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Rediff.com  » Business » World Bank, IMF shareholders split on Iraq

World Bank, IMF shareholders split on Iraq

April 11, 2003 12:14 IST
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The International Monetary Fund and World Bank heads want their shareholders' consensus before working to rebuild Iraq, but some countries worry the United States is trying to use the multilateral lenders to cut out the United Nations.

According to a World Bank official, Britain, France and Germany do not want the bank and fund to render assistance to the war-battered country without the UN' blessing. These countries fear US President George W Bush would use the IMF and World Bank as an excuse to say he is taking a multilateral route, the official said.

Bush infuriated many countries, including France and Germany, when he bypassed the UN and went to war with Iraq with few allies. Now those countries are pressing for a big UN role in the reconstruction.

"The British, French and the Germans have been working together to make sure the bank works in step with the United Nations," a World Bank official told Reuters.

"They are concerned the United States is using the bank and the fund as a multilateral fig leaf for their own unilateral policies," the source, who spoke on condition of anonymity, added.

The US, which as the largest shareholder of both institutions is often accused of using the two institutions to achieve its own political ends, is pushing for them to get to work on Iraq right away.

World Bank President James Wolfensohn and IMF Managing Director Horst Koehler are trying to avoid being caught in the middle. They have both said they are ready to help, if they are asked, but they need the backing of their shareholders--the same countries that belong to the UN--before embarking on the task of assessing how much help Iraq will actually need.

"Because of the complexity of this situation and because of the sanctions, it is a subject which I personally think I should take to the board," Wolfensohn said at a press conference on Thursday.

Speaking separately, Koehler agreed, urging the world to seek "cohesiveness" on a framework for Iraq's rehabilitation and saying he could only get to work with the "consent of my board".

Meanwhile, US Treasury Secretary John Snow said Wolfensohn should rethink his comments and said no further authority is needed for the bank to get involved.

"I guess I'm surprised by (the) statement that even on technical assessment (Wolfensohn) has to wait for other authorization before he can proceed," Snow said at a later press briefing in response to a question.

"I hope he rethinks that, because I think the World Bank today should be getting involved and trying to make those assessments."

The World Bank chief told Reuters earlier this week that it is not possible to do an assessment of the costs involved in the reconstruction of Iraq while sitting in Washington.

And technically, once the fighting has stopped, Wolfensohn said there is nothing to stop him putting "half a dozen people on an airplane to go over there and take a look".

But he wants to ensure he has the consensus of his shareholders behind him.

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