ONE of the showpieces of the Cairo conference will be the Middle East Development Bank (MEDB), a US-inspired institution set up to invest in economic development in the region in tandem with the private sector. As a creation of the late 1990s, the bank is going to be very different from the institutions set up in Africa and Asia a generation ago to aid development. Officials involved with the MEDB say the bank will be more of multilateral merchant bank than a traditional development institution.

The MEDB project was unveiled at the Amman economic summit in October 1995 and teams of officials have been busy since then working out how the bank will be structured and how it will operate. Its founder shareholders include the US, Israel, Egypt, the Palestinians and a number of European and Arab states.

However, many EU states query the rationale for the MEDB, arguing that what is needed is not another institution with its own capital, but better mechanisms for using existing funds dedicated to the Middle East. The Gulf Arab states have also expressed opposition and argued that the main beneficiary of the MEDB will be Israel.

The MEDB will have authorised capital of $5,000 million, of which $1,250 million will be paid-up. It is intended to start work by the end of 1997. The US is the biggest shareholder with a $750 million stake, though the government and Congress have been arguing for several months about where the money is to come from.

At the conference, the US and the bank's other sponsors should be able to demonstrate that the MEDB project is on course despite the recent upsets in the peace process. The basic structure and operating procedures of the bank have been worked out by a technical team based in Cairo, and its articles of association have been agreed by the shareholder states and deposited with the UN. The next stage is for each state's parliament to ratify its membership.