International donors are lining up in Madrid, Spain to pledge millions in aid for Iraq after hearing accounts of hungry children and idle, angry men prone to becoming terrorists. But as a conference on rebuilding the oil-rich nation shifts Friday from talk of needs to promises of help, a European Union official warned that expectations should be kept low.

U.N. Secretary-General Kofi Annan gestures at the start of the Iraq Donors' Conference in Madrid. [AP]

The EU External Affairs Commissioner Chris Patten reminded the United States that countries that opposed the U.S.-led war to oust Saddam Hussein are hardly eager to pick up the bill.

"You cannot expect European taxpayers who felt pretty hostile to military intervention to feel terribly enthusiastic about spending a large amount of money in Iraq," Patten said Thursday as the two day conference got under way.

Conference organizers have declined to say how much might be raised toward the $36 billion the World Bank says Iraq needs over four years.

U.S. Treasury Secretary John Snow, meeting Thursday night with American and Iraqi business leaders, would not state a dollar figure but said he was convinced the numbers would be good.

"Tomorrow I think it will surprise some in the press when the size of the support is visible," Snow said.

As he spoke, halfway across Madrid an estimated 2,000 to 3,000 protesters marched to denounce the conference as a trade fair designed for multinational companies to feast on Iraq's woes.

Protesters walk behind a banner criticizing the U.S. policy in Iraq during a demonstration against the International Donors Conference for the Reconstruction of Iraq taking place in Madrid Oct. 23, 2003. [AP]

"It is a farse," retired school teacher Josefina Martinez said.

U.N. Secretary-General Kofi Annan opened the meeting with an appeal for generous pledges and said differences over whether the war was right should now be forgotten in the interest of helping a long-suffering people.

"The long-term challenge of reconstruction has to be faced by all of us," he told delegates from 77 countries.

Only last week Annan was not even scheduled to attend the conference. He changed his mind after the Security Council passed a resolution spelling out a blueprint for Iraq's future, even though it did not give him the prominent role he sought in overseeing Iraq's transition to democracy or set a deadline for restoring Iraqi sovereignty.

France and Germany also had pressed those points. Both say they are withholding new aid, at least for now.

Much of the opening day of the conference was dedicated to reports on what Iraq needs, and it needs just about everything.

"We inherited Iraq in a deplorable state," said Mouwaffek al-Rabii, a member of Iraq's U.S.-appointed Governing Council.

Al-Rabii said more than two-thirds of Iraqis depend on food rations, less than half have access to pure drinking water, 20 percent of children under age 5 are malnourished, maternal mortality has quadrupled and diseases like malaria are recurring in Iraq.

The Chairman of the World Bank , James Wolfensohn gets ready for a television interview in the street outside the International Donor's Conference for the reconstruction of Iraq in Madrid, Oct. 23, 2003.  [AP]

"We are thinking now of the basic needs, such as providing food and health services and fighting unemployment, which creates the environment for terrorism and which feeds terrorism," he said.

Iraq's minister of immigration and refugees, Mohammed Jassem Khudair, said he needs to open offices and build houses to help absorb the 4 million Iraqis displaced or driven out of the country by Saddam's regime.

"There are 50,000 squatters living in public buildings," al-Rabii said. "What do we do with them, throw them into the streets?"

So far, Japan has pledged $1.5 billion for 2004; South Korea has agreed to $200 million, and Canada, $150 million. The World Bank has said it will lend Iraq $3 billion to $5 billion over the coming five years.

Spain pledged $300 million through 2007 and Britain $439 million for 2004-2005. An Italian Foreign Ministry official said Rome would give around $174 million over the next three years. All three governments were firm supporters of the U.S.-led invasion.

The European Union's head office has limited its contribution to one year, promising $233 million.

Smaller pledges came Thursday from Sweden, Belgium and the Philippines.

A separate $20 billion package is now before the U.S. Congress, and will go mainly toward security in Iraq and resurrecting its oil industry.

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