World Bank, IMF Shareholders Split on Iraq (United Nations)

World Bank, IMF Shareholders Split on Iraq Thu April 10, 2003 09:50 PM ET By Anna Willard WASHINGTON (Reuters) - The IMF 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 U.N.

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 United Nations' blessing. These countries fear President 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 United Nations and went to war with Iraq with few allies. Now those countries are pressing for a big U.N. 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 United States, 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, U.S. 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."

U.S. and Allies Seek U.N. Resolution to Promote Iraq Aid
By ELIZABETH BECKER

ASHINGTON, April 12 — The United States and the six other major industrial nations that make up the Group of 7 called today for a new United Nations Security Council resolution that would give approval for international institutions and other governments to help rebuild Iraq.

As the size and scope of the task becomes clear, the Bush administration has solicited both money and expertise from wealthy nations and the World Bank and International Monetary Fund for the reconstruction of Iraq, and asked creditor nations to forgive the country's debts.

But there was little disagreement as the global financial institutions met here that the United Nations would have to approve any new authority in Iraq before that kind of help would arrive.

Treasury Secretary John W. Snow led the administration's lobbying of the finance ministers and central bank governors of the Group of 7 — the United States, Britain, Canada, France, Germany, Italy and Japan — as well as of Russia, for aid and debt relief for Iraq.

Their support makes it more likely that the global institutions will move quickly to assess Iraq's needs and prepare reconstruction projects.

At a news conference, Mr. Snow said he was pleased with the results of the meeting. But the final statement released by the group was short on details.

"We recognize the need for a multilateral effort to help Iraq," it declared. "We support a further U.N. Security Council resolution."

It called on the World Bank and the I.M.F. to "play their normal role in rebuilding and developing Iraq."

Under those institutions' rules, that cooperation could require approval from the United Nations as long as Iraq is under military occupation.

The I.M.F. repeated that call for a new United Nations resolution at the end of its meeting tonight. Gordon Brown, Britain's chancellor of the exchequer and chairman of the I.M.F.'s financial committee, said that the resolution would have to deal with unfreezing Iraqi assets and lifting sanctions. "Everyone was unanimous about a further U.N. resolution and everyone wanted the involvement of the the International Monetary Fund and World Bank," he said.

Scott McClellan, a White House spokesman, said the administration had signaled its plans to ask for a United Nations resolution as early as March 16, when President Bush met with Prime Minister Tony Blair of Britain and other allies just days before opening of the war in Iraq.

Mr. Bush and Mr. Blair said earlier this week in Belfast that the United Nations had "a vital role to play in the reconstruction of Iraq."

But they need the support of France, Germany and Russia — the three members of the Security Council who were opposed to the war — to support a resolution that may not give the United Nations any real political authority in Iraq.

This weekend President Jacques Chirac of France, Chancellor Gerhard Schröder of Germany and President Vladimir V. Putin of Russia reiterated their position that the United Nations was best suited to administer and rebuild Iraq.

Mr. Bush has suggested only that the United Nations may have a role advising the occupying powers on the composition of an interim government and organizing aid.

The question of how to handle Iraq's debts dominated the financial meetings here. Because it holds the world's second-largest oil reserves, Iraq can not be considered a poor country eligible for traditional debt relief programs.

Some critics of the international financial institutions agreed that the Iraqi people should not be forced to pay off debts incurred by Saddam Hussein's government. However, they argued that Congo and South Africa deserved debt relief, too.

"It seems that after the U.S. prosecutes a nearly unilateral war to take over a devastated, indebted country, it suddenly sees the logic of eliminating illegitimate debts," said Njoki Njoroge Njehu, director of a nonprofit group called the "50 Years Is Enough Network." "Millions in Africa have died while the U.S. and its friends at the I.M.F. and World Bank have denied that logic."

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