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World Bank Authorizes Trust Fund, Endorses Interim Strategy For Iraq Press Conference

Thursday, January 29, 2004
Washington, D.C.

Mr. Christiaan Poortman, Vice President for the Middle East and North Africa Region
Mr. Joseph Saba, Country Director for the Mashriq, including Iraq
Mr. Nick Krafft, Program Director for Iraq
Ms. Shaha Riza,acting manager for External Relations and Outreach for the Middle East and North Africa Region

MS. RIZA: Thank you all for coming here today. My name is Shaha Riza, and I'm the acting manager for External Relations and Outreach for the Middle East and North Africa Region.

As many of you already know, this morning we had a Board meeting in which the World Bank has authorized a trust fund and endorsed an interim strategy for Iraq. And we have here with us today Mr. Christiaan Poortman, our Vice President for the Middle East and North Africa Region, and next to him is Mr. Joseph Saba, who is the Country Director for the Mashriq, including Iraq. And next to him is Mr. Nick Krafft, who is the Program Director for Iraq. And I will now leave the work to Mr. Poortman, who will say a few words, opening remarks, and then the three of them are ready to take any questions. But when you do ask the questions, could you please identify yourself before you ask the question? Thank you very much.

Mr. Poortman?

MR. POORTMAN: Well, thank you very much, and thank you for coming here and meeting with us.

We've handed out a little press statement which should give you some guidance as to what it is that we've done this morning. Indeed, there are two parts to this. One is that the trust fund, the international trust fund that had been some time in the making and the trust fund that you must have heard about the first time last summer, is an initiative that the World Bank and the United Nations, UNDP specifically, were charged to look at and actually then subsequently establish.

There have been a lot of discussions on this topic, including at the time of the Madrid conference, and we're just very happy that the trust fund is now fully fleshed out. And as a matter of fact, the Bank, together with the UN, actually, are going to be administrators of this trust fund. The trust fund is going to be split two ways: one part will be handled by the World Bank, one part will be handled by the UN System. We can give you more details on that if you want.

But it is an important step forward, and our Board actually sanctioned us to take that responsibility and take that task on as it has been put forward here. At the same time, we presented to our Board an interim strategy, which is an initial strategy, actually, which was in a document that allowed us to tell our Board about what we envisage as activities on the part of the World Bank Group over the next six to nine months. We are not yet in a situation in which we can do one of our normal strategy documents because World Bank resources and IDA as part of the World Bank resource envelope is still subject to a number of what we call threshold conditions. But the trust fund and the creation of the trust fund has allowed us and will allow us to become active in that sense by using the trust fund facility for operations in Iraq, but more broadly, our initial strategy document outlines the various steps that we have already been taking to jump-start a program with the Iraqis. As part of that, there have been various events that have taken place. Training programs have been started. We have opened up an office in Amman, in Jordan, to be able from there out to manage our operations in Iraq.

There are various elements to this strategy, and I will ask Joe and Nick to perhaps say a few more words about this.

It's important for us to be able to take this step. It is a way in which I think we can continue to be very active. Even although we're not yet operating on the ground in Iraq, we feel that this is a way in which, through the trust fund and through the other facilities that we're setting up outside, we will be able to make an important contribution to the development of Iraq and hopefully to be accelerated at a later stage. But we're very pleased that we can now continue more or less with some of the work that we've already done and expand it in a number of other areas. Joe, do you want to say something more about the specific strategy, the elements thereof? Or Nick?

MR. KRAFFT: Just to say a very few words, our intention is obviously to build on the Iraqi Needs Assessment which we issued just before the Madrid conference together with the UN, and that was, if you'll recall, the document that identified needs of somewhere around in the low $50 to $55 billion. And you'll recall that in Madrid there was some $32 billion committed at the time.

And what we are doing here is at the beginning of the implementation of this, the U.S. has their $18.6 billion, which is the single largest contribution to the reconstruction. In addition, you have, of course, the recon(?) budget, the $12 billion of recon budget, which basically meets all of the salary and other recurrent costs which are being met from the Iraqi oil resources. And then you have resources which will come from the trust fund, and eventually from the World Bank and IMF itself.

We aim to have a combination of projects which we're starting to prepare. We have four specific projects in mind, and we can talk a little bit more in detail about those, if you'd like. One essentially is a technical assistance project. One is in the education sector. One will be probably a line of credit, the reconstruction of infrastructure, and the last will be a community development project.

Now, we're also beginning to look at other things, but those are the ones which we're starting to prepare immediately and which we would like, if possible, to have funded from the trust fund itself.

