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Friday, October 3

Battle for Iraq money reflects weakening confidence in Bush

By Jon Frandsen and John Yaukey | GNS

WASHINGTON - The success of President Bush's plan for financing the reconstruction of Iraq hinges largely on the support of the countries abroad and lawmakers at home who have harshly criticized his approach to the war and occupation.

Bush's most immediate problem is in Congress, where the $20.3 billion reconstruction portion of his $87 billion request to finance the occupation in Iraq has caused resentment and criticism.

Momentum is building in both parties for making at least part of the $20.3 billion a loan to Iraq rather than a grant, despite warnings from the administration that debt could further hamper the birth of a new democracy.

Defense Secretary Donald Rumsfeld warned that weakening Iraq with burdensome loans could lead to greater American entanglement, not less.

``Investments the president is requesting are, in a very real sense, a critical element of the coalition's exit strategy,'' Rumsfeld said.

Some lawmakers say other concerns - such as assuring Americans they are not footing the tab alone - dictate the need for a loan. They argue that Bush has already lost on the issue.

``It's going to be a loan, not a grant. The question is going to be how much,'' said Sen. Olympia Snowe R-Maine.

Congress will take more than two weeks to complete work on the Iraq spending bill, and Bush could still prevail. But challenges that came from across the spectrum - such as other political problems Bush has been experiencing in recent weeks - point to a president who has been weakened, at least temporarily.

Sen. Joe Biden, D-Del., said widespread complaints about the overall $87 billion request is not about opposition to the war, but a kind of referendum on Bush's leadership.

``Consternation in the Congress and the country at the moment is not about the $87 billion,'' said Biden, the Democrats' most prominent foreign policy spokesman. ``...It is that we have lost faith in the president.''

While Biden's language is harsh, what is perhaps more telling about the depth of Bush's woes is that the scathing criticism comes from the only Democrat in the Senate so far to publicly side with the president on making the reconstruction money a grant. Even Bush's strongest backers in Congress temper their support by promising elements of the Iraq request will be changed.

One thing going for Bush is that supporters of turning some of the money into a loan have not formed a cohesive group. There are a half-dozen proposals floating around and nearly as many factions of the two parties involved.

As an illustration of how ideologically jumbled the support and opposition is, three House Democrats who voted against the war recently returned from Iraq convinced the whole amount needed to go to the country as a grant. Some of the most outspoken supporters of the war are conservative Republicans who now are just as adamant about making some of the money a loan.

One reason that the consternation sweeps so broadly is that $87 billion is an enormous number, one that shocked fiscal conservatives. But it also outraged liberals who throughout Bush's presidency have been thwarted in trying to increase spending on education, transportation and health care.By way of example, Bush signed the first spending bill for the new Department of Homeland Security Wednesday, with a cost of $30 billion for fiscal 2004, the same period covered by the Iraq request. Items in the homeland bill include funds for border security, air marshals, emergency aid after natural disasters, and more equipment and better training for those who would respond to another terrorist attack.

Many members of Congress favor the loan approach because they fear the $20.3 billion would be just a down payment on a reconstruction tab that the administration itself puts at $50 billion to $75 billion.

One of the sharpest criticisms of the administration's plan is that it assumes the international community will provide significant financial aid, but there is little evidence that such help is forthcoming.

On Oct. 23, nations attending a conference of potential donors in Madrid will be asked to contribute $35 billion over several years.

But the Bush administration is not likely to get more than between $1 billion and $5 billion, according to lawmakers and foreign diplomats. The 15-nation European Union recently reinforced those low estimates with a meager $234 million pledge.

The Bush administration is hoping to encourage more generosity by giving the United Nations a stronger hand in Iraq beyond merely running humanitarian operations. Bush diplomats have proposed allowing the world body to help draft an Iraqi constitution and organize elections.

But some members of the U.N. Security Council, France most notably, want more. They want the United Nations, rather than the United States, to control Iraq's emerging government and a rapid transfer of sovereignty back to Iraqis. Administration officials fear returning power to Iraqis too quickly could destabilize the country.