Iraqi Kurds open new "central bank" building 

TUNCELI, Turkey, Aug 21 (Reuters) - The Kurdish enclave of northern Iraq has recently
opened a new headquarters for a regional government-owned bank that is designed to
encourage local business, officials in the area said on Tuesday.

But Turkish officials voiced concern, saying the bank acted as a sort of central bank for the
region and that that could be a step toward an independent Kurdish state in northern Iraq, a
move Turkey fears could destabilise its own Kurdish areas.

Officials from the Kurdistan Democratic Party (KDP), which runs one half of northern Iraq,
told Reuters the new building had been opened in the KDP's capital city of Erbil on August
18.

They said it was called the Central Regional Bank. The bank has been active before the
opening of the new building.

"It aims to encourage local investment and provide banking services," a KDP offical said by
telephone from Erbil. The bank deals in the local northern Iraqi dinar.

Northern Iraq has been outside Baghdad's control since the end of the 1991 Gulf War and is
protected from attack by regular U.S. and British air patrols operating from Turkey.

The United States has encouraged reconciliation between rival Kurdish factions there to
forge the region into a bloc united against Iraqi President Saddam Hussein.

The northern Iraqi economy, boosted by U.N. aid and a diesel trade with neighbouring
Turkey, has performed much better than the rest of Iraq, labouring under international
sanctions.

Turkish military sources in the eastern city of Tunceli who are familiar with northern Iraq,
where Turkey keeps troops to crack down on Kurdish rebels based there, said the bank could
represent a step toward independence for the region.

Northern Iraqi Kurd officials have always said their political future lies within Iraq's borders.
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