Global Policy Forum

By Suleiman al-Khalidi

The World Bank expects a pickup in Iraqi business activity buoyed by higher oil prices to lead to an economic recovery in 2005, a senior bank official said. "Assuming we have a reasonable security situation and some political stability next year Iraq would be set for a very strong recovery," said Joseph Saba, the aid bank's director for the Middle East and North Africa Region.

In contrast to U.S. expectations of a post Saddam Hussien boom, Saba told Reuters in an interview on Monday the Iraqi economy has just now reached prewar output levels. Saba was speaking after signing three agreements with Iraq's interim government in the Jordanian capital.

The three agreements are worth a total of $145 million, by far the largest sum the bank has given to Iraq, and come after earlier funding to enhance government capacity and education. "We foresee the realistic possibility of doubling per capita income levels helped by a combination of oil, significant trade and the commencement of these reconstruction contracts," he added, saying per capita income was currently under $800. "Infrastructure projects which were chosen on the basis of immediate priority are just beginning now."

Under the new agreements, funds worth $65 million have been given to emergency water and sanitation projects for Baghdad's 6 million residents and $25 million to repair hospitals. A $55 million private sector development project mainly upgrades telecommunications infrastructure by helping rebuild a national network still to recover from U.S. bombing in 2003.

With the launch of the three projects, the majority of the $370 million pledged by non-U.S. donors to the World Bank's Iraq Trust Fund will have been spent, Saba said. Three earlier projects saw $25 million spent on school text books, $65 million on reconstructing schools, and $10 million on technical assistance.

Security less of a hurdle

Saba acknowledged the difficulty of managing projects from outside Iraq but said the bank hoped that entrusting Iraqis with implementing projects eased the impact of the bank's withdrawal last year after the bombing of the United Nations headquarters in Baghdad, Saba said. "Obviously it's a difficult security situation for the bank, but we hope to overcome this by working directly through the Iraqi administration," Saba said.

But Saba said critics were unfair to say there was any delay in the preparation and launch of projects, although there is Iraqi popular discontent at the slow pace of rebuilding. "Even had we been in Baghdad the timing would not have been much different for the preparation. In a matter of four months we have been able to prepare hundreds of millions of dollars of projects," he said. "I realise the needs are immediate and therefore there is always an impatience but by the standards of such projects and compared to other post-conflict situations, the preparations have been extremely quick."

The World Bank foresaw speedier implementation in 2005 as the emergency project's launch could pave the way for progress on essential mega projects now on the drawing board. "In redoing the communications we are not just restoring communications but we are modernising them so the same thing is happening in hospitals and in the other project we are beginning in school reconstruction," Saba said.

The World Bank said the emphasis on essential emergency needs was a prerequisite before embarking on larger projects. "Before you can design large mega projects you have to have essential infrastructure in place. You have to take the first steps first," he added. "In a country like Iraq where we have a major reconstruction programme underway it is really critical from the very beginning to put in place the correct process. If the process is sloppy or not transparent or not accountable then everything that comes after could be spoiled," he added. "That's why we have taken some time and care to do it right Now I hope we will be able to implement quickly," Saba added.