A Trade Bank for Iraq that would issue letters of credit (L/Cs) with credit insurance from the US' Export-Import Bank (Ex-Im Bank) could be established by the end of this year according to a recent report.

Ex-Im Bank's chief operating officer, Peter Saba, apparently told the Reuters news agency that a decision would be taken very soon on such an institution.

High priority

Speaking on the sidelines of a conference on Iraqi reconstruction, Saba said he anticipated a decision soon and if it were decided to establish the Trade Bank, contracts to provide support services for the institution would then be issued.

"The Trade Bank is a short-term, high priority programme. The [UN's] oil-for-food programme phases out in six months and this [bank] would fit in with that," he is quoted as saying.

Development plans

Saba apparently anticipates the Trade Bank would be a 'stand alone' autonomous body but the specifications for the proposed institution are yet to be drawn up.

The idea of the Trade Bank will be further developed at the Organisation for Economic Cooperation and Development's July conference in Paris.

Non-US Exports

Export credit agencies (ECAs) from non-US countries should be interested in the idea of the Trade Bank too according to Saba.

He is quoted as saying that while the bank would be established to issue L/Cs with credit insurance from Ex-Im Bank - the US' official ECA - he expects that ECAs from other countries "would take a similar approach."

Credit options

Washington has been considering several options for providing the credit required to kick start Iraqi trade (DCWorld 23 June 2003). But the option to use the proceeds of Iraqi oil sales lodged in the Development Fund for Iraq (DFI) as collateral for US exports has drawn some heavy criticism.

Democratic Congressman Henry Waxman has written to Ex-Im Bank complaining that this idea would "conflict fundamentally" with the notion that Iraq's oil belongs to the Iraqi people - the DFI is essentially under the control of the US and UK occupiers of Iraq.

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