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[casi] Constitution Must Precede Iraq Loans

World Bank Says World Bank Says Constitution Must Precede Loans to Iraq


BAGHDAD, Iraq, July 30  The president of the World Bank, James D.
Wolfensohn, suggested today that the bank would lend money for the
reconstruction of Iraq only after the country writes a constitution and
conducts national elections. He also said that an indeterminate number of
the country's state-owned industries would have to be shut down or

Mr. Wolfensohn's comments may put more pressure on Iraq's new Governing
Council to accelerate deliberations about its own leadership and other
decisions. Today, the 25-member council appointed Ibrahim Jafari, the
official spokesman of the Islamic Dawa Party, a Shiite political group that
had been banned by Saddam Hussein, as the first of nine presidents who will
serve rotating one-month terms. But the council still has not selected any
cabinet officials and has taken little substantive action on other matters.
It is expected to take at least a year to draft a new constitution.

In an interview broadcast this evening on Al Jazeera, the Arab television
network, Mr. Jafari said he hoped that the Council would begin appointing
cabinet ministers next week.

In a news conference here after meeting with the governing council, Mr.
Wolfensohn refused to provide a World Bank estimate on Iraq reconstruction
costs. But many experts have said that the long-term costs could exceed $100
billion  many times more than the resources currently available.

At the end of June, the American-led Coalition Provisional Authority, which
oversees nonmilitary matters in Iraq, had $5.4 billion available. But that
is expected to dwindle to about $1 billion by year-end, according to
official projections, mostly because of a $2.2 billion budget deficit. The
deficit stems largely from the gap between Iraq's projected $3.5 billion in
oil revenue and the $6.1 billion in expenditures planned for the rest of the
year, a sum that will provide only a fraction of what is needed to rebuild
Iraq's electricity grid, sewer systems and other services.

Occupation officials have not said how much outside financing will be
required for the 2004 budget, but they hope a donor conference in October
will provide billions of dollars for infrastructure and other projects. "I
think the global community is going to want to make the up the gap between
oil and such other revenues as the country has, and a basic budget," Mr.
Wolfensohn said today.

World Bank financing is likely to follow, assuming that a proper government
is organized, he said. "Clearly what would put it beyond doubt would be a
constitution and an elected government," Mr. Wolfensohn said. "The question
is what we could do in the meantime."

Aside from oil, much of Iraq's potential wealth, and its employment base,
lies in its state-owned enterprises, including cement, fertilizer, phosphate
and chemical companies. But Mr. Wolfensohn, speaking about the state-owned
businesses, said, "It does look as though there are a number that are not
efficient and need to either be closed or resurrected or significantly

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