World Bank To Strengthen Existing Presence In Iraq

Contacts:
In Washington: Amy Stilwell (202) 458-4906

astilwell@worldbank.org  

 

WASHINGTON, May 16, 2006 – At an informal meeting of the Executive Directors today, Joseph Saba, Country Director of the Middle East Department, briefed the Board on the status of the Bank's work program in Iraq and explained the intention of the World Bank’s Middle East Region to strengthen its existing presence in Iraq, timed with the advent of a new Iraqi full-term government.  The following is his full statement:

 

Informal Briefing on Iraq

Joseph Saba, Country Director

Middle East Department

Middle East and North Africa Region

May 16, 2006

 

Mr. Chairman and Members of the Board,

During the last eight months, the World Bank has made progress in implementing its Second Interim Strategy Note for Iraq, which was discussed by Executive Directors on September 15, 2005. Iraq has also witnessed historic political developments, namely the approval through public referendum of a constitution and national elections under the constitution for a full-term government. Iraq’s Prime Minister-designate is now in the process of selecting a cabinet. At this important time in the political process, I would like to provide an update on the status of our program in Iraq and our plans to strengthen our support for the new government and donors.

Update on World Bank Work Program

As you recall, the Second Interim Strategy Note’s overarching objective is to help Iraq develop institutional frameworks, policies, and systems for more effective, accountable, and transparent use of Iraq’s resources. To achieve this, it provides a framework for expanded analytical and advisory activities, additional Iraq Trust Fund resources, and up to US$500 million in IDA lending. I will provide an update on our progress in all three areas.

The Bank’s analytical and advisory activities—capacity building, policy advice, and economic and sector work—are a key vehicle for supporting the government’s transition to more efficient and accountable systems of governance and resource allocation. Despite the interim nature of the current government, the Bank has deepened its policy dialogue. Drawing on the accumulated knowledge of the last three years and in daily consultation with Iraqi officials, the Bank is finalizing a briefing book for the incoming government on core reforms, giving priority to strengthening governance and institutions, modernizing social safety nets, and accelerating economic reforms.

Projects financed by the World Bank Iraq Trust Fund (ITF) within the International Reconstruction Fund Facility for Iraq (IRFFI) continue to advance, financing improvements to education, health services, irrigation and drainage, and water supply and sanitation. An Emergency Disabilities Project (US$19.5 million) was approved in late 2005. In total, the ITF has now financed ten emergency projects amounting to about US$385 million, of which eight projects, amounting to US$375 million (97% of the total), are implemented directly by Iraqi governmental authorities. Disbursements stand at about US$55 million, which is nearly double the level of September 2005 although still disappointingly low. Importantly, the pace of contracting has accelerated over the past eight months as Iraqi capacity to meet Bank standards for subproject design, tendering, and contracting has strengthened. About 46% of ITF grant monies, valued at more than US$172 million, have been tendered or contracted. Over US$90 million of contracts have been awarded or completed. Next week, on May 24, the Bank and UN will brief IRFFI donors in Amman, Jordan, on the status of the IRFFI program. The Bank and UN will also propose to extend the IRFFI termination date from the end of 2007 to the end of 2010 to accommodate new projects and new government priorities.   

The Bank has worked closely with government counterparts to prepare projects to be financed from the International Development Association (IDA). Executive Directors approved the first IDA-financed project—the Third Emergency Education Project (US$100 million)—in November 2005. An Emergency Road Rehabilitation Project (US$135 million) was negotiated in February 2006 and will be submitted to Executive Directors as soon as we receive reconfirmation from the new government. Projects are also under preparation to support rehabilitation of electricity and water supply and sanitation.

The International Finance Corporation (IFC) has also advanced its work. In March 2006, IFC invested US$98 million in a cement plant in northern Iraq. IFC is also supervising investments made in 2005 to two Iraq Banks, and is looking into a third banking investment, all focusing on expanding financing to SMEs. Technical assistance through the donor-funded Iraq Small Business Financing Fund Facility and PEP-MENA is building financial sector capacity. Also, PEP-MENA is collaborating with the Bank on a Housing Construction Sector Study.

Looking Forward

With the advent of a permanent Iraqi government, the Bank sees opportunities for increased stability, more fruitful cooperation, and enhanced program effectiveness that warrant a further incremental strengthening of the Bank’s presence in Iraq. As you know, the Bank’s operational work in Iraq has relied until now on a growing cadre of professional Iraqi staff based in Iraq, regular meetings with Iraqis outside of Iraq, use of the Bank’s videoconferencing facilities in Baghdad, and close support from the Interim Office for Iraq in Amman. An international consultant contracted through DFID has helped represent the Bank in the International Zone and has been working out of space provided by the Ministry of Planning. It is this space we plan to upgrade and use.

For maximum program flexibility and responsiveness in a complex and changing  environment, and based on the results of two security missions to Iraq, the Region will recruit a volunteer to serve as Iraq Country Director based in the International Zone in Baghdad. If our assessment changes, the Country Director could be based in a neighboring country, rotating frequently into Iraq. Given the transition in Iraq and the growing World Bank role, a field-based Country Director would better manage and strengthen the Bank’s overall country relationship and take the lead in developing flexible and innovative ways of working in Iraq at different levels of government and more broadly with civil society. The Country Director would also take a leading role in donor coordination and harmonization. Strengthening the Bank’s physical presence in Iraq at this juncture is also consistent with the actions of the Bank’s development partners.

The Country Director would be supported in the International Zone by at least one and, depending on need, cost, and availability, up to three internationally-recruited staff or consultants and additional Iraqi staff to be identified. All international staff to be based inside Iraq will do so only on a voluntary basis. Bank staff in the International Zone would operate out of secure premises first identified during a security mission in August 2005. The Iraqi Ministry of Planning and the Ministry of Finance have offices in the same building. Mission travel to Iraq would be in accordance with strict limits set by Bank security. All security within Iraq, including for occasional controlled visits outside the International Zone, would be provided by a dedicated security support team from a security contractor.

Given the security situation outside of the International Zone, the Bank would continue to rely mainly on Iraqi staff and consultants, who operate in a low-profile manner out of their homes and government ministries, for supporting project implementation and undertaking project supervision. We anticipate adding Iraqi professional and support staff in other locations in Iraq to enhance work at the local level. Overall, the strengthened country presence would enable the Bank to substantially deepen its policy dialogue with the new government, allowing the Bank to play a more central role in improving donor coordination and enabling a stronger focus on public sector governance and other core reform areas outlined in the Bank’s briefing book for the new government.