ISLAMIC DEVELOPMENT BANK ON AID TO IRAQ AND GAZA

1. On July 22, Econ Counselor met with two senior Islamic
Development Bank officials in Jeddah. They are Amadou
Boubacar Cisse (VP for Operations) and Rami Ahmad (Deputy
Director of Operations in charge of Middle East projects).
Cisse briefed on Iraq, Gaza and more generally on how the IDB
makes project decisions:

-- IRAQ. The IDB allocated $500 million for Iraq in 2005,
for a five-year period. Consulting with the Iraqi government
it selected education and electricity as the top priorities.
To date, it has approved only one project, worth $12.8
million, to build 15 elementary schools and train teachers,
including by the World Bank in Washington. The IDB is aware
of the UN/World Bank trust funds but prefers to fund
countries directly, and is awaiting the Iraqi Government to
provide further projects for IDB staff evaluation.

-- Iraqi Central Bank Governor Sinan al-Shabibi visited the
IDB last year, at which time the IDB cleared out overdue dues
unpaid by Saddam and restored Iraq to full IDB membership.

-- GAZA. Cisse said the proposed Egypt-Gaza electricity
transmission project is under technical review, and not fully
approved as yet by the IDB Board. IDB projects for the
Palestinians are often done directly with contractors and not
funded through the Palestinian Authority, he said.

-- IDB at the Singapore meeting. IDB President Madani leads
the IDB delegation to the annual Bank/Fund meetings in the
Fall and will be in Singapore in September. VP Cisse
generally leads the IDB delegation to the annual Bank/Fund
Spring meetings in Washington.

-- Who Makes IDB decisions? The IDB has 56 member
countries, and not all have Muslim majorities (Russia has
applied for observer status). There are seven permanent
board members: Saudi, Kuwait, UAE, Iran, Turkey, Libya, and
Egypt. The three Gulf countries contribute the majority of
the IDB's capital (Saudi is the largest with 22 percent,
roughly the same as US's contribution to the World Bank) and
thus together can control project allocation, per Cisse.



2. Comment: IDB staff described Cisse as a former PM of
Niger and former World Bank staffer of some 15 years. On
Iraq, IDB appears to rely heavily on the World Bank for
information. For instance on the proposed Iraq Compact
meeting of July 20, IDB was planning on getting a readout
from the World Bank office in Amman, though the IDB received
an invitation to attend.
Gfoeller