World Bank, IMF Await Role in Iraq

The International Monetary Fund and World Bank Group have spent the last half-century bailing out bankrupt countries and war-ravaged economies, but they have found themselves on the sidelines in Iraq.

As the steering committees of the sister institutions prepare for their spring meetings in Washington this weekend, the issue of Iraq’s postwar reconstruction is creating a series of awkward moments for normally expansive officials.

“The World Bank hasn’t been asked to play a role in Iraq,” spokeswoman Caroline Anstey said. “As soon as we’re asked, we’ll let you know.”

The uncertainty about IMF and World Bank participation reflects an ongoing debate within the Bush administration about how best to involve other countries and international institutions in rebuilding Iraq. Administration officials have indicated they want to enlist the help of allies but have made it clear the U.S. intends to take the lead.

“The rebuilding of Iraq will require the support and expertise of the international community,” President Bush said Tuesday after meeting with British Prime Minister Tony Blair in Northern Ireland. “We’re committed to working with international institutions, including the United Nations, which will have a vital role to play in this task.”

Bush did not mention the IMF or World Bank, but a senior Treasury Department official told reporters the administration would welcome their initial participation in assessing reconstruction needs and providing technical assistance. Broader involvement, such as providing loans to finance rebuilding, might occur “down the road,” the official said.

“They have a lot of expertise in both institutions,” the official said. “They do have a lot to add, and they can contribute.”

In the run-up to the weekend meetings, Treasury Secretary John Snow said that giving the IMF and World Bank key roles in reconstruction was “a possible option.” He said he plans to discuss the matter when he meets Friday and Saturday with finance ministers of the G7 nations -- Britain, France, Germany, Italy, Japan, Canada and the United States.

Speaking to reporters in Florida last week, Snow predicted G7 officials would spend considerable time addressing reconstruction oversight and cost-sharing. He said he expected France and Germany to move beyond their objections to the war and become active participants in postwar planning.

Snow indicated that the U.S. might lobby to establish an international donors’ fund like the one to aid Afghanistan.

Economist Jeffrey Schott at the Institute for International Economics in Washington said the lack of dialogue between the administration and the financial institutions may simply reflect the unsettled nature of the war.

Once the conflict is over and an interim government has been set up, he said he would be surprised if the IMF and World Bank were not given roles.

“I suspect we will need the technical and financial expertise and resources of the bank and the fund,” he said. “Their support will be extremely valuable.”

Still, some foreign officials are concerned about the lack of IMF and World Bank participation.

Britain’s international development secretary, Clare Short, has voiced fears that the chances of a successful reconstruction program will be jeopardized if the two institutions are excluded, aides say.

Finance officials from Germany, Spain and Sweden have expressed similar reservations. “There should be a mandate for the World Bank to be active,” German Development Minister Heidemarie Wieczorek Zeul said Monday in Berlin.

The IMF and World Bank were set up after World War II to help countries weather financial crises and to finance development projects in the Third World. Their client list includes the former Soviet states, East Timor, Bosnia-Herzegovina and Afghanistan. The two institutions have 184 member nations.

World Bank President James Wolfensohn has said that before either institution can become involved in Iraq, it must receive some international mandate, such as a U.N. Security Council resolution. No authorization has been forthcoming.

In the absence of an official invitation, the two agencies will devote much of their energy this weekend to other issues: creating new standards for development assistance, expanding programs to improve health and education and combat AIDS, promoting trade reforms and challenging wealthy countries to make good on financial pledges.

At least two hot-button issues will not be on the weekend agenda: debt relief for the world’s poorest countries and a proposed international bankruptcy court process for overextended economies such as Argentina’s. The bankruptcy initiative is being set aside because of objections raised by the U.S. and commercial creditors.

Some advocacy groups say the debt-relief program needs to be expanded and reformed, and accuse the institutions of trying to cover up its shortcomings.

“The IMF and World Bank have taken [debt relief] off the agenda for the first time,” said Marie Clarke, national coordinator for Jubilee USA Network, a debt-relief advocacy group. “They may feel confident that with the buzz about Iraq, there isn’t going to be enough outrage expressed by protesters.”

Demonstrations have been a trademark of IMF and World Bank meetings for the last few years, but they have lessened in intensity since the Sept. 11 terrorist attacks and the increasing focus on U.S. policy in Iraq. Anti-globalization activists plan to stage rallies in connection with this weekend’s meetings, but they will be sharing the spotlight with opponents of the Iraq war.

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Times wire services were used in compiling this report.