Only a small amount of the billions of dollars pledged to help rebuild Iraq has been spent, because of concerns about graft and mismanagement and because of disruption from anti-US violence.

"We have serious problem with corruption, and I think all of us must recognise it as a serious threat," Iraqi Planning Minister Barham Salih said on Monday.

"We have to provide the donor community with a transparent and streamlined process by which these programmes reach the people they are intended to reach," he said.

Dead Sea resort

Representatives from about 60 countries and international organisations, including some that opposed the US-led invasion, gathered in the Jordanian Dead Sea resort to follow up on meetings in Madrid and Tokyo over the past two years at which they pledged $14 billion.

"The conference will accelerate the flow of funds from the donors and make sure that the commitments they have made in Madrid are kept," Finance Minister Ali Allawi said.

In a sign that aid might be flowing more easily, World Bank officials said the bank has extended a $500 million soft loan for Iraq for infrastructure projects with an interest-free grace period of more than 10 years.

The bank manages $400 million of donor money to Iraq. The United Nations manages another $500 million.  

"The next six months are critical"

Staffan Demistura,
deputy special representative for the UN secretary-general in Iraq

"It is very important to continue to mobilise additional resources, but it is also very important that we accelerate the implementation of what we have," Christiaan Poortman, World Bank's vice president for the Middle East, said.

Clear priorities

Staffan Demistura, deputy special representative for the UN secretary-general in Iraq, said the international community wanted a "clear idea" from Iraq of its priorities.

"Their first priorities must be the creation of urgent projects in order to make a real concrete difference for the people," Demistura said.

"The next six months are critical. We aim at concrete, immediate impact. Donors will be more receptive if they hear that Iraqis have come up with top priorities and they are do-able and concrete," the UN official said.

Concerns about the sustainability of the post-Saddam Hussein political system, violence and widespread corruption have led donors to be cautious about implementing their pledges.

Basic services

Iraq's economy is suffering from
absence of basic services

Iraq's economy suffers in the meantime. Iraq's central bank chief economist Mudhir Salih Kasim said basic services, such as water and electricity, are in their worst state in decades.

Iraq presented the conference with an updated version of the projects it hopes to finance in a document called the National Development Strategy.

Iraqi officials say the country can handle aid flows better because it is tackling corruption. They have also been urging donors to set up offices in Iraq, instead of handling aid through meetings outside Iraq.

Little of the $14 billion in non-US aid pledges made has been spent. The United States separately allocated more than $18 billion, but progress on American-funded projects in Iraq has been slow with flows diverted to security.

Only a few hundred million dollars of the non-US aid pledges have been spent, mainly to buy school supplies and help train government workers abroad.

Reconstruction is faltering, with basic infrastructure projects in electricity and sewage systems far behind schedule.

Iraq has the world's second largest oil reserves. But its infrastructure and living standards have been handicapped by UN sanctions from 1990 to 2003 and three wars in the past quarter of a century.