2003 Spring Meetings - Press Conference on the Middle East and North Africa Region

Washington, D.C, April 11, 2003

PROCEEDINGS

MS. RIZA:  Good morning.  My name is Shaha Riza, and I am the external relations and outreach person in the Middle East and North Africa Region [MENA].

I would like to thank you all for coming today and welcome you.  As some of you already know who have attended the Spring Meetings, we are holding these briefings to share with you some of our thoughts, some of our work, and some of the challenges, the development challenges that we and the Region face on a regular basis.

To do this, we have here today with us Mr. Joseph Saba, who is the Country Director for the MASHREQ Region, which includes Iraq, Iran, Lebanon, Jordan, and Syria.

Next to him is Mr. Mustapha Nabli, who is the Chief Economist for the Middle East and North Africa, and next to me here is Mr. Jean-Louis Sarbib, who is the Vice President for the Middle East and North Africa Region, and he will start by making a few remarks, after which the floor is open for questions.

Thank you.

MR. SARBIB:  Thank you very much, Shaha, and good morning to all of you and thank you for being here.

What I would like to do to begin is to give you a very broadbrush picture of the work that the World Bank is doing in what we call the Middle East and North Africa Region, which is a band of 20 countries that go from Morocco in the west to Iran in the east, and I am telling you what the countries are so that you can put the numbers and the countries together.

Obviously, it is a region that is very diverse.  We have Saudi Arabia and Yemen, we have Morocco and Jordan.  It houses 307 million people, and one of the key characteristics of this population is that it is young.  Fifty-nine percent of the people living in the Middle East and North Africa are under 24 years old.  The average for the rest of the world is 48 percent.  So 48 percent for the rest of the world, 59 percent for the Middle East and North Africa.

These young people are increasingly educated, often with university degrees, and are increasingly hardput to find jobs.  It is a region that is known for its oil wealth.  It had 31 percent of the world production in 2001 and 71 percent of the world reserves, with Saudi being the first country in terms of reserves and Iraq the second.

It is a region that is important for the world, but it is not well-integrated in the world economy.  Trade is about 12 percent of GDP and 40 percent with oil. But what is very interesting is that if you look at the manufactured exports of the MENA Region, they amount to about $40 billion, which is the same as Finland, with 55 times the population of Finland.  So that gives you a sense that this is a region that is important for the world but not well-integrated in the world, and the result of this poor integration is that it is a region that, in terms of growth, in terms of development, has certainly lived below its potential, and today we see this in the challenge of employment.  This is a region that needs to offer jobs to 4 or 5 million people each year, young people who come on the job market, and to offer these 4 to 5 million jobs, you need to have a growth which is much more robust and much better distributed than it is today.

So we are working with the countries in the region on what we see as the five challenges that they face.  The first one, as I said, is the challenge of employment, and that is a challenge that has to be met by a more active development of the private sector, by a more conducive investment climate.  And the second challenge is that it has to be encouraged by a more effective public sector, by states that are more competent in regulation and that make more space for the private sector to grow and to flourish.  So the first two challenges are employment and governance in the large sense of the term.

In order for the countries of the region to be competitive, the third challenge is that they have to educate their young for a knowledge economy for the 21st century.  And while, quantitatively, these are countries that have good enrollment ratios in schools and in universities, the quality of the output of the education system is often not found to be competitive on the job market, which explains the fact that although many people are educated and graduates of universities or secondary schools, they are having a hard time finding jobs, in part because their qualifications and skills do not match, in part because the private sector is too anemic.

The fourth challenge is the challenge of water.  MENA is a region that is water-stressed.  It has a fraction of water available per capita than the rest of the world, and in some countries such as Yemen, this water stress is intense and clearly comes in the way not only of human development but also in the way of having the right sort of infrastructure and the right sort of conditions for the private sector to develop.

So the fourth challenge we see is that of water management.

And last but not least, it is a region where the role of women in the public sphere is much less than in other parts of the world. MENA has the lowest rate of female participation in the labor force, and this is a challenge that essentially deprives the region from the benefits of half of its population in terms of making a contribution to economic and social development.