At the same time, we have some analytical sector work, which I won't go into now, which covers many of the important sectors of the economy, and that work is going to go forward. I think I'll just leave it at that now.

MR. SABA: Just very briefly, in Madrid we agreed to form an international reconstruction trust fund facility for Iraq. The facility has a common Donor Committee, meaning all those donors which contribute to the trust funds will sit on a single committee. There will be a single Secretariat.

Within this facility, there are two trust funds--one for the United Nations, the other one for the World Bank. Each of those trust funds operates in terms of implementation in a slightly different way. The United Nations works through its various participating organizations. They tend to do often very quick humanitarian, immediate emergency projects, and they implement through their organizations. On the other side is the World Bank trust fund. We tend to implement through Iraqi organizations and agencies, both at the central level and at the local level. The primary purpose of the World Bank trust fund is to build institutional capacity on the Iraqi side, so we work with them to design procurement, finance, and implementation procedures in order to build systems and institutions which provide a high degree of transparency and accountability. And at the same time, we're aiming, as Nick said, to devise projects and programs which address both the immediate term and also to lay the groundwork for the near term in terms of economic advice.

The trust funds, because they will have a common governance structure, will be fully transparent one to the other. And, in fact, we and the United Nations will be meeting in about ten days to compare the two work programs which have been developed by the staff of both institutions to make sure that they are consistent with our discussions with the Iraqis and also to make sure that they are not inconsistent with one another or provide unnecessary overlap or duplication.

Following that, we will call for a meeting of the Donors Committee for both of the trust funds, together discuss our work program, and the donors in turn will set up their own governance structures, reporting structures.

There is a fair amount, obviously, in that facility of reporting and of disclosure back and forth, and we're hoping that in turn will create a good deal of harmonization among the parties, because the major donors to the trust fund, after all, are also the major bilateral states that are interested in the reconstruction of Iraq. So we hope that by this type of participatory process, disclosure, reporting, we'll have a system which helps the Iraqis in turn develop a coherent budget and public expenditure framework.

So that's the concept, and what happened today is the Board, the Executive Board of Directors of the World Bank, authorized us to act as administrator for this fund, and they discussed this interim strategy which will form the work program for the Bank. And this means now we're ready to move on and to begin implementation.

QUESTION: Thank you very much. My name is Khaled Daoud from Egypt's al- Ahram newspaper. I have two questions.

In terms of deadlines, just to explain to our readers, when do we exactly expect real money to flow into projects in Iraq in terms of the deadlines and after the (?) measures that you apparently have to go through?

The second thing, you mentioned, Mr. Poortman, something about return--or not being in Iraq yet. Also, when do you expect to be on the ground in Iraq in terms of what's your assessment of the safety and security situation?

Thank you.

MR. POORTMAN: Let me just--and my colleagues, I'm sure, will have something to add here. Let's make a clear distinction here between the money that will flow. The money that will flow until such--there is World Bank resources, and there are the resources out of this trust fund.

Now, the trust fund resources are the ones that are currently readily available, and the projects that Mr. Krafft was describing to you are ones that are going to be initially financed out of this trust fund.

When we talk about World Bank resources, we're talking about resources that will become available when a number of what we call threshold conditions have been fulfilled. One of those threshold conditions is a recognized de facto government, which is an issue. The second is there are arrears, Iraq has arrears vis-a-vis the World Bank Group, and they need to be settled. And thirdly is the question of security, which is another condition that we need to see fulfilled in the sense that the security will allow us to do the work that we need to do in order to design, formulate, and further implement projects for our own account.

Now, when we talk about money that will flow following that line, we're talking about the ones that--the trust fund projects, and the four operations I think that were described. I think our current expectation is that some of that money will potentially flow before the middle of this year. Some of the training facility money will, I think, flow earlier, but, Joe, you may want to say a word about that. And then I will briefly talk about the World Bank actually being on the ground in Iraq.

MR. SABA: Some of the training facility--some of the training is already well advanced in preparation, and we expect that this could begin moving in a matter of weeks. What we're trying to do is use much of the technical assistance and training funds that we will get as quickly as possible to build capacity. Iraq had a large administration and had basically very competent people, well trained. However, they had no experience in--very little experience in international practice, and they have very little, if any, experience in the requirements that international organizations, ourselves and bilateral donors, place upon recipients.

And so in order to get monies moving quickly, it's necessary to build a cadre of Iraqis who are familiar with these practices and can move on to provide the kinds of reports that donors, whether ourselves or bilaterals, need. So we putting a lot of emphasis in this right away.

