After European unification, the next challenge is global poverty

By James D. Wolfensohn

Date: 13/05/04

This is a moment of triumph for Europe. On 1 May, the European Union welcomed ten countries - most of them remnants of the former Soviet Union - as its newest members. The EU is now a massive free-trade area and a political union with 25 countries, 455 million people and an economy worth $11.6 trillion (l9.8tr) per year.

After World War II, far-sighted Europeans and Americans promoted European unification to end a history of ruinous wars. They did this through investing in reconstruction and development - by choosing to invest in economic prosperity and peace. Their vision has succeeded spectacularly.

Now it is time for all of us to apply the same kind of vision to the challenge of our times: global poverty. That vision is encapsulated in the Millennium Development Goals to cut poverty in half by 2015. These goals were signed up to by almost every world leader four years ago - so we should be able to muster the same sense of common purpose that drove the effort to revive and unite Europe.

The problems we face are no less momentous and critical than those confronting the world 60 years ago, when a shattered Europe looked for support to rebuild. The challenge now is to address the gap between the rich and the poor across the world, a gap that represents the fault-line imbalance of our time.

In our world of six billion people, one billion own 80% of global wealth, while another billion struggle to survive on a dollar a day. Two billion people have no access to clean water; more than 100 million children never get the chance to go to school; in excess of 40 million people in the developing countries are HIV positive - with little hope of receiving any treatment.

Demography also contributes to the imbalance. Over the next 25 years, some two billion more people will be added to the planet's population - but a mere 50m of them will be in the richer countries. The vast majority will be in the poorer nations, born with the prospect of growing up into poverty and unemployment - and disillusioned with a world that they will view as inequitable and unjust. Terrorism is often bred in places where a burgeoning youth population sees hope as more of a taunt than a promise.

For these young people, the choice is stark: dignity or desperation. In making the choice, an ever-increasing number will leave their home countries to find work. Migration, already a significant social and political issue in Europe, will become an even more critical issue for us all.

There is further imbalance between what the industrialized countries spend on development assistance - the most visible sign of support for the poorest nations - compared with other priorities. Subsidies and tariff protection for farmers in the developed countries add up to more than l250 billion per year. Military spending by all countries is in the region of l760bn per year. By comparison, spending on development assistance is around l42bn per year.

What needs to be done to correct this global imbalance?

At Monterrey in 2002, at a meeting on financing the Millennium Development Goals, a bargain was struck: the developing countries promised to focus on building capacity, strong legal and judicial frameworks, and fighting corruption; the developed countries, for their part, promised to free-up trade, increase aid and help the poor countries move to a more sustainable position on debt.

Over the last two years, the Monterrey 'bargain' has been analyzed and discussed. Now it is time for action.

There are signs that this is happening. European and American negotiators have made recent efforts to revive the Doha trade round by confronting the issue of agricultural subsidies. There is also evidence that aid flows are beginning to increase - though nowhere near the doubling of resources that is estimated to be needed. So there is a long way to go.

European countries have cooperated and integrated in ways few could have imagined and only a few foresaw. We need that same determination now to unite behind the global challenge of reducing poverty.

The Millennium Development Goals offer poor countries hope - and rich countries a road map to achieving real improvements in the lives of hundreds of millions of people by 2015.

And our response to this challenge will shape the world our children live in.

• James D. Wolfensohn is president of the World Bank.
• Craig Winneker is the editor of TCS-International (www.TechCentralStation.be), a Brussels-based website.

Commentary by the President of the World Bank.

http://www.worldbank.org/ http://www.worldbank.org/

---