The course of the fighting on Iraq is now so uncertain that no one can predict when it will be possible to begin the systematic reconstruction of the economy and the petroleum sector. What began as an insurgency has become a sectarian and ethnic conflict that risks tearing the country apart and could lock it into a bloody civil war or divide it between Shi'ite, Sunni and Kurd.
This fighting has compounded the serious, if not critical, problems in the past allocation of aid. The US programmed some $38 billion dollars in aid to Iraq between its invasion in 2003 and President Bush's announcement of a new strategy in January 2007. The international community pledged some $15 billion more.
The new Bush strategy at most will buy time and support military operations for a year or so in ways that can weaken the economic incentives to support sectarian and ethnic fighting. To be successful, however, past aid plans will probably have to be totally restructured during the course of 2007 and 2008.
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