There is additional technical assistance support which is going to be provided right away to the various ministries in order to help them begin to establish themselves on a more sound footing, to be able to work better with their own financial planning, their own budgeting, their own implementation. And this will be done in several ministries, and, in fact, when this press conference is over, we're having a meeting with several people from one ministry in one area to look at the capacity building in that. And we've been talking to municipalities as well. People from the municipality of Baghdad were at our meetings last week, and we're looking at some capacity building in the municipalities.

In addition, these facilities can also be used not necessarily or exclusively with governmental institutions. We're looking also to work carefully with certain private sector parties, and we can also work with other groups that are qualified to receive funds. This could include NGOs, and we could also implement with other UN agencies.

So it's a very broad program in terms of potential recipients, and our hope is to move quickly on that.

I'll let Nick mention one or two other things because, for example, the education program is also well advanced and depends, of course, on the calendar for education. Kids have to go to school.

MR. KRAFFT: There's very little to add to that. We will move as rapidly as we can, as Joe mentioned, and specifically on the date, I mean, we would hope to have the first of these projects go forward, I would think, within a couple of months or so.

There are a number of issues which we have to look into, and we just don't know how long some of them will take. I mean, we could go forward with projects quite rapidly, but the design of a project and making sure that it can be implemented are two different things. And we want to make sure that when the project's approved that it will implement quickly thereafter.

We have, for example, this whole issue of fiduciary responsibilities to make sure that there are proper financial management control systems in place. It's harder for us to do that since we're not able to go there, so we don't know how long that will take. But it will take a number of weeks.

So I would think by the end, for us, of this fiscal year, beginning around June or something, we would certainly hope to have had quite a bit of this program off the ground.

MR. POORTMAN: Just on the question about security, because I'm sure, otherwise, it will come back.

Security indeed is an issue that keeps us at this point from operating in Iraq itself, although a lot of our activities, as you've heard from my colleagues, will actually be undertaken, but we'll do them from a distance. But obviously we'd like to move back to Iraq as soon as--or into Iraq as soon as we can physically.

The situation is closely monitored. We're talking to others who have similar concerns. One of the reasons of having an office much closer by is for us to gauge developments much better. The only thing I can say is that as soon as we consider it secure, we will obviously go back into Iraq as quickly as we can.

MS. RIZA: I'll take Alan, and then I'll try to take two from that side.

QUESTION: Alan Beattie from the Financial Times. Can you just say how much of challenge is it to harmonize all the donor procedures given that a lot of the money that's going to be flowing certainly in the short term is coming bilaterally from the U.S. and presumably will have a whole different set of criteria and donor reporting procedures and pressures on it?

MR. SABA: Of course, the U.S. will follow its own procedures in the implementation of this supplement, and that's governed under U.S. law. But having said that, we have had quite a few meetings with them, and we're trying very hard to make sure that, to the extent possible, the procedures and the work are harmonized and don't overlap.

One of the purposes of the facility in the common governance reporting and in the sharing of information is to try to create a system in which we harmonize these processes and procedures. We're also working with the IMF and the Iraqis so that their own reporting systems match those required in the trust fund facility. We're hoping in this way to move toward harmonization.

All that said, this is always a problem in a post-conflict situation, and we're working hard to avoid some of that fragmentation. And it remains to be seen how successful we are, but we are trying to learn from the lessons of our recent experience.

QUESTION: Thank you. My name is Thabet Bardissi, Al-Jazeera TV. I would like to ask Mr. Saba about--you said that among the $55 billion assessed in Madrid, $32 billion have been raised. I would like to verify that. And concerning the $18.6 billion from the United States, what I understand is this is for mostly to spend on U.S. troops there. Is this incorporated into the $55 billion then?

MR. SABA: Well, it was Mr. Krafft, but in any event, the $55 billion was an estimate on the total needs. Of that, we looked at approximately $36 billion, which was the whole needs in the 14 sectors of the Needs Assessment looked like, bearing in mind that it wasn't necessary that all of that money be raised from the donors. That's simply a price tag from which Iraq's own resources could make, we hope, increasing contribution.

That said, when we met in Madrid and we counted up the pledges, what we came to is a total of about $32 billion, of which the United States commitment turned out to be 18.6, according to what Congress approved.

Of that 18.6, I believe all of the categories--and although we're not here to speak for the United States, but I would point out that all of the categories and the allocations of that 18.6 were put on a website by the United States, and that can be readily determined. And a very substantial amount of that includes monies for infrastructure, for health, and basically for many of the sectors, many of which were covered also in our Needs Assessment. They outlined about 5,000 projects, for example, largely in infrastructure, of which they intend to cover, I believe, about 2,300.