So these five challenges of employment and private sector development, governance, education, water, and gender, are obviously compounded by the fact that the MENA Region has been in the last 50 years probably the region in the world that has been most affected by conflict, whether it is the Israeli-Palestinian conflict or whether it is the wars that have taken place between various states, and most recently, the conflict that has just taken place and is continuing to take place in Iraq.

Let me say a word on the relationship of Iraq with the World Bank.  I'm sure that is of interest to you.

Iraq was a founding member of the World Bank and joined the World Bank in 1945.  The World Bank has made six loans to Iraq, mostly in education and infrastructure, and while the oil boom of the early 1970's, the income per capita of Iraq made it, quote-unquote, "graduate" from the Bank--meaning that it was no longer, because of the level of its income, eligible for Bank loans--and Iraq stopped repaying its obligations to the Bank in December of 1990 and is currently in arrears, meaning that they owe us $82 million, which is a very small sum compared to the size of the economy of Iraq.

We have had no relations, no technical information, coming from Iraq.  As you know, this is a country that has not been publishing economic statistics.  My understanding is that the last IMF Article IV consultation took place in 1980, and the last IMF mission was in 1983.  We have not had any missions going to Iraq, and whatever information we have on the country, we rely on the information we can get from other sources, whether it is the United Nations or other organizations that have been on the ground.

The situation right now is a situation on which we have what we call in our jargon a "watching brief," which means that we are trying to gather as much information as possible from secondary sources.  And we obviously monitor the situation very closely on a day-to-day basis.

What we are doing--and I'll stop after saying that--is actually working with the countries that are likely to be affected by the economic and social consequences of the war to help them face the fact that for most of these countries--Jordan, Egypt, Morocco, Tunisia--they depend on the revenues from tourism, and I need not tell you that tourism is collapsing, and with that, it is creating some difficulties for the balance of payments of these countries and sometimes for their budgets.

So we are working with these countries to try to assess the situation and the economic and social impact and to see what if anything the World Bank can do.

The impact on the oil-exporting countries is obviously going somewhat in the other direction in the sense that with the higher oil prices that we have seen in the past months, we see these countries being in a rather favorable position in terms of balance of payments.

And there are a number of countries for which we are still doing the assessment because it is not as clear-cut as for the two groups of countries that I just mentioned.

So I'll stop there, and I'll be happy to answer your questions.

If you could please say who you are and what organization you represent.

Sir?

QUESTION:  I'm Emad Makey with Interpress Service.

Sir, you mentioned that five challenges for the countries of the Middle East--water management, women's issues, unemployment, education and private sector.  What about democracy?  From the scenes that we have seen of the Iraqis so happy to demolish all the statues of Saddam Hussein, obviously, there is a message there that the people of that region are basically sick of the dictatorship there.  Why do you continue to lend to governments that have used and violated human rights in that part of the world?

MR. SARBIB:  Well, I think that you're going to get the stock answer from the World Bank, which is that we are not a political institution, and our Articles of Agreement prevent us from interfering in the political or domestic affairs of a country.

That said, I think it is very clear that the experience that the World Bank has accumulated over the years shows that development results are much better when there is participation, when the people can actually have a say in the activities and in the projects that the World Bank or other financing institutions, for that matter, participate in.

And increasingly, we talk in the region to circles beyond the governments.  All of our assistance strategies are developed with the participation of civil society, and clearly, the development of civil society is very uneven across the region, but we are trying to adapt and to reach out to the organizations of civil society because we believe that participatory development is much more efficient and gives much better results than development that is not participatory.

There was a question here.

QUESTION:  Jim Tyson  with Bloomberg News.

I wonder if you could offer some clarification as to when the World Bank will go from its current footing of a watching brief to more active involvement in Iraq.

I would imagine that would initially entail some sort of technical assistance or at least assessment of damage there.  You mentioned of course that you are not a political institution but largely a humanitarian institution, so are we then to believe that your main imperative would be to provide humanitarian assistance regardless of what the surrounding political environment is?

MR. SARBIB:  We are neither a political nor a humanitarian institution.  We are a development institution, which means that our brief is to work on medium- to long-term issues, to work on sustainable development, to work on poverty reduction.

Now, in the case of Iraq, the full involvement of the World Bank as a lending institution will obviously require that we have a partner, we have a counterpart, and we have a governmental counterpart that is accepted and legitimate for the international community.

