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World Bank links financial support for Iraq to reconciliation

BAGHDAD (Reuters) - The World Bank plans to offer Iraq financial support in parallel with projects to foster reconciliation after Islamic State’s defeat, its regional director said on Monday, to ensure that reconstruction after years of conflict is sustainable.

U.S.-backed Iraqi and Kurdish forces have dislodged Islamic State from most cities that the hardline Sunni group captured in 2014 in Iraq, and they are now fighting the militants in their last major stronghold, Mosul, in the north.

While mainstream Shi’ite, Sunni and Kurdish forces are taking part or supporting the battle to dislodge Islamic State from Mosul, their politicians are yet to heal rifts that followed the U.S.-led invasion of Iraq in 2003.

“The Mosul battle is keeping all these forces together,” World Bank director for the Middle East Ferid Belhaj told Reuters by telephone. “When the fight is over, we don’t know what kind of pressures ... will be in place; that’s why it is very important for the Iraqis to start this exercise right now.”

“We will try as much as we can to make sure that the incentives ... for reconciliation would be more appealing than the incentives for each of these factions ... to go it alone.”

The World Bank approved in December a new loan of $1.485 billion to help Iraq lessen the impact of low oil prices on its economy and shoulder the cost of the war on Islamic State, bringing its total support to the nation to nearly $3.4 billion.

The OPEC nation’s government income comes almost exclusively from exports of crude oil. It fell sharply when world oil prices tumbled three years ago.

In addition to planned financial support “we will bring people who have had experience in rebuilding social ties from a number of countries around the word,” Belhaj said, mentioning the experiences of South Africa, Morocco and Rwanda.

“This is going to be a parallel track. We will make sure that money will flow ... towards reconstruction and rebuilding, but at the same to make reconstruction and rebuilding sustainable, we will need to make sure the social contract is being drawn in a way that would allow for the infrastructure to remain solid.”

The World Bank has also offered advice to the government about maintaining the Mosul dam, said Belhaj, although it was not involved in financing or arranging the contract with Italian company Trevi which was selected last year to carry out badly needed repair.

A U.S. government briefing paper released a year ago said 500,000 to 1.47 million Iraqis living in the highest-risk areas along the Tigris River “probably would not survive” the impact of a flood that would be caused by the collapse of the dam located north of Mosul. Iraqi authorities have played down the threat, estimating only a one in 1,000 chance of failure.

Editing by Dominic Evans