So there were provisions also for security with respect to Iraqi security. As I understand that 18.6, it was not to pay for United States troops. It was to--you know, to the extent there was a security element in it, it involved security for Iraqis. But I would direct you to their website since this was not the business of the World Bank.

The rest of the funds came from a number of states, and they were listed also on our website and other websites following the Madrid conference. The largest donor after the United States was Japan, and Japan has currently before its own Diet a supplemental request for the first $1.5 billion. And I believe that's still being considered by their parliament, the Diet.

The IFIs, yes, Nick reminded me, and the IFIs also had a contribution in there, and it should be remembered that the contribution of the $32 billion of the IFIs was essentially loan money. So if you look at the $32 billion, you must then begin to also parse it out according to loan and other types of grants and provisions. So the 32 included the IFIs. And Nick is correct: If we look then, we have the United States, Japan, the IFIs, and then a whole collection of other countries which made contributions.

MR. KRAFFT: The IFIs in this case being the Bank--

MR. SABA: Being the Bank and the IMF. And probably after that you would have the European Union, as I recall.

QUESTION: Thank you. Christiana Urli, German Press Agency. I also had a question on the numbers. Does that mean that the 32 are in this trust fund? And how much money does the World Bank produce of its own? And would that--that would not be part of the 32?

MR. KRAFFT: Okay. Maybe I erred in raising the 32 in the first place. This is really going back to Madrid. I mean, this is actually--really, these are all issues that were discussed. The $32 billion which was pledged represents essentially three major sources of money, as Mr. Saba has mentioned:

One was the 18.6 from the United States--and all this is on the websites and so on. I mean, it is public knowledge.

The second was the big contribution from the IFIs--the World Bank and the IMF-- which, as mentioned, would be on a loan basis and, as Mr. Poortman mentioned, is subject in the case of the World Bank to what we call the threshold issues, these three issues that he mentioned, which we have not yet crossed.

And then the third portion is the money that would come from bilateral institutions other than the United States, in other words, Japan, Canada, EU, and the like.

So the two--the biggest single one was the United States. Then you have the IFIs, which were, again, a fairly substantial chunk. The World Bank at the time, if I recall correctly, committed between $3 to $5 billion over five years. Again, all of this is on the website. This is public knowledge. This is all discussed after Madrid. And the IMF, I have a figure there, and the rest.

So we're really talking--and indeed the U.S., the 18.6 as Joe mentioned, that is being used and subject to the normal rules for expenditure of U.S. monies, you know, government rules and controls. We're talking about a trust fund which essentially deals with this third element, which is, you know, Japan, Canada, and a host of other countries. And, again, you'll see some of the countries which pledged some money. Some of that money will go into the trust fund. Some of it will be directed to the World Bank part of the trust fund. Some of it will be directed to the UN part of the trust fund.

And in the case of Japan, which I think is fairly typical, what they have indicated is out of the $1.5 billion that they committed for this year alone--they committed a larger figure, but for this year they committed $1.5 billion. The biggest share of that will be on bilateral, on a bilateral basis. And then they will put some of that $1.5 billion--they haven't indicated exactly how much-- into the World Bank-UN trust fund.

And I think what Japan is doing is fairly typical of what a number of donors are doing.

QUESTION: So you don't know yet how [inaudible, off microphone].

MR. KRAFFT: That is correct.

QUESTION: Do you have an idea, an estimate, a wish?

MR. KRAFFT: We have plenty of wishes.

QUESTION: [inaudible, off microphone.]

MR. KRAFFT: I don't think that--that may sound like--it's not that complex an issue. I mean, we do not expect these contributions to come in tomorrow, you know, in one slice. That would be not the way it's happened in any other country in the world, in any other trust fund that's been set up. These funds come in over a period of time.

We would hope that, you know, the first chunk of money would be there in significant amounts by June. But we would expect, you know, contributions to come in. Japan indicated their figure over--they said $1.5 billion in the first year and very sizable amounts in years two and three. So, you know, it's not all coming in in day one.

And so when it comes back to these projects, I mean, the first project which we hope to do is a technical assistance project which will be quite small, and there it's not an issue. The education project--and you will see these in the figures because these documents that were discussed today will be made available on our website tomorrow, as I understand. Am I correct in saying that?

You know, the education project we would hope to have would be something of the region of maybe $100 million or something like that.

Well, if we assume, you know, by that stage we have--and I have no idea--two or three hundred million in the trust fund, that's fine, it will fund the first project. And then the second, the third project, you know, we can adjust the project. One of the projects, as I mentioned, was a line of credit for infrastructure. The amount of the needs in infrastructure are enormous, so we can design projects which can be bigger or smaller. As I say, it will be a line of credit. So we will adjust the size of the program to the amount of funding that is available at that point in time, but there is no point in time at which the fund, you know, will just stop in the first six months. Its life is--what?--five years--four or five years.

