BID President against a U.S. war in Iraq

Investment, tourism and oil are already feeling the painful impact of a possible U.S. war in Iraq, said Enrique Iglesias, president of the Inter-American Development Bank (BID) in the closing ceremony of the BID Regional Governors Meeting held in Tegucigalpa, Honduras.

Mr. Iglesias blasted the U.S. threats of launching a war against Iraq because it would play significant havoc with the world economy, a situation that is already pushing oil prices up.

The rising trend of crude prices as war drums beat louder is hitting all the same in those countries that depend heavily on oil. “This is no doubt too hefty a burden to bear,” Mr. Iglesias said.

“We’re also coping with the markets’ hesitation in terms of investments and in terms of the flow of resources,” he added.

The BID President pointed out that “we’re also having some implications in international travel –something that hits tourism hard. So, we’re already feeling part of that impact across the board” amid a possible war against Iraq.

“Let’s hope it won’t come to this extreme (war) and let’s hope we could walk out of this uncertainty as soon as possible and out of what’s bugging us the most as far as international affairs are concerned,” he underscored.

Mr. Iglesias went on to say “the best case scenario is no conflict at all. But if it comes to that, the aftermath would be hard to gauge because we don’t know exactly how long this war could drag on, nor what’s going to happen the morning after.”

Mr. Iglesias and Honduran vice president Vicente Williams closed the 17th Consultation Meeting of BID Governors of Central America and the Dominican Republic that began last Thursday in Tegucigalpa.

BID governors and officials weighed the bank’s cooperation efforts with the region, the prospects of the free trade agreement Central American nations are currently bargaining with the United States, public safety and a possible tax overhaul for the region.

According to Mr. Iglesias, Central America must join the free trade realm because “those countries that have posted higher growth numbers are the ones that are more broadly opening their exporting capabilities to the world.”

Negotiations between Central America and the U.S. got started last January in Costa Rica and are scheduled to resume in Cincinnati, Ohio with a possible deadline fixed for later this year.

The BID President augured “the opening of local economies to the outside world is the key to economic development.”

He also said the free trade agreements that some Latin American nations are now negotiating with the U.S. and the European Union (UE) mean “the region is reaching out to the rest of the world.”

“Signing agreements with those countries we can do business with provides us with defense mechanisms that guarantee access to markets and the possibility of being rewarded for our exporting capabilities,” Mr. Iglesias averred.

As to tax-collecting systems both in Central America and the Dominican Republic, the BID President stressed on the need to streamline them in order to achieve more equity in tax returns.

The BID presented a research study on the region’s tax-collecting systems to the attending governors –Finance Ministers and Central Bank Presidents.

Mr. Iglesias made clear the BID won’t call for further tax raises and refused to suggest any particular action to any of the countries for these are “their own sovereign decisions to make.”

The 17th Consultation Meeting of Central American and Dominican BID Governors also paved the way for the BID annual assembly to be held on March 22 to 25 in Milan, Italy.