U.S. Occupation Assistance: Iraq, Germany and Japan Compared

Publication Date: March 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Economics

Type:

Coverage: Iraq Japan Germany

Abstract:

This report provides aggregate data on U.S. assistance to Iraq and compares it with U.S. assistance to Germany and Japan during the seven years following World War II. U.S. aid allocations (all grant assistance ) for Iraq appropriated from 2003 to 2006 total $28.9 billion. About $17.6 billion (62%) went for economic and political reconstruction assistance. The remaining $10.9 billion (38%) was targeted at bolstering Iraqi security. A higher proportion of Iraqi aid has been provided for economic reconstruction of critical infrastructure than was the case for Germany and Japan. Total U.S. assistance to Iraq thus far is roughly equivalent to total assistance (adjusted for inflation) provided to Germany -- and almost double that provided to Japan -- from 1946-1952.

For Germany, in constant 2005 dollars the United States provided a total of $29.3 billion in assistance from 1946-1952 with 60% in economic grants and nearly 30% in economic loans, and the remainder in military aid. Beginning in 1949, the Marshall Plan provided $1.4 billion with the specific objective of promoting economic recovery. Prior to that, U.S. aid was categorized as Government and Relief in Occupied Areas (GARIOA). Adjusting for inflation, the constant 2005 dollar total for Marshall Plan aid was $9.3 billion, of which 84% billion was grants and 16% was loans. (West Germany eventually repaid one-third of total U.S. assistance it received.)

Total U.S. assistance to Japan for 1946-1952 was roughly $15.2 billion in 2005 dollars, of which 77% was grants and 23% was loans. Most of these funds were provided through GARIOA grants. Japan repaid $490 million of the total postwar assistance. Of the $2.2 billion in total aid, an estimated $655 million, or almost a third, went to categories that would mostly contribute directly to economic recovery (industrial materials, including machinery and raw goods; petroleum and products; and transportation, vehicles, and equipment). Most of the rest went for agricultural equipment, foodstuffs, and food supplies with smaller amounts spent on medical and sanitary supplies, education, and clothing.

U.S. assistance to Germany and Japan largely consisted of food-related aid because of severe war-induced shortages and the need to provide minimum subsistence levels of nutrition. In Iraq, humanitarian aid has been a minor part of the assistance. Expectations also have changed. Countries today have much higher expectations of what the United States should contribute to reconstruction in Iraq relative to what was expected following World War II. Germany and Japan also are larger than Iraq -- both population and size of their respective economies -- and the extent of war damage to each country's industrial capacity was different. Iraq also faces an insurgency that deliberately sabotages the economy and reconstruction efforts, whereas there were no resistance movements in either Germany or Japan.

This report will not be updated.