Future of ME development bank in the balance

02 June 1995
FINANCE

Two-day talks on plans for a Middle East development bank ended in Cairo on 17 May without agreement on the basic principle of whether a new source of funds for the region is necessary. Representatives of up to 32 states have been discussing plans for a new bank in the context of the regional economic development working group, part of the multilateral peace process. This was the third time the group has met since the proposals were first put forward at the Casablanca summit in November 1994 (MEED 24:3:95).

'It is difficult to see how it will come out,' says one European delegate at the talks. 'It is still early days, and it is a question of clarifying the ideas.' He says the group will move towards monthly meetings to meet the October deadline, when a draft document on the form of the institution is to be presented to the economic summit in Amman.

The US, Japan, Jordan, Egypt, Israel and PLO all favour a bank with capital of $5,000 million that could approach capital markets and raise funds for regional projects. However, those plans have been opposed by a majority of European and some Gulf states, who say there are already sufficient resources committed to the region.

'We are still not convinced of the usefulness of a bank,' said Daniel Maitre, representing France, after the meeting. The EU is proposing a policy co-ordination forum that would help channel more effectively the funds of existing institutions, such as the World Bank, the European Investment Bank and the Islamic Development Bank. Gulf states, including the UAE, have also criticised the plans saying they will favour Israel.

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