Pledged financial aid from the international community started to pour in to the Middle East this week as Arab states brace for a US-led war on Iraq.
World Bank chief James Wolfensohn on Thursday in Amman said the organisation was ready ”to help Jordan mobilise the assistance that may be needed to absorb short-term shocks, while pursuing long-term development goals”.
Jordan is expected to be hard hit in the event of war, as Iraq is its largest export market and Baghdad has been supplying the kingdom with all its petroleum needs at highly preferential rates.
Amman has discussed the possibility of buying oil from Saudi Arabia and other Gulf states at a discounted price if Iraq’s deliveries are interrupted, but there has been no formal announcement as yet. Egypt secured on Monday loans totalling one billion dollars from the World Bank and African Development Bank, as the threat of war strains its currency which has already lost 20% of its value against the dollar since being free-floated on January 29.
Officials have estimated that a war in Iraq would cost Egypt between six and eight billion dollars in lost revenues, mainly from tourism and exports. The Egyptian central bank hiked this week interest rates on treasury bonds by 24%, to 9,3% per annum, in a bid to make the local pound more attractive.
Unrelated to the Iraq crisis, Lebanon received this week $700-million from Saudi Arabia and $500-million euros from France that were part of $4,4 billion package pledged by donors last November in Paris to help Beirut cope with its massive $31-billion in foreign debt.
Lebanon, a petroleum importer, is suffering from high oil prices caused by war threats, and it fears the fallout of a conflict on its tourism sector. In energy-related news, Saudi Oil Minister Ali al-Nuaimi pledged on Wednesday that Riyadh and the Organisation of Petroleum Exporting Countries (Opec) would make up for any shortage in oil supplies in the event of war.
The assurance came following talks in Riyadh between Nuaimi and Claude Mandil, executive director of the International Energy Agency, which represents oil-importing nations, ahead of an Opec meeting next Tuesday in Vienna.
Saudi Arabia, the world’s top oil exporter, has already hiked production to nine million barrels per day (bpd) to appease the market and has the capacity to pump out an extra 1,5 million bpd.
Kuwait said Monday all its northern oil fields, close to the border with Iraq, will be shut down should war break out, but the emirate’s total output of 2,1-million bpd will be maintained by raising output elsewhere.
In Washington, the Pentagon announced Thursday that it had contingency plans to extinguish oil well fires in Iraq, if President Saddam Hussein sets them ablaze as he did in Kuwait in 1991.
Saddam has said he would not torch his country’s oil fields if attacked, and an oil ministry official on Friday renewed the assurance.
But the US defence department has said the Iraqi leader has both the ”capability and the intent” to do so. In the Palestinian-Israeli conflict, the World Bank unveiled
on Wednesday a report showing that half the Palestinian workforce is unemployed and six out of every 10 Palestinians live below the poverty line.
It blamed Israel’s closure of the occupied territories as the main reason for the deterioration, calling for a political solution to the 29-month-old uprising against Israel.
”With unemployment rising and incomes collapsing, over half a million Palestinians in this formerly middle-income economy are now fully dependent on food aid,” said the report.
It warned that ”the incidence of severe malnutrition recently reported in Gaza by Johns Hopkins University (in the United States) is equivalent to levels found in some of the poorer sub-Saharan countries.” – Sapa-AFP