The cost of Iraqi reconstruction will be high

Over 16,000 finance officials, journalists, and observers have descended on the small Gulf emirate to discuss weighty issues of world economic growth and poverty.

The decision to hold the annual meeting in the Middle East was made before the Iraq war - but the problem of the reconstruction of Iraq has added urgency to the tasks which will be addressed by the IMF and the World Bank.

The World Bank has taken the lead in drawing up the plans for reconstruction which will be put to a meeting of donors in October - and it says that its task will be completed on time despite the destruction of the UN headquarters building in Baghdad, where the Bank team was based.

The World Bank is also taking an active role in looking at the economic needs of the West Bank and Gaza Strip, which could eventually form a new Palestinian state.

KEY ISSUES AT DUBAI Reconstruction of Iraq Aid to Palestine IMF loan to Argentina Middle East development Meeting poverty goals Managing the world economy Limiting impact of dollar falls

Despite the political turmoil in the region, James Wolfensohn, the World Bank's president, told a press conference that he will organise a donors' conference in November to raise money for economic development.

The Palestinian economy has suffered in the past three years, with about half its three million citizens unemployed and 60% living under the poverty line of $2 per day.

And the World Bank is also hoping that donors will stump up more money to help reconstruct the Afghan economy - which has been struggling since its liberation from the fundamentalist Taliban regime two years ago.

MIDDLE EAST DEVELOPMENT Bank warns of job shortage

The institutions are also concerned with the slow pace of economic development in the whole region, which has made it a breeding ground for terrorism.

Mr Wolfensohn said that the question of Middle East development was much deeper than just "fundamentalism and wars".

Development goals

The World Bank is also worried that political disagreements and the continuing economic slowdown have diverted attention from the pledge made last year to tackle world poverty.

Mr Wolfensohn warned that the failure of the rich countries to reach a trade deal in Cancun, or to pay over much of the $16bn in additional aid promised last year, has increased scepticism among developing countries.

The World Bank is concerned that many developing countries are not on target to meet the so-called millennium goals, including improvements in child health, sanitation, and education.

The Bank is calling for improved delivery of public services in poor countries, as well as better governance to root out corruption and improve democracy.

But Mr Wolfensohn said money was still important in encouraging political and economic reform.

"If countries knew that there was $50bn available I have no doubt that they would adjust," he said.

But some development groups will argue that the Bank itself is not doing enough to tackle poverty and health, and will criticise its slowness in tackling the debt problems of the poorest countries.

Rich countries disagree

One of the biggest issues for the world's richest countries could be a disagreement over the future of the dollar, which will be discussed on the sidelines of the meeting at a G7 meeting of finance ministers.

The US has warned that China needs to float its under-valued currency on world markets, allowing its value to increase and thus reducing the impact of cheap Chinese goods on the American market.

But European finance ministers, whose own currency, the euro, has appreciated sharply against the dollar, will tell the US to get its own house in order, and tackle its "twin deficits" of the budget and its current account.

The IMF, in its world economic assessment, has warned that the "unwinding" of the twin deficits could lead to a sharp fall in the value of the dollar, while its director, Mr Koehler, says that the slowdown in Europe means that the stability and growth pact - which limits budget deficits - need not be strictly enforced.