In addition, as Mr. Wolfensohn says, we have the issue of various UN resolutions, in particularly the UN Security Council Resolution 661, which establishes the sanctions.

The question that you are asking is the question of what can we do in terms of needs assessment, in terms of looking at the situation, and there, I think it is very clear that the President of the Bank intends to consult with the governments that are represented at our Board of Directors before we can send a mission.  And from my perspective, it would have to be in an environment when I can also guarantee the security and the safety of Bank staff that would go there.

Now, there is work that we can do in Washington.  We are in contact with the United Nations, we are in contact with other people who have information on Iraq, and we are trying to continue to build a knowledge base because, as I told you before, we haven't been involved in the country for almost 30 years by now.

QUESTION:  Harry Dunphy, Associated Press.

Yesterday, Mr. Wolfensohn did say he would have to consult the Board, and later, Treasury Secretary Snow said that he was puzzled and baffled by Mr. Wolfensohn's position and wanted him to rethink it.

I think Mr. Snow was saying that surely the Bank could send a preliminary assessment team without the Board having to vote on it.

Could you clarify that for us?

MR. SARBIB:  I think Mr. Snow and Mr. Wolfensohn will be talking about this today, and I will wait until they have talked for us to know what the situation is.  But it is very clear to us that in the case of Afghanistan and in the case of Kosovo, we have always worked in very close collaboration, in fact, under the directions of our Board of Directors, and I think it will have to be the same in the case of Iraq, especially since I think it is no secret that there has not been a unified position in the events that have led up to the current situation.

So one of our concerns is to make sure that the consensus that usually reigns in the Board of the World Bank continues to be the order of the day.

Yes?

QUESTION:  Maury Jacobson with the News Hour.

I was wondering if you could address how you will go about figuring out the state of the economy when you have had so little information to work with and the kinds of problems this poses as you get ready to figure out assistance to Iraq.

MR. SARBIB:  Maybe, Joe, you want to take this one up.

MR. SABA;  Obviously, having not been there for some time poses a serious problem in not having immediate knowledge.

However, in trying to do work now in what we call the "watching brief," we have been able to call on others who have been there. We are trying to work very closely with a number of United Nations agencies which have had more than a thousand people on the ground in different places in Iraq for some time.

Obviously, there is no substitute for being on the ground, and the methodology we would use would be the same methodology we used in Afghanistan, where we had not been on the ground for some time, either, or for that matter, in certain other places--for example, West Bank and Gaza.

So the idea is that if you go into the country and you try to get out to the villages and the towns, you try to meet with the people who are in charge of hospitals, schools, social delivery, the water systems.  We take a look at those systems, and we try to evaluate not only their physical needs but also the institutional and financial needs to deliver the services, and you try to sequence that, you try to get your priorities, you sequence your priorities over a period of time, try to estimate what kinds of resources you need, and then you have to reconcile what are your needs in terms of resources, particularly financial, as well as human, that is, institutional, with the available resource package.  And the reconciliation of that is very much what the World Bank does in a needs assessment.

MR. SARBIB:  Yes?

QUESTION:  Larry Elliot of The Guardian.

Following on from that question, have you got any idea, however sketchy, how much it might cost to rebuild and reconstruct the Iraqi economy; and secondly, if you don't have a full idea--and obviously, you don't, because of the factors you mentioned before--how long would it take you once you've got a team inside Iraq to come up with a full assessment of what needs to be done?

MR. SARBIB:  I think that any answer to your question is very speculative, so I would say we have no numbers, and I think that right now, it would be very imprudent to say any number. 

And the answer to the second part of your question is that we have no idea of what sort of economic information the Government of Iraq has been keeping; we have no idea what we are going to find in terms of records, in terms of archives, in terms of economic information.

If this information is available, with a concerted effort, it is a matter of months before we can really have a full assessment given the fact that with the exception of the people who have been involved in the Oil for Food Program of the United Nations, there are very few outside bodies that have been involved in Iraq.

The difference, for example, in Afghanistan is that we could rely on a number of NGOs which had been active in the country and that gave us a lot of information when we did the needs assessment for the situation in Afghanistan.

