I.M.F. stuck with P.L.O. ‘hot potato’

Press, 18 August 1980, Page 31

I.M.F. stuck with P.L.O. ‘hot potato’

NZPA correspondent Washington

The World Bank and International Monetary Fund have still not settled the “hot potato” of observer status for the Palestine Liberation Organisation that the Prime Minister (Mr Muldoon) had to wrestle with last year. As chairman of the organisations’ joint annual meeting in Belgrade, Mr Muldoon rejected demands by Third World and nonaligned States for the P.L.O. to join 60 other groups with observer, status.

He set up an eightnation committee, under New Zealand chairmanship, to decide the issue for future meetings, but the committee failed after three attempts to make a decision, remaining deadlocked on a four-four vote. Mr Muldoon then passed the issue to his successor, the Tanzania Minister of Finance, Mr Amir’ Jamal, saying: "He has now got the hot potato I had in Belgrade.’’ The next joint annual meeting is planned for Washington next month, and the executive boards of the World Bank and the I.M.F. discussed the question when they met recently. Under great pressure from the United States, which is resolutely opposed to recognition of the P.L.0., the boards agreed, according to informed sources, on a resolution to limit the observers at next month’s annual meeting to the same number as attended at Belgrade last year. This resolution has now been sent to a 140-member board of governors for approval on a postal ballot.

If they approve by September 8, the P.L.O. will again be excluded from the meeting to start on September 30. If a majority do not agree, the decision will pass to Mr Jamal, who has made it clear he favours a P.L.O. presence at the meeting, which Mr Muldoon will again attend as the New Zealand representative. Over'the: last year, the issue has acquired increasing importance to the World Bank and the IM.F. As the balance-of-pay-ments deficits of nations without oil resources are likely to reach crisis proportions next year, the I.M.F. has been looking to Saudi Arabia and other oil producers to invest their vast. surpluses with it for relending to the deficit nations.

But Saudia Arabia — with West Germany already the I.M.F.’s biggest fund contributor — has been vociferous in its demands that the P.L.O. be given the same observer status it has with the United Nations and such bodies as the Arab Monetary Fund. The fear is that no recognition for the P.L.O, will mean that the Saudis take their badly needed money elsewhere. Mr Jacques de Larosiere, managing director of the LM.F., is due to visit Saudi Arabia in the next few weeks in a bid to head off any hasty decision before the annual meeting. The alternative to Saudi funds, financial sources are suggesting, is that the I.M.F. will be forced for the first time to make huge borrowings on the world financial markets next year, draining off millions of dollars.