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US to have tough time on Iraq at IMF-WB meet

The US, having antagonised world opinion by rushing to war, is now anxious to get the world bodies to rush aid to the battered country.

india Updated: Apr 12, 2003 18:38 IST

The IMF-World Bank spring meetings, beginning on Saturday could see a heated debate between the United States and some other nations over the issue of quick aid flows to Iraq. The sticking point is Washington's failure to work out a consensus over the interim authority to run post-war Iraq and handle its reconstruction.

The US, having antagonised world opinion by rushing to war, is now anxious to get the world bodies to rush aid to the battered country. But IMF and World Bank officials have hinted that some key issues will have to be addressed before that happens: getting the UN to lift the sanctions and resolving disagreements over American plans for interim authority and reconstruction.

The first round of confrontation could well be at the G-7 deliberations, ahead of the IMF-World Bank meetings. Two of its members, France and Germany, have made it clear that it is not the US, but the UN that should have the lead role in administering post-war Iraq, including reconstruction. Washington is still to clarify the role it is envisaging for the UN.

World Bank president James Wolfensohn disclosed on Thursday that some members of the bank's board are of the view that the UN should first lift the sanctions before the bank thinks in terms of helping Iraq, even with technical assistance. He proposes to put the issue before the entire board for a decision.

The move drew flak from US Treasury Secretary John Snow, who commented at a Press conference that he was "baffled" whey a board vote was deemed necessary even for aid assessment studies. Snow sought rethinking on the issue since it was a question of rebuilding Iraq "after 25 years of economic misrule and mismanagement".

At the G-7 meeting, Snow also proposes to advance the case for the rich countries writing off portions of Iraq's sizeable foreign debt to help the country make a fresh start. Some of this debt is with France and Germany, the two countries that have been in the forefront of opposition to the US-led war.

The IMF and the World Bank have no idea of Iraq's economic conditions as they have had very little interaction with Iraq in a long, long time. Baghdad has never taken a loan from the IMF and has kept out its financial teams from visiting the country since 1983. Iraq has not borrowed from World Bank since 1973.

IMF managing director Horst Koehler, addressing a Press conference on the eve of the meetings, expressed relief that the Iraq war may be ending earlier than some of the grim predictions. While this would be welcome news, he cautioned that risks to the global economic outlook will still remain high because of the other deep-rooted economic problems.

First Published: Apr 11, 2003 22:10 IST