We do not have those sources of information.  So I realize it is not a terribly satisfactory answer, but it is a professional one.  I cannot tell you.  I think it will take a matter of months, but it could be shorter or longer depending on the quality of the information that we are going to be able to find and how quickly we can establish the reliability of the information that we will  find on the ground.

Yes?

QUESTION:  Michael Backfish, German Business Daily.

As far as the procedures are concerned for aid, what would you say, provided that military fighting comes to an end, are the immediate steps without a UN mandate, and what are the steps that you are going to take with a UN mandate until you reach a full-fledged loan agreement?

MR. SARBIB:  Well, with a UN mandate, I think that the first thing to do is to have a group of people, probably part of a multi-agency mission, I would assume, and with the full blessing of the international community, go and do an assessment.  And one of the things we will have to assess is what is the size of the gross domestic product of Iraq, what is the size of the population, so we can see where we are in terms of whether or not Iraq is eligible for being a client, if you will, or a borrower from the World Bank Group.

So that would be the first thing we have to determine, because right now, they graduated in 1973, which does not prevent them from coming back in as a borrower, but we have to know where they would fit.  So this is one of the first things that we would have to establish.  And then, if they are eligible to borrow from the World Bank Group, then we clearly have to agree with--what typically happens in situations like this, we have what is called in the jargon of the Bank some form of "interim reengagement strategy," and in order to do that, we have to have a counterpart in the country that is duly representing the people of Iraq at the Board of the Bank, and then we will agree with them on what are the priorities.  Obviously, we will have to coordinate, I am sure, with whatever international effort will take place.

So in the case of having an international mandate and an authorizing environment, I think we know how to proceed.

If we do not have an authorizing environment, I think it will be extremely difficult for us to intervene, because we are not a political institution--I go back to that--and we will have to make sure that what we do is under a mandate, as it was in Afghanistan, as it was in East Timor, as it was in Kosovo, under a mandate of the international community.  And that is what multilateralism is all about.

Yes, please.

QUESTION:  Anna Willard, from Reuters.

Do you have any recommendations or any thoughts at all about what Iraq should do about the currency?  There have been a number of suggestions in the press about what they should or shouldn't do.

MR. SARBIB:  I think it would be very presumptuous from a World Bank person to say something about the currency in the IMF building.

[Laughter.]

MR. SARBIB:  Please.

QUESTION:  Do you have any projections, even preliminary projections, about loss of GDP to the other countries of the region as a consequence of the war?  You mentioned various groups of countries.

MR. NABLI:  As you know, it has been very difficult to make such assessment of the impact of the recent events on the countries of the region.  There are lots of uncertainties and there continues to be lots of uncertainties about that.

However, given what we know now, which means since the period to the buildup of the war and since the war, we know that a number of things have happened which have been impacting the countries of the region.

Let me say what are those things and what are the uncertainties that remain, which can give us an idea of the sense of the numbers.

We know that in the last few months, oil prices have been impacted significantly, which has an impact on countries of the region in different ways.

We know that tourism, even before the war, has been impacted.  It has been impacted, you will remember, since after September 11, and it started to pick up again, and then, since the discussions and the buildup to the war has started, tourism has again started to go down and has gone down further since the war started.

Non-oil trade for the countries of the region has been impacted.  Trade with Iraq--the countries of the region had different kinds of trade with Iraq, both formal and informal, before the war.  This has been impacted also, including trade in oil products for some countries.

These, we know--we know that these impacts have been happening in the countries of the region.  What we don't know yet is how much longer this uncertainty of the conflict is going to go on and how long it will take for stability to come back.

What we don't know is the kind of reconstruction that is going to take place in Iraq--the extent, the contact, the speed with which reconstruction will take place, and which will have an impact on the countries of the region, including in terms of trade with the countries of the region.  We don't know how and when and how much this is going to take place.

What we don't know is the extent of the external support that countries of the region will receive, some of the impacted countries, whether it is from the international financial institutions or from the bilateral support that countries of the region will get over the coming period.

Having said all that, I think our assessment as of now, as of what we know now, is that, as Jean-Louis said a few minutes ago, we can say there are three groups of countries overall in the region--those countries which we know are going to be severely impacted at least during 2003.  These countries are Jordan, first of all, which has the most negative impact, and Egypt, Morocco, and Tunisia.  These four countries are the ones which have the most negative impact.

