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DEVELOPMENT: World Bank Chief Vows "Inclusive" Globalisation

Abid Aslam

WASHINGTON, Oct 10 2007 (IPS) - Robert Zoellick, the World Bank president, pledged on Wednesday his agency would ensure that the world's poorest people share in the benefits of economic globalisation.

"It is the vision of the World Bank group to contribute to an inclusive and sustainable globalisation, to overcome poverty, enhance growth with care for the environment, and create individual opportunity and hope," Zoellick said in a speech marking his first 100 days in office and delivered in the run up to the bank's Oct. 20-22 annual meeting.

The former U.S. deputy secretary of state and chief trade envoy under President George W. Bush also urged rich countries to follow the lender's lead in committing more money to development efforts.

The bank set an example last month, he said, when it announced a 3.5-billion-dollar contribution, from its profits, to the International Development Association (IDA). This would more than double the bank's commitment to IDA, the window through which it disburses money at little or no cost to the world's 81 poorest countries, most of them in Africa.

"Now we need the G-8 and other developed countries to translate their words from summit declarations into serious numbers, too," he said. Zoellick referred to the Group of Eight rich nations.

Zoellick's comments reflected ongoing negotiations in which he has asked the bank's shareholders to pitch in 39 billion dollars for IDA operations in 2009-2011. Haggling often is intense in the face of members' unwillingness to spend more money.

Zoellick took over as bank president on Jul. 1 from Paul Wolfowitz, a former U.S. diplomat and deputy defense secretary whose tenure was truncated by an ethics scandal.

He inherited an agency that lends around 24 billion dollars per year for everything from roads and power plants to schools and computerised courtrooms. The bank has defined itself as an institution dedicated to fighting poverty since the 1960s, after outliving its original mandate of financing reconstruction in the aftermath of World War II.

The bank has since made its bread and butter in China, India, and countries that have kept up with loan repayments and risen from the ranks of the poorest to form a new tier of middle-income economies.

Many of these countries came to be known as "emerging markets" when the bank's fast-growing private sector unit, the International Finance Corporation (IFC), coined the term to distinguish them from the mass of developing nations in the eyes of world financial markets. The ensuing rise in investment enabled them to reduce their dependence on aid and to diversify their sources and terms of finance.

This success – coupled with rising resentment of the policy prescriptions that accompanied loans from the bank and its sibling, the International Monetary Fund, in the 1990s – has led to a decline in traditional lending.

Zoellick acknowledged the reversal of fortune for the bank's core element, the International Bank for Reconstructrion and Development (IBRD), which makes market-rate loans.

"Our loan business has been shrinking. Today, about 70 percent of the poor live in India, China, and the middle-income countries served by IBRD," he said. "These countries have asked us to remain engaged in their search for how best to meet their diverse needs. So the IBRD should be growing, not contracting."

To shore up business, the IBRD would reduce the cost of its loans to levels seen before the Asian financial crises of 1997-1998 and would give individual countries policy recommendations tailored to their specific needs, according to Zoellick.

"We aim to be better, faster, and cheaper," he said.

Zoellick echoed predecessor James Wolfensohn, a former investment banker who headed the bank under the U.S. administration of Bill Clinton, in invoking the fruits and pits of global economic integration.

"Globalisation offers incredible opportunities," he said over lunch at Washington's National Press Club.

"Yet exclusion, grinding poverty, and environmental damage create dangers. The ones that suffer most are those who have the least to start with: indigenous peoples, women in developing countries, the rural poor, Africans, and their children," he added.

Zoellick laid out a six-point manifesto for the bank and its affiliates. They would concentrate on aiding the poorest countries, chiefly in Africa; developing special projects in states emerging from conflict or facing collapse; and developing new financial products and advisory services for middle-income countries.

Additionally, his strategy calls for playing a more active role on issues such as climate change, HIV/AIDS, and malaria; supporting pro-market and pro-Western initiatives in Arab countries; and increasing the bank's effectiveness as "a 'brain trust' of applied experience", in the lender's own words.

Some items on the agenda – the poorest, post-conflict recovery, AIDS, and the "knowledge bank", as the lender once called itself – appeared reminiscent of causes and strategies pitched by Wolfensohn, Wolfowitz and Robert McNamara, the Vietnam War-era U.S. defense secretary who headed the bank from 1968-1981.

But on at least one item – the environment, and climate change in particular – Zoellick seemed to telegraph new moves.

Prominent among globalisation's costs are "rivers that run black, skies that block the sun, and threats to health and climate," he said.

"At our upcoming annual meetings and at the U.N. climate change conference in Bali this December, I hope to outline a portfolio of ways the World Bank group can help integrate the needs of development and low carbon growth," Zoellick said. "We need to focus particularly on the interests of developing countries, so that we can meet the challenge of climate change without slowing the growth that will help overcome poverty."