QUESTION: Anna Willard from Reuters. Just to be absolutely clear, right now there isn't any money in the trust fund at all?

MR. KRAFFT: That is correct.

QUESTION: And, secondly, the U.S. Treasury has said they would put some of their $18.6 billion, I thought, into the trust fund. Does that mean you're not expecting anything from the U.S. at all to go into the trust fund?

MR. SABA: What we understand is that the United States will put $10 million into the trust funds. We do not know the source of that $10 million, that is, whether it is part of the 18.6 or whether it comes from another authorization. And that's entirely their decision, not ours.

We have indications from a number of other donors who have given us some indication of the level of funding. As you can imagine, it is also necessary for the donors to understand what the work programs of both the United Nations and the World Bank would be, that is, what is it we expect we can do if we had money, and how much money would we need, and that's in part why we have completed this interim strategy and why at the same time the United Nations organizations are also completing their strategy.

As I said, we'll be meeting in about ten days to take a look at these two strategies and work programs. We've completed the preparation of this, and in the preparation of this, we've actually included some of the larger donors. We've invited them as observers to several of our meetings. They have participated as observers. They're watching these programs. As you can understand, they're giving us some indications of the level of funding.

It's not as if we need to have all of that money first and then we go out and prepare the programs. It's quite the opposite, in fact. We begin to prepare the programs, and then as we get indications of the money, we adjust the programs to suit the amount of money we have.

But as you can also imagine, these countries are, one, our shareholders, and in other cases, in post-conflict situations, our partners. So we have a constant dialogue. We know these--we also know the individuals who work in the governments and in these organizations over many years. So we have some indications.

The straight answer to your question is we have indications for funds. No, the funds do not at the money have money in the funds. But, yes, we do have fairly strong indications, and those will become, I think, in the course of the next month to six weeks, much more clear. And we are obviously tailoring the work program, ours and the United Nations, to the amount of money that we reasonably expect and, frankly, and more important, the amount of work that we think we can reasonably do, focused on those areas where we think we each have comparative advantage and something to offer in Iraq. And those last two points also put serious limitations in terms of exactly how much you can do and when. So it's a question of being realistic as well.

QUESTION: Cesar Munoz with FA.

You said, Mr. Saba, that you indicated to donors how much money you will need for certain programs. I mean, can you give us an idea of how much money you asked for?

And if I may ask another question, I wonder if you could explain a little bit how the whole thing is going to work. Since you don't have employees in Iraq, for example, for this technical assistance, are you going to have Westerners from NGOs training people there or how is the whole thing going to work?

MR. KRAFFT: Just briefly on the question of needs. The needs were set out in the document in October, the needs assessment, and that was right across the board, and it covered, as Joe mentioned, 14 sectors which the Bank and the U.N. looked at quite carefully, plus a number of sectors where we got the information essentially from the CPA and the Iraqis directly.

What we can say is the needs are enormous. So I think it's not possible to say specifically that we have gone out and said we would like "X" million from this donor or "Y" million, and we wouldn't do that anyway. I mean, basically the donors have access to this needs assessment. It was discussed at this conference in Madrid. They know what is required. What most of the donors themselves right now are doing, they decide amongst themselves do they have a focus--and it depends often on the country or the government at the time, is their focus on education, is it on infrastructure, is it on the private sector? And then they basically indicate, okay, we would like to put funding into education and health sectors, and then it's basically a decision taken by the relevant Parliament or deit or whatever it might be.

Obviously, what we're saying here, and that was what was approved this morning, that we from the Bank side are willing to act as the administrator of this trust fund, and for us, you know, whether there is "X" million or "Y" million in it, we will try to spend that money as effectively and efficiently as possible, responding to the needs of the Iraqis.

On designing of projects, the designing of some of these projects is not that difficult because, I mean, it's not like we're working in isolation. I mean, just to use as one example the community development project which we proposed to have. This is something that the Bank has in--I have no idea--but I am sure in 40, 50 countries we have community development-type projects. And so the actual design of the project, as such, is not that difficult. It's a question of finding which implementing agency, and whether it's going to be a social fund or how the communities are going to be involved and so on.

And so setting up the funding, the funding mechanisms and the like is not that difficult nor is it perhaps that difficult in the case of the line of credit for infrastructure reconstruction. What is important though is to make sure, as I said, that we have the right financial controls on the system that, in the case of infrastructure, whether it's transport or electricity, power, whatever, I mean, we would make sure that these funds, these donor funds, are used according to normal Bank practice.