Now, Jordan is most impacted because it is closest to the theater of the activities of war.  It is impacted because it has significant trade with Iraq both in terms of oil products and non-oil products.  It is impacted because of the decline in tourism as well as investment, foreign direct  investment, in the countries, and also in terms of non-oil trade.

We estimate that Jordan will have a significant drop in its GDP.  Before the war started, estimates of growth for GDP in Jordan were on the order of 5 to 6 percent for 2003.  Jordan might lose most of this growth during 2003.  Growth might become flat or slightly positive and even negative under some scenarios. So a significant impact on Jordan in terms of growth; a significant impact in terms of balance of payment, negative balance of payments effect, as well as the fiscal impact, because one of the components of the fiscal impact is the implicit subsidies that Jordan did get from supplies of oil at subsidized prices from Iraq, and this has clearly been disrupted and has stopped.

Now, there is some indication that some of this may be compensated through supplies from other countries of the region.  We don't know to what extent and under what conditions this is going to take place, so it is difficult to say what is the impact.

Egypt is certainly a country which is also being negatively impacted.  The main channel here is tourism.  Tourism is being impacted very negatively as well as receipts from the Suez Canal in terms of the decline in transportation through the Suez Canal and receipts from the Suez Canal, as well as through impact of decline in trade.

Egypt is likely to be impacted much less than Jordan, certainly, but the negative impact in terms of growth may be 1.5 to 2.0 percent of GDP decline; significant balance of payments, maybe of the order of $1.5 billion after everything is considered--not the gross impact but the net impact, $1.5 billion on the balance of payments.

The impact on Morocco and Tunisia will be smaller, relatively smaller, but may be significant, also because of tourism, and also because of slow growth in terms of non-oil trade.

There is a second group, as Jean-Louis said, which may be positively impacted, and those are the oil-exporting countries, the net oil-exporting countries.  Here, I am talking about the countries with which the Bank has lending activities--I am not talking about the Gulf countries with which the Bank does not have lending activities, which means Saudi Arabia and the Gulf countries.

These countries are Iran, Algeria, and Yemen.  We expect the overall impact of the recent events to be globally positive for these  countries because the oil prices have been higher than they would have been without the conflict, and therefore, their balance of payments as well as their fiscal situation is much improved and possibly, their growth will be positively impacted.

There is a third group of countries which is uncertain but where the impact is probably negative overall, and I would include here both Lebanon and Syria to some extent.  It is uncertain because clearly these countries will be negatively impacted by trade with Iraq as it is disrupted.  They are impacted by the overall environment in the region, the uncertainty in the region. 

Syria will be impacted also by the loss of its preferential oil trade with Iraq on more or less similar terms as Jordan.  On the other hand, Syria has oil production, has oil exports, and then there is some positive impact for Syria.

Lebanon is uncertain also, because there may be some positive impacts from capital flows coming from different places in the region which may mitigate some of the negative impact.

But overall we expect some negative impact both in Syria and in Iraq.

Let me add by saying that really, what is more important also is looking forward.  In the medium and long term, what is happening now, at least in the medium term, is producing much more uncertainty.  As you know, when we look at the region, one of the features about it is the uncertainty and the volatility.  And clearly what is happening now is another manifestation of this volatility, whether it is through oil prices, in other words, political volatility, or whether it is weather volatility and domestic issues and so on.

Now, this uncertainty and volatility is not going to improve over the coming period, so there is a negative impact that one would expect here.

What is more important, however, is that this uncertainty might slow down the reform process that is going, that has been ongoing.  However it is strong or less strong, it might slow down over the coming period, and this will certainly have a negative impact in the medium to longer term in the region, and that is really what is worrisome in terms of the prospects, and one of the invisible impacts of this situation on the region is what it will do to reforms, to undertaking what is needed, including getting more integration in the world economy, reforming the institutions and so on in the region in the various areas, whether it is financial sector, whether it is public sector management, whether it is education, whether it is water prices, whether it is agricultural prices, and so on.

