Reflecting a growing sense of urgency over the Persian Gulf economic crisis, World Bank President Barber Conable said yesterday that a new pool of financial aid for Eastern European and other severely affected nations may have to be created by the bank for distribution next year.
Speaking at the conclusion of the joint World Bank and International Monetary Fund meeting, Conable said this new approach would be necessary "if the crisis continues for a protracted period of time -- that is, if the price of oil stays up and there continues to be turmoil, uncertainty and impact on the global economy." He defined "protracted" as an extension of the crisis into 1991.
IMF Managing Director Michel Camdessus also indicated that his agency is exploring ways of assisting countries not usually eligible for IMF-subsidized loans. But the IMF does not plan a special fund. Both Conable and Camdessus indicated that financing would be sought from "windfall" countries benefiting from higher oil prices.
Additional assistance contemplated by the World Bank and IMF would be separate from the aid planned for the so-called "front-line" nations of Egypt, Jordan and Turkey, for which a coordinating committee under Treasury Secretary Nicholas F. Brady is attempting to collect up to $14 billion for this year and next.
The discussion of added ways of meeting the economic fallout from Iraq's invasion of Kuwait was symbolic of a growing concern among some at the annual meeting that the initial response to the crisis may have been too optimistic.
The sharply rising spot market price of oil this week induced second thoughts among officials.
Dramatic explanations by some Eastern European ministers of the new plight of their countries also appeared to have had an impact. For example, Czechoslovak Finance Minister Vaclav Klaus said: "My English does not offer me adjectives for describing the problem now."
Because the Soviet Union is charging the world market price for oil -- when it can deliver it -- Klaus pointed out that, in effect, "we are facing the three oil shocks of the last two decades all at the same moment. ... It seems clear to me that some extra, additional financing will be necessary."
Similarly, Polish Deputy Prime Minister Leszek Balcerowitz told the meeting that just as the Polish economy was showing "the first faint signs of recovery," the loss of two-way trade with Iraq -- a main source of its oil -- had thrown things into reverse. He, too, appealed for extra help.
Conable said candidates for additional aid next year include Pakistan, Sudan, India, the Philippines, Bangladesh, Morocco and Sri Lanka, as well as the Eastern European nations. Many of these are "middle-income" developing countries not eligible for concessional aid through the World Bank's International Development Association (IDA).
In related developments:
Camdessus and Conable said that after conferring with Soviet "special invitees" at the joint session, they were ready to begin immediate technical assistance to that country without waiting for it to complete a long process of membership application.
"It's going to be a tough job to reorganize the Soviet economy, and it will take some revision of their thinking," Conable said. "But that doesn't mean they're a basket case. The Soviet Union can be highly productive. It has lots of resources and a lot of educated people."
Middle East members of the IMF dumped the highest-ranking -- and only -- Iraqi official at the agency as their alternate executive director. Abdul Moneim Otham of Iraq will be replaced by Azizali Mohammed, a Pakistani.
The ouster took place during the regular election of executive directors, results of which were announced yesterday. Mohamed Finaish of Libya continues as executive director for the Middle East group.
Conable, whose five-year term expires next June, broadly hinted he would be receptive to reappointment, saying, "It's a very interesting job," and that he is "grateful for expressions of support." Recalling earlier criticisms of his stewardship, he said: "It's not like it was the first couple of years."