That means international competitive bidding if it's a sizable contract, local competitive bidding, the award of contract to the lowest bidder and in the usual circumstances, and then we have to make sure that the funds are spent properly, transparently and then can be fully accounted for, and that there is the implementation capacity.

So it's the issues of, those are actually the most difficult issues at this juncture to deal with, to make sure funds are properly spent, transparently spent, done in an open way, competitive bidding and that the Iraqis, who have for the most part very good administrative capacity, but the fact of the matter is that they haven't worked with the World Bank and a lot of international community for many years. I mean, the sanctions was one obviously period over a decade and then before that.

So there is quite a lot to learn, and these are the training courses that we will hold to make sure that they know what needs to be done in order to meet the requirements of the Bank and of the donors.

MR. SABA: If I could just add, too, we're hiring Iraqi consultants who are quite qualified and who reside in Iraq or who could reside in Iraq, and we've already hired a number of those consultants who are working with us. They are also able to go back and forth to Iran. We're looking to hire additional consultants working in the different sectors.

As we mentioned, we had meetings with 35 Iraqis last week in two of the sectors. We had a whole team from the Ministry of Education to continue working on that education program, and we've already installed a video conference facility in Baghdad, and we're expanding that facility in Baghdad, and we're hooking up various ministries with our own e-mail system. That e-mail and video conference facility will be hooked up with our Amman office, our Beirut office and other World Bank field offices, including of course Washington, and this gives us an ability to have, if need be, daily conversations with our counterparts.

The technology, fortunately, is also helping us quite a bit. There's some very interesting innovative features. People are using digital cameras and laptops to be able to take pictures of goods, to take pictures of things almost immediately as they happen and transmit them. It's not necessary in every case to be everywhere at all times. And even if we had some staff in the country, which is preferable, but even if we did, given the size and scope of this, we certainly can't cover the country with international staff. So we're trying to build up an Iraqi staff and trying to use, to the best extent we can, the technology to help us to work.

Again, it is not the case of an emerging state, which we sometimes deal with, or a state that was so broken that it doesn't have an administration. There are plenty of people in Iraq who know the number of schools.

To give you an example, just to give you a feeling for it, after the conflict, most of the schools were looted. Most of the buildings exist, though many of them were in bad condition. Most of the condition of the buildings and the extent of the looting was surveyed during the needs assessment. We have a very good idea about that, and we have a very good idea of the needs.

The Education Ministry was sufficiently competent to distribute in the last couple of months, I understand, more than 60 million brand new textbooks. Textbooks in Iraq tend to be what we call here in Washington or in America paper workbooks; that is, you consume most of them in a school year. So there's a need now to go out and redo these textbooks.

However, in redoing the textbooks, if you think about it, do we want to replicate the old textbooks or do the Iraqis now want to look at new textbooks, maybe with newer technology, different type of information, some curriculum reform? How much money do they want to spend? All of the vocational and technical schools were almost completely looted, even the glass in the structure.

Now, what were those vocational and technical skills geared to producing? Is Iraq going to be an industrial state again? Do they want to consider again what kind of equipment they want to produce? So it's a question, first, of meeting the emergency needs, sticking the glass on the wall, and then it's a question of replacing the physics labs, the vocational labs, the equipment, but then one needs to have some technical assistance and some training and capacity building, in terms of what is we want to do? What are the Jordanians doing? What are they doing in Chile? What are others doing? What kind of state is Iraq going to be?

So one doesn't want to just order everything immediately. So there's a sequencing and a priority. To do that, you have literally thousands of Iraqis who can work and know their people and their needs very well. What they need is to work with a number of us to figure out what it is they need to modernize. Ordering the equipment, frankly, and making sure that goes in is not so easy, but in fact, as Nick said, it's not so difficult. It's the kind of work we do in many countries. So, in the case--I mean, that's an example in the case of education, but one could extend that to water, one could extend that to health. I hope that was helpful to you as a practical example.

QUESTION: Peronet Despeingnes, USA Today.

Two sets of questions. First, have the terrorist attacks since the needs assessment was drafted materially affected the needs assessment estimates?

And the second set of questions are you say you're monitoring the security situation. What's your assessment of security now? Is it getting worse? Is it getting better? And under what conditions do you envision going back into Iraq? Is it conceivable that you, along with the U.N. and the IMF, will take the lead in the reconstruction effort by the end of 2005 or 2006?

MR. POORTMAN: Let me take the security question. I mean, the fact whether the needs assessment has materially changed, I mean, my quick answer to that would be that at the margin maybe there's been more discussion, but if you're talking about a $55 billion program, I think one has enough of an idea about the priorities, and I don't think it has materially changed, unless my colleagues think differently.