There is a big agenda, a huge agenda, which is certainly not going to proceed as quickly as otherwise without the war.

MR. SARBIB:  Yes?

QUESTION:  Given the fact that many people in Washington have explained the motives for the war in Iraq on the basis of development, democracy and development objectives, could you on the basis of your experience with post-conflict situations give us an assessment as to whether you feel the war in Iraq will ultimately hasten the achievement of human development objectives in Iraq, or the contrary?

MR. SARBIB:  This is a very important and a very difficult question.  My sense is that from having worked in a number of post-conflict situations, the immediate impact of the war is very rarely positive in the sense that it disrupts institutions, it disrupts networks, it disrupts infrastructure.  And in the case of Iraq, I think there is an enormous amount of uncertainty as to what institutions and what form of governance is going to emerge from the post-war situation.

So I really don't care to speculate as to whether the impact will be positive or negative.  You just heard Mustapha Nabli say that the level of uncertainty which has been somewhat of a deterrent to reform in the sense that we believe reforms are needed to accelerate growth and development, the war can actually increase this level of uncertainty.

There is another school of thought that says that the war will actually decrease this level of uncertainty.  And I really do not know for now, and the situation is still too unclear for us to see which way the chips are going to fall.

So I think I'll remain noncommittal on this one.

Yes, sir?

QUESTION:  Joe Rebello with Dow Jones.

Could you give us a sense of the magnitude of the challenge that you think you face in Iraq relative to your experience in other post-conflict situations--what is the closest precedent?

MR. SARBIB:  Well, I think once again, it is hard to talk about a situation where you don't have information.  What I can tell you is some of the questions that I have in my mind when I think about Iraq. 

It is a country that has natural resources--the second-largest oil reserves in the world--which on the one hand is a positive fact, but if you look at the development experience of countries that have been oil-rich, I don't think we can write a long list of success stories.

So, will oil in Iraq be a blessing or a curse--I think that we are certainly prepared to draw the lessons that we have from other parts of the world to err on the side of it being a blessing.

The second thing is that I think if you think about the most recent reconstruction effort that the Bank has been involved in, it is the case of Afghanistan.  Afghanistan did not have any resources like oil, and the other resources that Iraq has that Afghanistan did not have in my understanding is human resources.

So there is a very large pool of educated people in Iraq.  There are about 4 million of the 24 million Iraqis living outside the country.  Some of these people might come back, bringing their experience.

One of the questions that I have is whether the institutions within which the trained people and the educated people have been working--how easily would they adjust to a different form of economic and social organization?  We certainly intend to draw on the experience we have had in the transition economies, because Iraq is very much, to the extent that we understand the economic system, it is a command-and-control economy, and how do you go from that to more of a market economy with a strong, competent state?

Those are some of the challenges that we see.  But it will be much clearer if we can have this conversation in six or eight months' time so we have had a chance to actually go on the ground and see the reality for ourselves, which is not the situation right now.

Yes?

QUESTION:  Gabe Kajian [phonetic], with the Middle East Broadcast Center.

Sir, there is clearly a division of vision, if you will, between the United States and the United Nations on how to proceed, who will be involved, leadership, maybe even a refinance strategy. How closely is the World Bank tied into the United Nations vision of how to proceed, and what happens if the split becomes worse between the United States and the UN as to how to proceed next in Iraq?

MR. SARBIB:  Well, the short answer to your question is that the governments that are at the United Nations are also the governments that are represented on the Board of the Bank, and I don't think they will take different positions in one body and in another.

The right place for political differences to be ironed out is the United Nations, so to some extent, this is where the political ironing out will have to take place.  And the World Bank has remained over many years an institution that has steered out of politics, and during the years when we did not steer out of politics, when there was a cold war, we did not have terrific development results.  So I think it will be much better for us to let the political differences be resolved when they exist, in the proper forum, and that is not the World Bank.

QUESTION:  Can I ask a follow-up?

MR. SARBIB:  Yes, please.

QUESTION:  What happens if there is a bureaucratic gridlock, and with timing being of the essence in Iraq, what happens if no decisions are made, and the status quo continues?

