Global Policy Forum

By Jeannine Aversa

An international consortium of financial institutions led by J.P. Morgan Chase & Co. will run a trade bank aimed at helping the Iraqi government make big-ticket purchases from other countries, U.S. authorities involved in rebuilding Iraq announced Friday. The new Trade Bank of Iraq may be operating by the end of September, said Peter McPherson, director of economic development for the Coalition Provisional Authority, which oversees rebuilding the war-torn country.

McPherson told reporters in a telephone call from Baghdad that the trade bank ``won't be transmitting money'' but would guarantee that goods would be paid for when purchased by the Iraqi government or eventually a private business in the country, thus making sellers more inclined to ship. Details weren't provided.

The trade bank is needed because of the phasing out of the United Nations oil-for-food program, which has handled Iraq's major purchases abroad, McPherson said. ``With that program ending, we needed to have a commercial type of program,'' he said.

McPherson said the contract for the international consortium of banks is valued at ``a very few million'' dollars and would last a year with a renewal option for another two years. He said the contract would be paid for by Iraqi revenue from oil or other financial assets.

McPherson said he expects most of the trade bank's employees and its top executive to be Iraqis who receive training and guidance from J.P. Morgan Chase and the consortium.

McPherson said the consortium banks would not provide capital to start up the bank. He said $100 million in capital is authorized, including $5 million in cash from the Coalition Provisional Authority. Another $95 million is available if needed from a U.N. reconstruction fund made up mostly of oil revenues.

A total of 13 banks, including New-York-based J.P. Morgan Chase, are in the consortium, according to the Treasury Department. The other banks are: Australia and New Zealand Banking Group, Melbourne, Australia; Standard Chartered PLC, London; National Bank of Kuwait SAK, Safat, Kuwait; Bank Millennium SA, Warszawa, Poland; Bank of Tokyo-Mitsubishi Ltd., Tokyo; San Paolo IMI S.p.A, Turin, Italy; Royal Bank of Canada, Toronto; Credit Lyonnais, Paris; Caja De Ahorros Y Pensiones De Barcelona, Barcelona, Spain; Standard Bank Group Limited, Johannesburg, South Africa; and Banco Comercial Portuges, Lisbon, Portugal.

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