On security, it would be very nice for me to be able to be very exact in answering your question; you know, we're looking for this, we're looking for that, we're going to do--but I can't do that. I mean, security is security. It's an assessment that needs to be made, and we will consult with whatever priorities and partners we have, and we'll try to come to a conclusion whether, on balance, it is appropriate for our staff to go back in.

Clearly, this is a decision that we're making together with many others. The U.N. system is one of them you mentioned. There are many other organizations that face similar questions, and we want to consult with them. But the only point that I'm trying to make or two points is, one, we will go into Iraq as soon as it is possible, but we will not go in unless there is a reasonable assurance that our staff can do its work in an appropriate manner and being appropriately protected.

Secondly, everything that we have been telling you today is geared towards the fact of making sure that we do as much as we can, and I think my colleagues have indicated to you that there is a lot that we can do, even from a distance. That doesn't mean to say that it's perfect, but we do believe that, given the current situation and the kind of initial work that needs to be done, particularly the training site, there is a lot that we can do without having to be on the ground.

QUESTION: Marty Krutzinger with the Associated Press.

You talked about threshold issues that would have to be addressed before you could start a regular World Bank program recognized government clearing up of arrears.

The U.S. envisions a transfer of power on June 30th. Will that put in place a recognized government, as far as the World Bank is concerned, and is that when you'll start a regular program?

MR. POORTMAN: I can't tell you. I think we need to see what that government is that comes out. We will obviously try to--we'll keep monitoring this very carefully.

QUESTION: You can't tell me because your Board will have to vote on it?

MR. POORTMAN: That's absolutely correct.

QUESTION: Can I ask you just a follow-up on that? This discussion, the Board vote today was it unanimous? Could you give us a sense of what that debate centered around?

MR. POORTMAN: Very strong support at the Board.

QUESTION: Were there any abstentions or--

MR. POORTMAN: There was no voting involved. This is a review that we have with the Board. Very strong support, I think, across the board.

QUESTION: Hoda Tawfic, Al Ahram Newspaper.

Pending the recognition of a de facto government in Iraq, there will not be an authority, an Iraqi authority to represent the Iraqi people. In this case, the Bank will be dealing with whom? There is no authority to put the policy like what are the priorities they want about projects, about education, textbooks and all of that.

MR. SABA: Clearly, in the example I gave, the children have to go back to school next September and certain things have to be done. There is a Governing Council. They have appointed Ministers. Almost all of the prior administration in the service sector has come back-- Education and Health, which are the biggest.

But being sovereign doesn't mean that I can't figure out that I need a math book for a fourth grader next year and that I don't need to put the glass back in the window, and that I don't need books or chalkboards, and that I shouldn't perhaps even introduce computers and introduce the Internet into education. A whole host of immediate and expedient measures can be taken without necessarily changing the entire issue of policies, but nevertheless you have in the case of education a commitment already for universal education.

We also have a commitment to the Millennium Development Goals, which the Iraqis are committed to, which means education for all, which means education access for women, as well as men. These are the things which the administration does--the existing administration has a commitment to. It's not very difficult, in terms of meeting these Millennium Development Goals, looking at the social sectors, looking at water pumps, the sewage has to be maintained, improved, clean water has to be delivered to people, traffic should work, certain transportation has to be restored, markets have to be restored.

You begin to get into difficult issues when you get into the level of taxation, when you get into price policy, particularly if you get into energy price policy. So you begin to have important major policy decisions. But even if you were to leave some of those aside and await a government which has broad international acceptance, you still have the day-to-day issues that face an administration, and that administration is still in place. All of the municipalities are still there.

The work of the World Bank is--our original work, you know, we're the international bank for reconstruction and development in a postwar situation. Our job is to get in there and work with those service providers and try to meet these social sector needs, and many of these, frankly, are not very difficult to figure out and don't require major policy decisions at the highest level.

QUESTION: Thanks. Julie Ziegler from Bloomberg.

The U.S. contribution to the trust fund seems alarmingly small, in terms of the percentage of aid they've committed. Are you anticipating that other nations are going to give a higher percentage of, you know, do you have a ballpark figure for the percentage of their pledge that they are going to contribute to the fund or are we going to see more bilateral aid sort of take a precedent over the fund?

MR. POORTMAN: I think that the point, I mean, let's put this fund in context. This was established not at the behest of the World Bank, this was a fund that was established at the behests of the donor community who, in a meeting in New York last year, indicated that they wanted to have a mechanism through which they could channel resources to the Iraqi development effort and not channeling it through the Iraq Development Fund, which is the other fund that is being operated by the Iraqis, actually, primarily on the basis of the revenues being generated by the oil sector.