MR. SARBIB:  Well, I think that given what is on the ground in Iraq right now, I think that things will have to happen.  What will happen, I don't know.  But certainly I think that if you want to preserve the ability of the World Bank to function as it has and with whatever effectiveness it has had, I think it is very important that we do everything possible so that we stay within our mandate and that we let the discussions take place where they need to take place in terms of how the international community will hammer out and iron out its differences.

Yes, sir?

QUESTION:  What is your impression or information on the state of the economic institutions in Iraq?  Is there a working central bank?  Is there a working banking system or other institutions?

MR. SARBIB:  The honest and short answer is I don't know.

Yes?

QUESTION:  Christiana Oelrich, German Press Agency.

Can you tell us what the dividing line is to determine whether Iraq is eligible for World Bank help or not?  And could you share some of the statistics that you have, maybe from secondary sources, on per capita income and mortality rates?

And the last question--are you in touch with Jay Garner?  Is there any sort of relationship-building between that authority and the World Bank?

MR. SARBIB:  The answer to your last question is no, no.  We are not in touch with Jay Garner.  We have no relationship with--we have no contacts with the--how do you call it--the interim authority.  We have no contacts.

In terms of--you know, the World Bank has criteria of per capita income to determine whether you are eligible for borrowing from the World Bank Group, and I don't quite know right this minute what these numbers are. 

What we know--and we can give you these exact numbers; I would rather not say something that is not correct--if you are above a certain threshold, you are not eligible, and you have, quote-unquote, "graduated"; if you are below that threshold and above something which is I think around $1,000 or $1,100--I don't know if anybody knows--what is the IDA eligibility--

MS. ANSTEY:  IDA is about 800[IDA IS $875]

MR. SARBIB:  Anyway, we'll give you the exact numbers.  So that if you are below that graduating income and above the IDA level, then you can borrow from IBRD, and if you are below the cut-off for IDA, then you can borrow from IDA.  But we'll give you the exact numbers.

From secondary sources, the information that we have is that per capita income in Iraq has fallen from about $3,700 in 1980 to about $1,200 in 2001.  But again, I give you these figures with all sorts of caveats.

What is very clear is that the link with the Millennium Development Goals, which are one of the important items of the Spring Meetings, Iraq is certainly not on track to meet the Millennium Development Goals.  Whether it is underweight children, we have had today an increase from about 9 percent of children underweight in 1990 to about 24 percent in 1995, and it has begun to decrease once the benefits of the Oil for Food Program were met, but it is around 20 percent today when it should be at about 7 percent to be on track to meet the MDGs.

Maternal mortality is about 300 per thousand now; it should be at about 70 to be on track to meet the MDGs.

Child mortality is, again, at about 100 per thousand, and it should be about half that.

What we see is a very significant difference in progress between the 15 governorates of the south, while the Oil for Food Program was managed by the government of Saddam Hussein, and the three governorates in the north, where the Oil for Food Program was managed with the assistance of the United Nations.

So the numbers that I gave you hide differences, wide differences, between more progress being made in the north and less progress, and sometimes deterioration, being made in the 15 southern governorates.

So this is to underline the fact that behind the immediacy of the crisis prompted by the war, there are long-term development challenges in Iraq, and that the role of our institution is one that is going to be important, together with others, to help the Iraqi people get back on track for development, because the mismanagement of the last decades has really created a situation where the resources of the country have not been used for the benefit of the development of the Iraqi people.

So it is very important that we get involved in a way that positions us as an institution that the people of Iraq will see as being on their side and trying to help them grow and develop and send their children to school and make progress on the MDGs.

So beyond the immediate political wrangling, we really have to think medium and long term about what will be the image that the people of Iraq have of the World Bank and of the international institutions, and that long-term image is going to be determined in large part by how we choose to get involved now, when the emotions are high and when the level of--emotion is the best word that comes to my mind--is extremely high not only in the country but in the region.

So for us to play a role in the region and a trusted role and the role of a real partner, I think the way in which we get engaged in Iraq has a very, very important long-term consequence.

Two more.  Yes?

QUESTION:  Two questions, if I may.  First of all, could you please clarify in what way Resolution 661 and the sanctions regime could affect or could interfere with the World Bank starting to work in Iraq?

And the second question--what impact do you expect the war to have in Morocco?

