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US to organize new credit facility for Iraq's foreign trade

The US-led administration in Iraq is to establish a major credit facility "within weeks" to lubricate overseas trade after last week's lifting of UN sanctions, its head Paul Bremer announced on Monday.

"It will be a substantial credit facility that first symbolically indicates to the world that Iraq is open for business and also provides a practical incentive to people who want to trade with Iraq," Bremer told a news conference.

The facility will be funded by a raft of private banks as well as the Central Bank of Iraq, he said.

He added that a further US$250 million of central bank reserves had been recovered undamaged from the bank's vaults after they had been drained of wartime flooding from the Tigris River by coalition troops over the past week.

"We are now nearing the end of the first stage of our task here and entering a new stage," said Bremer, noting that government ministries, most power and water supplies, and a new police force were all now up and running.

"The task now is to help the Iraqis rebuild their economy after decades of state control and mismanagement."

Bremer said the lifting of UN sanctions had been a "big step along this road."

"Oil revenues will now all be used for the Iraqi people as we work to establish the first free economy here in years," he said.

"Encouraging robust trade between Iraq and the rest of the world is a key part of our stra-tegy," he said, adding that a market economy was the "best protection for political freedom" in Iraq.

Bremer said the occupation had yet to work out any detailed economic policies, and was still looking at the closely related issues of trade tariffs, currency, and price deregulation.

"We are in the process now of trying to establish what the relationship should be and what the steps should be. I don't have a preconceived view on that," he said. "Because the economy was so tightly controlled and interlinked, you can't change any one part of it, without changing it all."

Bremer said that for the moment the ration system on which some 60 percent of Iraqis depended for basic goods under former president Saddam Hussein would be preserved.

"In the long term we would like to see market prices brought into the economy," he said.

"At this point it would be premature for me to lay down specific guidelines [for foreign investment] and it's a matter that, in the end, an Iraqi government would want to make a contribution to discussing," he said.
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