- The Washington Times - Monday, September 22, 2003

DUBAI, United Arab Emirates (AP) — Global finance leaders pushed initiatives yesterday to boost economic growth and repair some of the damage done by conflict in the Middle East, saying greater prosperity would improve security in the troubled region.

The United States and Turkey signed a deal on releasing $8.5 billion in loans to Turkey — money designed to cushion the nation from any fallout from the war in neighboring Iraq.

Although the deal was contingent on Turkish cooperation with the United States on Iraq, Turkish Prime Minister Recep Tayyip Erdogan said there was no connection between the loan and a U.S. request for Turkey to send about 10,000 soldiers to Iraq help bring stability. The troops request is contentious in Turkey.

“That’s a totally different subject and a totally different issue,” the prime minister said in Dubai, where finance ministers, central bankers and other money gurus are gathered for the annual meetings of the International Monetary Fund and the World Bank that opens today.



U.S. Treasury Secretary John W. Snow also called the two issues “distinct and separate.”

A day before the IMF and World Bank open their annual meetings, a joint steering committee — with ministers from rich and poor nations — urged a quick resumption of global trade talks that collapsed this month in Cancun, Mexico.

In a statement, they said it was imperative to “put the process back on track as soon as possible” and bridge the gaps between rich and poor countries that caused the breakdown.

Mr. Snow told members of the committee that it was “propitious” that they were holding their meetings for the first time in the Middle East.

He said the task of rebuilding two countries invaded by U.S.-led troops in the war on terror — Iraq and Afghanistan — would be enormous and will require considerable assistance from the developed world.

Iraq’s finance minister introduced a blueprint Sunday for a new Iraqi economy, based on open access — to everything but the oil industry — and free-market principles intended to reverse decades of stagnation under tight controls maintained by Saddam Hussein, who was toppled by U.S.-led troops in April.

“Helping Iraqis achieve these objectives will require a sustained commitment by the international community,” Mr. Snow said yesterday.

Despite much talk about helping Iraq, the chairman of a joint IMF and World Bank development committee said the banks should withhold any loans for Iraq until the United Nations recognizes a government there.

Iraq badly needs cash to recover from decades of mismanagement, United Nations sanctions and the recent U.S.-led war, but the IMF and World Bank are not in a position to make any loans for now, said South African Finance Minister Trevor Manuel, chairman of the committee that sets broad policy directions for the two global lenders.

Iraq’s Governing Council, appointed by the United States, selected a Cabinet this month, but it is not viewed as legitimate by the international community.

“It is important that the status of the government in Iraq be clarified,” Mr. Manuel told reporters gathered for the IMF and World Bank annual meetings in Dubai. “I think it is a matter for the United Nations, as you need a Security Council resolution on the status of government in Iraq as a precursor to any lending.”

In Afghanistan, the shattered economy is recovering but it must fix serious security problems and find ways to wean its farmers off opium production that accounts for up to half of the gross domestic product, an IMF official said yesterday.

The Afghan central government is making important strides in collecting revenue from the provinces and has achieved reforms such as a new currency and better banking rules, but much hard work remains to lift the nation out of dire poverty and reintegrate it with the global community after 20 years of war, said Adam Bennett, the IMF mission chief for Afghanistan.

“One dark cloud over this scenario is the production of opium,” he said.

Opium farmers use some of Afghanistan’s most fertile land in the south, where the security problems are worst, creating a “vicious cycle” that won’t be easy to stop, he said, although the IMF says a switch to legal crops such as wheat should be the solution.

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