MR. SARBIB:  Well, Resolution 661, for those of you who don't know, is the resolution that was passed--it is the sanctions resolution--it was passed under Article VII of the United Nations Charter, and essentially, it--let me try to see if I can find the exact--I have it somewhere here--it prevents any activity, any essentially economic activities, by any national or international organizations in the territories of Iraq.

So that the General Counsel of the Bank a while back made the determination that the Bank would follow the UN  Security Council resolutions under Article VII, and we are abound legally to follow this resolution.

This resolution also, again, under its paragraph 4, says that "All states shall not make available to the Government of Iraq or to any commercial, industrial, or public utility undertaking in Iraq or Kuwait any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise, etc."You can construe this as saying we could not even go and pay for hotels in Iraq.  So that is the situation, and it is not exactly clear today where the United Nations Security Council stands on this particular resolution.

So 661 is one that is important for us to see clearly what we can do because of our determination to respect the resolutions of the UN Security Council under Article VII of the Charter.

So that is the answer to your first question.  And your second question was about--

QUESTION:  Morocco.

MR. SARBIB:  --Morocco.

Do you want to speak to Morocco?

MR. NABLI:  Yes.  As I said, we know there is already some impact on Morocco, and let me say what are these impacts.

First of all, Morocco is being negatively impacted by the higher oil price that has been prevailing during the buildup to the war and has continued also to be higher than it otherwise would have been.  So there is a negative impact in terms of cost of oil imports.

The second major impact is the slowdown in tourism.  As you know probably better than anybody else, Morocco has been impacted.  There are less arrivals in terms of tourism and so on, and this has had significant impact on Morocco.

Also, there is some impact which is uncertain, maybe not too big, on Morocco in terms of lower non-oil exports of Morocco, manufactured exports of Morocco to Europe.  It is difficult to know what is the impact which is due to a slowdown in Europe and what is due to the impact of the war; that is a little bit difficult and so on.

Overall, we think that the overall impact on the balance of payments would be on the order of between $1 and $1.5 billion, and the impact in terms of growth would be between one percent of GDP to 1.5 percent of GDP than it would otherwise have been.

MR. SARBIB: Okay, the last one.

QUESTION:  Mr. Wolfensohn yesterday talked about the fact that some of the other things that you would be doing once this UN issue is resolved would be helping to get schools started again.

Could you talk about that--what are the initial things that you will be looking to be doing once the UN issue is resolved?

MR. SARBIB: Joseph?

MR. SABA:  Yes, I think you touched immediately on one of the first issues.  As Mr. Sarbib said, the Millennium Development Goal targets are far from being met in Iraq, and they set a standards for us.  And since Iraq had either achieved those goals almost 30 years ago or was well on the way, we think the potential for getting back on that track is very good.

So our immediate goals would be to address questions of health, education, access to clean water, sanitation--and of course, that is also related to power.  Those are the areas of immediate and primary focus, and getting the kids back into school is clearly one of them.

In addition, as we get the kids back into school, we are also hoping to work with Iraqis in terms of making sure that what the kids learn in school prepares them for participation in a modern economy, in an information economy.  And I think it is exactly for those reasons, as Mr. Sarbib said, that we are quite eager to work with Iraqis and to get onto the ground where we can work with Iraqis to address those challenges and those issues.

But it is also important for us to have the conditions that we need in order to be able to work with those Iraqis and in order for that work to be effective, to be sustainable, and to be credible, because we are not looking to solve--these kinds of problems are not solved in one day or six weeks.  These problems are very systemic, they involve institutions, and they involve also habits. 

I think also, as Mr. Sarbib said, it is important to remember--and many of us have had experience in transition countries--that when there are changes of government and of regime, and these kinds of very major psychological trauma to a people and their institutions, behavior does not change overnight, and in many ways it gets frozen.  So part of what we want to do is to be able to work with the people to address those issues, and it is precisely in education and health and in vital utilities that the immediate challenges are there, and they are going to be there for a long time.

MR. SARBIB:  I guess we have run out of time.

Thank you very much for your time and your questions.

MS. RIZA:  And we hope to see you next year in Dubai, where the Annual Meetings will be held for the first time in the region.

[Whereupon, at 11:01 a.m., the press conference was concluded.]