World Bank chief backs calls to double poor countries’ aid

Date: 22/05/03

By David Cronin

A "QUANTUM leap" by EU member states and other leading industrial countries is required if an internationally agreed target of halving global poverty by 2015 is to be realized, according to World Bank President Jim Wolfensohn.

Speaking in Brussels on Monday (19 May), Wolfensohn endorsed a blueprint by Gordon Brown, the UK chancellor of the exchequer, for doubling the €50 billion-a-year in aid currently given by rich nations between now and 2015.

"We will probably need a quantum leap if we are to meet the millennium development goals," said Wolfensohn, referring to anti-poverty targets agreed by the United Nations.

"ODA [official development assistance] today stands at 50 billion, agricultural subsidies stand at 350 billion and spending on defence stands at 900 billion. But there are three billion people in the world living on less than 2 a day.

"We have got to deal with inequality. Inequality is not the only cause of crime and terror, but it certainly creates an environment in which they can flourish," added Wolfensohn, a former investment banker who was nominated for the World Bank top job in 1995 by then-US President Bill Clinton.

Gordon Brown is due to present his 'international finance facility' plan to the summit of eight leading industrialised countries (G8) in Evian, France in just over a week's time (1-3 June).

With the aim of building on existing aid commitments, he proposes that additional funding for development could be raised through issuing bonds in the international capital markets.

Wolfensohn, a 69-year-old cello-playing Australian, who fenced for his country in the 1958 Olympic Games, said that European Commissioners Chris Patten (external relations) and Poul Nielson (development), whom he met during his visit to Brussels, have "much more understanding" of how poverty can be tackled than previous members of the Union's executive.

"We are not looking at single bullets to solve things; we need an integrated view of development," he said.

"Trade will not solve things alone. ODA will not solve things alone. Lifting it to 0.7 [of gross national income, a target to which all EU states are officially committed] will not solve things if you do not have an efficient use of money."

Wolfensohn wants the G8 summit to give a fresh impetus to the Doha development round of world trade talks, launched in 2001. Two deadlines in the round - on access to medicines for poor countries and reforming farm markets - have been missed, triggering fears that September's World Trade Organization ministerial in Cancún, Mexico, will be deemed a failure.

"I'm worried about the lack of progress, but not suicidal," he said. "It's not unusual in trade negotiations, that things get done at the last minute.

"But it is critically important that progress is shown in Cancún. Otherwise, we might lose the support of the developing countries, who think of this as a development round."

On Iraq, he welcomed the agreement reached by G8 finance ministers in Deauville, France, last weekend that the war-weary country should not have to service its debt until the end of 2004 at the earliest.

Wolfensohn indicated that the World Bank may agree to cancel debt of some €70 million owed to it by Saddam Hussein's regime.

But that figure is just a fraction of the overall debt owed by the country, which is estimated at some l86 billion.

The issues are sensitive for Germany, France and Russia, all of which have been considerable lenders to Iraq. "If everybody else wants to forgive debt, that would be wonderful," he commented.

Wolfensohn also pledged there will be close liaison between his institution and the EU in assessing the needs of Iraq: "It is not an easy place to get information, so I think we will cooperate as much as we can."

But he lamented that the war in Iraq has deflected attention away from the "war on poverty".

"In Evian," said Wolfensohn, "there will be a recognition by powerful countries that there is this other war we are trying to go on with.

"What is needed beyond that is not only that it be discussed but a real sense of conviction on the part of leaders that this is important. Unfortunately, in most [G8] countries, this sort of issue is considered a lot less important than domestic pension reform."

The World Bank, which provided almost €17 billion in aid and loans to development projects last year, has been rebuked by anti-globalization protestors for allegedly failing to lessen poverty and ease the debt burden crippling economies in poor countries.

Wolfensohn said the bank has been prepared to take on board many of the criticisms levelled at it, stating that non-governmental organizations have succeeded in convincing it to adopt policies on the gender and environmental aspects of development.