THE HISTORY OF THE OPEC FUND
The Founding Years – The Shihata
T he OPEC countries were not blind to the struggles of fellow developing countries. In the 1960s and 1970s, intra-Arab solidarity and Arab solidarity with other emerging regions like Africa were blossoming. The establishment of the Kuwait Fund for Arab Economic Development in 1961, the Arab Fund for Economic and Social Development in 1968, the Dubai Fund in 1971 and the Saudi Development Fund in 1974 were testament to this approach. Ibrahim Shihata, who became the OPEC Fund’s first Director-General in 1976, wrote: “Birth and growth of the OPEC aid phenomenon did not follow the oil price.” Instead, one strong impetus for setting up the OPEC Fund was the goal to make national aid delivery more effective by taking a more structured, better aligned and closely coordinated approach. Secondly, the early days of the OPEC Fund were clearly fueled by the world view held at the time by many developing nations: “We believe that the developing countries which have managed to achieve some measure of prosperity have done so in spite of the international economic system and not thanks to it,” Director-General Shihata said in a speech at the United Nations in 1981.
Nevertheless, "launching an institution such as the OPEC Fund was not an evident task," as the later Assistant Director-General Said Aissi once put it, and accelerated by the boost in external revenues. By the time of the first OPEC Summit in Algiers in March 1975, all but three countries had their national aid agencies focused on low-income countries in the Global South. This term is usually understood to comprise countries in Africa, most of Asia and Oceania as well as Latin America and the Caribbean. Many are organized in the Group of 77 (G77), established in 1964 and today the largest intergovernmental organization of developing countries in the UN with currently 134 countries (the historical name has been retained). The participants of the OPEC Summit in Algiers agreed on the idea of establishing a collective aid facility. The plan was referred to the OPEC Ministers of Finance who passed a recommendation in November 1975 for the “establishment of a new facility for the provision of additional financial support to less developed countries under the aegis of OPEC.” However, it would not be a special organ of OPEC, nor would it have any legal or administrative link with that organization.
Ibrahim F. I. Shihata
Ibrahim F. I. Shihata, 1937-2001, was an Egyptian international lawyer who served as the first Director-General of the OPEC Special Fund, later renamed OPEC Fund for International Development, from 1976-1983. Holding a BA in Law from Cairo University Law School and a PhD in International Law from Harvard University, he worked as Legal Counsel at the Kuwait Fund for Arab Economic Development before being appointed to head the newly established OPEC Special Fund. Shihata is credited for designing the legal, governance and operational framework of the institution. A dedicated advocate in the fight against poverty, he championed global development cooperation and successfully positioned the OPEC Fund as a multilateral institution committed to supporting developing countries in the Global South. After his time at the OPEC Fund, he continued his career at the World Bank as General Counsel and Secretary-General of the International Center for Settlement of Investment Disputes (ICSID). He is also remembered as the founding father of the Multilateral Investment Guarantee Agency (MIGA), set up in 1988 to provide political risk insurance and credit enhancement guarantees.
The first OPEC Summit in Algiers, March 1975
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