So we know that there is a significant amount of money that has been pledged by the donor community to be spent in Iraq. It's now up to these donors to determine whether they want to go use the fund, as they said they said they would, and we set it up for that purpose or they want to do it bilaterally.

So I think, when you say it's a very small amount, to us, it is maybe a small amount for the trust fund, but that doesn't mean to say that the other resources that were committed or that were promised in Madrid are not going to be channeled through other resources, through other means. You see the point that I am getting?

So I think it's is really we've put this at the disposal of the international community to make it easier for the, but I can see conclusions being drawn about the fact that somehow or another this is now a new indication of the amount of assistance that the donors are making available for Iraq. That's the wrong conclusion to draw because there are many other ways in which they can spend their money.

QUESTION: I have a question on a slightly different topic. Are you expecting any plan or program or anything to be unveiled at the G7 meeting regarding Iraq's debt, any sort of plan for debt forgiveness or restructuring?

MR. POORTMAN: I have no idea.

MS. RIZA: I think we'll take just two more questions. Over here. Yes?

QUESTION: Jackie Spinner with the Washington Post.

You said that you do have indications from the donors about the level of funds that they are planning to commit to the trust fund, as opposed to the bilateral donations. Can you share what that number is?

Also, you put $100-million figure with the education program, and keeping in mind that these numbers are going to fluctuate depending on what you get, can you also give the numbers for the other three projects?

MR. KRAFFT: Tomorrow, you will see these two documents on our website that will actually give you much more detail. If you want the figures, what we tentatively put down at the moment is $5- to $10 million for the technical assistance project, $100 million for the education project, the emergency community-based rural infrastructure project, $100 million, and $2- to $400 million for the line of credit of the emergency infrastructure project.

QUESTION: And the dollar amounts are the indications--

MR. KRAFFT: On the indications, I mean, if you go back into our website, and this was the point of Madrid, most of the donors gave a pledge, and the Japanese are the perfect example because they happen to be the biggest. They pledged $1.5 billion for this year. At the time, they did not say that they're going to give so much bilateral assistance, so much to the U.N., so much to the World Bank trust fund. As Mr. Poortman says, in a sense, it doesn't matter, and the Japanese have still not said definitely how they're going to divide their $1.5 billion. And that is true I think of pretty much every other donor as of this point in time.

Now, bear in mind, also, only today were we approved to actually be the administrator. So no one could put any money into the trust fund before today anyway because we weren't even approved to be the administrator, so it wasn't possible to put any money into the trust fund until today.

And the donors, obviously, as I think Mr. Saba said, want to see what are the kind of projects that we have in mind, and they obviously want to look at what the U.N. is doing, and then they have their own bilateral assistance programs. So, for the most part, I would say this is a process ongoing. We have a meeting of the--we are planning a meeting of the donors to the trust fund, and those who are thinking about putting money into the trust fund by the end of February, and we would hope that by then--that's about a month away, four, five weeks away--we would have a much clearer idea.

But in a sense, this shouldn't be a test of if there's $18.6 billion is how much the United States is putting in. So whether they put $10 million into the trust fund or whatever, in a sense it doesn't, you know, it's still the money that's going towards the Iraqis.

QUESTION: Kathy Shaw with National Public Radio.

The arrears to the Bank, how do we get past that threshold and how does that relate to efforts of debt forgiveness or restructuring that are going on multilaterally?

Thank you.

MR. POORTMAN: This is an amount which at this moment is about $100 million. It sounds like a lot of money, but the Iraqis have indicated that they will, when the moment arrives, they will settle this and take that away or make sure that this threshold condition is being fulfilled.

So the payment is going to take place. At least we have indications from the Iraqis that this is the way they want to do it. So we don't consider this to be a very difficult threshold condition to fulfill in comparison to some other countries that come out of conflict which have much larger debts vis-a-vis the World Bank Group.

QUESTION: Is that $100 million for the World Bank only?

MR. POORTMAN: World Bank only.

QUESTION: Where are they going to get the $100 million from?

MR. POORTMAN: The Iraqis?


MR. POORTMAN: In oil, they have $12 billion coming in every year. On the total recurrent budget of the Iraqis, we're talking about something in excess of $12 billion, which is the annual intake in oil revenue. So $100 million out of $12 billion I think generates resources that could be used for this purpose.

MS. RIZA: Thank you very much, and the documents are going to be on our website tomorrow. So, if you're interested, don't call me.

[Whereupon, at 4:56 p.m., the press briefing was adjourned.]

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