Debate about channelling more money into the international financial system and providing funds for poorer countries effectively dominated the World Bank/IMF annual meetings, which were held on 29 September-6 October in Madrid.
But the Madrid meetings also provided an opportunity for multilateral, bilateral and commercial financiers to discuss regional issues, including the provision of funds for the Palestinians and other parties to the Middle East peace process.
In the rich/poor debate, Arab states lined up with a group of developing countries arguing for substantial extra resources to be raised for the benefit of all IMF members. The G7 governments, led by the US and UK, countered with a proposal to target a smaller amount on the poorest countries only. Richer developing countries argued they would lose out if the G7 approach was adopted.
‘We would like to see the transfer of more money from those with surplus funds to those with a deficit to ensure trade and global development,’ Bank of Libya governor Abdulhafid Mahmoud Zlitni said on 3 October. Budgetary constraints mean that countries like Libya can no longer afford to be providers of development funds, Zlitni said, adding that more support is needed from industrialised countries.
Away from this sharply polarised debate, substantial progress was made in developing the financing programme for Palestinian self-rule areas and lining up fresh finance for other regional states, including Syria and Lebanon.
The World Bank’s vice-president for the Middle East and North Africa region, Caio Koch-Weser, said in a 1 October interview that donors will disburse $200 million-250 million to the Palestinian National Authority (PNA) in 1994, but now that recipient institutions are in place, lending should increase substantially thereafter (see Gaza/West Bank).
Talks with PLO Chairman Yasser Arafat and other officials have centred on co-ordinating with new institutions. Koch-Weser criticised donors who prefer to offer tied aid rather than joining wider initiatives. ‘The provision of bilateral export credits often runs the risk of distorting development programmes, especially in this case where there is so little absorptive capacity,’ he said.
The conflict between national interests and multilateral programmes was also apparent in Lebanon. The holding of a November consultative group meeting for Lebanon was discussed at the Madrid meetings. However, this may be difficult to arrange since funds available from bilateral donors are limited by budgetary constraints and the fact that some countries are reserving financing for tied aid to secure contracts for their nationals.
Peace in the region could be reflected in improved relations with Syria. ‘I would hope that sooner rather than later we would have a lending programme in Syria and we will expand our policy dialogue,’ Koch-Weser said. Damascus’ arrears to the bank of around $400 million are now being paid.