Arabs Thwarted in Move to Legitimize PLO in World Bank, Imf
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Arabs Thwarted in Move to Legitimize PLO in World Bank, Imf

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The industrial democracies in the World Bank and International Monetary Fund (IMF) successfully blunted the drive of the Arab states to win legitimacy for the Palestine Liberation Organization and to achieve additional authority in the governing of the two fiscal institutions as their annual meetings concluded here Friday.

Decisions made on issues growing out of the PLO bid were: selection of a committee of nine governors to examine the complaint of Saudi Arabia and Kuwait that the voting which blocked the PLO’s entry as an observer to the meetings was illegal; the institutions’ executive boards are to recommend possible changes in the bylaws to avert future complications regarding observers; negotiations that may take several years are to be held on demands by the two dozen Arab countries and their Organization of Petroleum Exporting Countries (OPEC) allies, known as “Group 24,” for more voting power.

As these decisions developed, the threats over the PLO issue by Saudi Arabia and Kuwait to cancel contributions to the World Bank and IMF not only receded but actually evolved into support for the proposed establishment by the Bank of an “energy affiliate” to help oil-importing developing countries economically battered by the steep and continuing increases in petroleum prices.


“We regard the proceedings against the PLO were successful,” a Bank Governor of a Western country remarked when asked by the Jewish Telegraphic Agency how he viewed the circumstances. Asking not to be identified, the Governor noted that the subcommittee of nine named to look into the legal aspects of the rejection of the PLO consists of the eight countries that split evenly on the issue last year but now includes Sweden which voted last month for the U.S. resolution that resulted in barring the PLO.

The Arabs had charged that extending the vote on the resolution from Sept. 9, when allegedly a quorum was not available, to Sept. 19 when it was, constituted an illegal process. The resolution limited observers to this year’s meetings to those listed in 1979.

Besides Sweden, this committee includes Belgium, France, West Germany and New Zealand which backed the quorum decision, and Indonesia, Pakistan, Nigeria and Yugoslavia which opposed it. The group will submit its findings to the Boards of Governors of the World Bank and the IMF by Jan. 31. Kurt Eklof, Sweden’s IMF Governor, told JTA “Sweden is traditionally very neutral” and “at present, I cannot say anything on the position Sweden will take.”


Meanwhile, the executive bodies of the two institutions will draft recommendations for submission by March 1 to the Governing Boards on possible changes in the bylaws regarding observers and the power of the chairman of the annual meetings on invitations. Tanzania’s Finance Minister, Amir Jamal, had “disinvited” all observers on the 1979 list because the PLO was not legitimized. The Governors found they could not reverse him.

Regarding the demands by the ministers of the “Group of 24” for more power, which if granted would result in less voting strength for others among the 140 IMF members and 135 in the Bank, the decision was for “negotiations” that IMF specialists said would continue at least for the next two years and possibly into 1985. Voting power is determined by financial output. The U.S. leads with 21 percent; the United Kingdom is next with 11 percent; and Germany, Japan and France follow. The “G-24” have 38 percent and want 45 percent. Cuts in the authority of other countries would entail acute political decisions.

Indicating abandonment of threats to diminish support, Sheikh Mohammad Abal-Khall, Saudi Arabia’s Minister of Finance and National Economy, raid the Governors “We are fully prepared to participate with others in a discussion to look into all aspects of the proposal” by outgoing Bank and IMF president Robert McNamara for an “energy affiliate” to help poorer countries with energy problems. McNamara suggested a pool of $25 billion for this purpose.

Earlier, U.S. Treasury Secretary G. William Miller said he did not think the PLO issue would result in unwillingness by the oil cartel parties to participate in the larger financing. Saying “there is a cooperative attitude and good will all around,” Miller invited Saudi and American business leaders to the U.S. Treasury to discuss business investment opportunities in Saudi Arabia.


Arnon Gafny, Governor of the Bank of Israel, pledged Israel’s support to poor countries. He told the plenary: “As in the past, we stand ready to share our experience and technology with other developing countries and with international and regional development institutions.”

He noted that “despite stringent constraints in terms of capital, arable land and water, Israel has, with the help of World Bank financing, developed its agriculture over the past two decades to the point of becoming a net exporter, instead of a net importer, of food. In view of our problems, the technologies developed place emphasis on high output with minimum capital investment, and have therefore proven to be particularly suitable” for the needs of developing countries.

Referring “regrettably” to the PLO issue, Gafny said the Bank and the IMF had observed by “an unwritten agreement” the “letter and spirit” of their rules, “saving the meetings from political issues” by barring the PLO. “The PLO does not meet any” of the “criteria” for observer status, he said. “Only a firm stance against the introduction of extraneous political elements jeopardizing the form and substance of the bank and fund functions will enhance the best interests of the international community as a whole.”

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