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Official urges bridging rich-poor gap

/ Source: Reuters

Acknowledging the growing urgency of developing countries’ grievances, World Bank President James Wolfensohn warned on Tuesday it would be reckless to delay steps to bridge the gulf between rich and poor.

Wolfensohn's call, coming from the head of a bank whose mission is to tackle global poverty, is by itself unexceptional.

But it assumes greater significance as policymakers sift through the fallout of poor countries’ forceful defense of their interests at world trade talks in Mexico earlier this month.

“At Cancun, developing countries signaled their determination to push for a new equilibrium,” Wolfensohn said in his opening speech to the bank’s annual meeting here.

“They signaled that there must be greater balance between the rich and the powerful, and the poor and the numerous.”

Against this background, Wolfensohn painted a grim picture of the future if a sixth of the world’s six billion people continue to own 80 percent of its output while another billion struggle to get by on less than a dollar a day.

“Delay is reckless,” Wolfensohn said.

While 50 million people are likely to be added to the population of the rich countries in the next 25 years, the developing world will add half a billion people, he noted.

“The demographics of the future speak to a growing imbalance of people, resources and the environment. If we act together now, we can change the world for the better. If we do not, we shall leave greater and more intractable problems for our children,” the head of the Washington-based lender said.

Nigeria’s central bank governor, Joseph Sanusi, hailed the speech but said developing countries wanted action not words.

“When you have poverty and some people living in affluence, then you have conflicts,” Sanusi told Reuters. “There is a saying: the hungry dog and a dog that is full, they cannot play successfully.”

Dictated by the rich
The battle by poor countries for a greater voice in the running of the World Bank and its sister organization, the International Monetary Fund, has been a hot topic at the annual meetings in Dubai of the two lenders.

A rich-poor divide also overlay a call by the Group of Seven industrial countries for Asian states to let their currencies rise to take pressure off industrial-country exporters.

China, for one, swiftly rejected the demand by pointing out that, despite its growing export prowess, it was still a poor country and needed all the help it could get to grow.

Woldai Futur, Eritrea’s minister of national development, said economic inequalities was reflected in political imbalances across a range of international agencies.

“The rich have the power and they are dictating the policies of the world,” Futur said. “The political structure is imbalanced whether it is in the World Bank, the U.N., the IMF — every international organization it is dominated by the rich.”

Wolfensohn tacitly sided with the poor in the unfolding debate, remarking that the policies and governance of developing countries had never been stronger.

Rich countries, by contrast, had not matched the promises made to boost aid and help fight AIDS and malaria. The $56 billion a year they spent on development assistance paled beside outlays of $300 billion on farm subsidies, Wolfensohn said.

The refusal of rich countries to scrap farm support was one of the reasons why the Cancun trade talks collapsed.

“It is time to take a cold, hard look at the future,” Wolfensohn said. “Our planet is not balanced. Too few control too much, and many have too little to hope for. Too much turmoil, too many wars, too much suffering,” he said.