THE WEST KNOWS NOW THERE IS NO WALL TO HIDE BEHIND: WOLFENSOHN. World Bank President James Wolfensohn warned last night that global poverty was breeding terrorism and called on the west to make good on its promises to bridge the gulf between rich and poor nations, reports the Guardian (UK). Attempts to construct a fairer economy were being frustrated by a lack of aid and protectionism in the developed world, said Wolfensohn, adding that the events of September 11 had proved that there was no artificial barrier between the two halves of the world.
"I was saying before September 11 that the issue of poverty and development, the issue of trade, the issue of the environment, of health, of migration, of crime, of drugs, were all global things. They don't recognize borders," he is quoted as saying. "We have a situation where 20 percent of the world's population have 80 percent of the wealth, and the other 80 percent has just 20 percent. If that's a situation that leads to instability, then we are saying that that instability will convey itself through migration, through wars within countries and through crime and terrorism."
Wolfensohn continued, "Many people of my generation grew up in developed countries thinking that the world was divided into two parts, and that there was a wall round the developed world. They thought that poor people had no relevance to us. What happened on September 11 was that anybody who thought there was a wall now knows that there is no wall. Conditions in one part of the world can affect us in the world behind that imaginary wall. Afghanistan can land in New York or on the Pentagon."
Noting that Wolfensohn said on the BBC that the West needed to devote more time to the issue of helping developing nations in order to bolster world security, the National Post (Canada) quotes him as saying, "That's an issue of peace that affects us directly."
Post September 11, the Guardian notes Wolfensohn said, there was more of an interest in development issues, but he wanted to see whether this concern was translated into action at a time when budgets in the West were coming under pressure as a result of slow growth. Aid from rich countries to poor countries was running at $50 billion a year, he said, but the West was spending seven times that amount on agricultural subsidies that prevented products from poor nations being sold in the developed world.
Also speaking on Radio France Internationale, Wolfensohn urged rich countries to open their markets to exports from poor countries. Growth will not come to developing countries unless markets are opened to them. We can also help developing countries take advantage of open markets by building the required infrastructure.
Even before September 11, Wolfensohn also notes, there were already problems brewing in the industrialized economies. But no one spoke of the problems, both political and economic, brewing in the developing countries. Without being entirely pessimistic, Wolfensohn says he now wonders how the next few months will unfold and what it will bring for the developing countries. Agence France-Presse also reports on Wolfensohn's comments.
With the Bank now expecting global growth of just one percent next year, "we are particularly concerned about developing countries, which account for 4.8 billion people," the Guardian quotes Wolfensohn as saying. "They have been hit in terms of falling commodity prices but also in ways that were not expected, such as the drop off in tourism to the Caribbean. The result is that 20 million people are not going to get out of poverty, a lot more kids will be dying because of a lack of health care and a lack of nutrition. That's the problem for people in poor countries. They live on the edge. When you are living on a dollar a day it's a question of life and death."
Meanwhile, the terrorist attacks on the US last month and the subsequent sharp deterioration in the outlook for the global economy should reinforce the importance of the World Bank and other global institutions to the rich nations that finance them, Dow Jones reports. Wolfensohn noted yesterday that instead of relying on the Bank to act as subordinate emergency financier to the IMF, the Bank's major shareholders should acknowledge that its key role should be in alleviating the poverty and inequality that so often encourages despairing populations to turn to radical fundamentalism, he said.
"When you're talking about structural loans-fast-disbursing loans-there may be some of those, but I think we'll be moving much more towards sort of programmatic type loans that would be over a five, or 10-year period for education, for restructuring of financial and legal systems, for highways, for power," he is quoted as saying.
If the Bank and the Fund were to ease the pain for developing nations struggling to integrate into a fast-evolving world economy, the wealthiest nations would need to back these institutions with increased assistance and broader mandates, Wolfensohn argued. "The IMF and the World Bank cannot carry it themselves. This requires really a change of heart on the part of the richer nations and not just one of charity," he said. "Secondly, I think everyone will come to recognize that there is a need for global institutions. This cannot be done without a sort of global coordinating mechanism and some mechanism to provide funding and relief. If you didn't have the Bank at the moment, or the Fund, you'd probably have to invent something like them."