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UN Office for the Coordination of Humanitarian Affairs

IRAQ: Interview with World Bank head

BAGHDAD, 22 April 2004 (IRIN) - Faris Hadad-Zervos, head of mission of the World Bank for Iraq, says the focus of the US $400 million interim strategy will be training and capacity building as well as emergency projects. In an interview with IRIN in the Jordanian capital, Amman, he outlined expectations and goals to be reached within a nine-month period.

QUESTION: When did the World Bank start its work on Iraq?

ANSWER: Actually, Iraq is a founding member of the International Bank for Reconstruction and Development. We spent most of last year on this project. I spent time getting economic information in 11 of the 14 sectors we plan to operate in, which was presented at the Madrid [donor] conference. In the summary, we said Iraq has US $55 billion in needs of which $35 billion is to come from the bank, $20 billion from the Coalition Provisional Authority (CPA) to be spent from 2004-2007. We opened this office in December.

Q: What is the World Bank strategy in Iraq?

A: We have an interim strategy of six to nine months that we presented in December. It covers the time period between July-September. In the interim period of six to nine months, we want to do three things: capacity building and training; emergency projects of reconstruction and rehabilitation; and to support policy for medium-term reforms.

Q: How much is allocated for the interim strategy?

A: We have $400 million. The donors at Abu Dhabi committed to that number, and it's coming in. Of that, we will spend $100 million on emergency education infrastructure, mainly on new textbooks. Another $200 million will be spent on urban infrastructure rehabilitation projects done in coordination with the Ministry of Public Works and Municipalities. That will cover things like power, transportation and possibly telecommunications in cities. Water supplies and sanitation systems will also be a big part of the project. Then we'll spend another $100 million on emergency infrastructure in rural areas. We'll start with labour intensive infrastructure - water and sanitation.

We expect to appraise these projects by the end of this month with the help of local consultants we recruited. We are working with several Jordanian firms with Iraqi subsidiaries. We also have an office here that spearheads that type of work.

Q: What type of training will be carried out?

A: In terms of training, we have already started a three-month training for 75 Iraqis who represent a cross-section of Iraqis working in procurement, financial management and project implementation. We don't implement projects. We set them up, then we have the Iraqis implement them. Actually, they [Iraqis] know how to do that, but we, the bank, the United Nations, the
donor community, have a certain way of doing things, so it's them adapting to meet the needs of the donor community. We're doing workshops with the education and telecommunications sectors and more on private development and state-owned enterprises. So in terms of workshops we are going full steam ahead.

Q: How do you expect the economy to function in post-war Iraq?

A: One of the issues is finding a proper mechanism to track purchasing power. We're waiting to hear what the Iraqis want to do in the market, letting the market guide things, letting the private sector guide things, still with an important role for the public sector [which] is the most sustainable way for the economy to function. A plan has to take into account the pains people will go through if the economy transitions too quickly, but you need a sustainable system for the long term. We want to ultimately move to a system that relies on market forces but not at the price of suffering to vulnerable groups.

Q: How will this work?

A: In a market economy, the bank needs to look at the investment climate, including laws and regulations, and what the private sector is doing. We've been in discussions with the CPA and the Ministries of Finance and Planning about private sector development and price liberalisation. To what extent do you keep subsidies and to what extent to you remove them? You have to make sure any move you make, whether a public distribution system [an estimated 60 percent of Iraqi families are completely dependent on a food basket distributed monthly under the former United Nations Oil-For-Food programme now run mostly by the Ministry of Trade] or a cash payment, actually works.

Q: Who will make sure the transition goes smoothly?

A: Iraqi government ministries have some good technical competencies. Our relationships with them are growing. The Ministries of Education, Health and Public Works have been handed back to Iraqis. We are on course with them, and our expectations have been met. But the bank is not making decisions as to what reforms are taking place and speed at which they are taking place. We're sharing with them the experience and lessons from what we know.

Q: What's going to happen at the status conference in Qatar in May?

A: The conference will assess the progress of programmes. It's important, because it gives the donors a chance to assess what's going on.

Q: How does the security situation affect your work?

A: It's a myth that we have an option to start reconstruction in Iraq. We have to start the reconstruction. But it's no secret, especially in the last week, that it has been very precarious. We'll have to wait and see what happens. We're taking things as they come. It sounds like it's just a phrase, but if you get lemons, you have to make lemonade.

Q: What are your predictions for Iraq?

A: We see some basic indicators going in a positive direction - GDP [gross domestic product] has been growing, for example. Unemployment has been a huge problem and will continue to be a huge problem, but there is business activity. And the dinar has held steady at about 1,400 to the US dollar. It's holding its own, so somebody has faith there. The picture is not 100 percent rosy, but there are good signs. There are some things moving despite the security problems.

Theme(s): (IRIN) Economy, (IRIN) Governance

[ENDS]

This material comes to you via IRIN, a UN humanitarian information unit, but may not necessarily reflect the views of the United Nations or its agencies. If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer. Quotations or extracts should include attribution to the original sources. All materials copyright © UN Office for the Coordination of Humanitarian Affairs 2004