World Bank President Calls for a Doubling of Foreign Aid
Regional, Economics, 3/6/2002

In a March 6 press release, Bank President James Wolfensohn said that $40,000 million to $60,000 million more is needed to reach United Nation's poverty reduction goals by 2015 -- roughly a doubling of current aid flows. He called for aid increases of $10,000 million a year over the next five years.

Wolfensohn said rich countries should open their markets to imports from developing countries and cut agricultural subsidies. Agricultural subsidies are six times the amount that rich countries spend on aid, he said.

Wolfensohn called development assistance "the best investment in long-term peace" and noted that worldwide, the number of poor people has fallen by 200 million since 1980 while the world's population has increased 1,600,000 million.

"Lowering of trade barriers will not cost the rich countries anything in the aggregate; they gain from freer trade in these areas," he said.

He pointed to Vietnam, where the number of poor people has halved in the past 15 years; Uganda, which has doubled the number of children in primary school; and Bangladesh, which has significantly increased the enrollment of girls in school, as development successes.

Wolfensohn said international assistance should be considered by finance ministers along with defense and domestic spending in budget discussions.

Wolfensohn's remarks preceded the United Nations Financing for Development conference in Monterrey, Mexico March 18-22.

(Note: In the following text, "billion" equals 1,000 million.)

Following is the text of the World Bank press release:

Rich Nations Urged to Wage War on Poverty. Wolfensohn to call for doubling of foreign aid:

Rich countries must build on the global war on terrorism by launching a new war on global poverty, World Bank President James D. Wolfensohn will say tomorrow in an address at the Woodrow Wilson International Center for Scholars in Washington, DC.

In remarks slated for delivery Wednesday, Wolfensohn calls on wealthy donor nations to double foreign aid over five years and tear down trade barriers that harm the world's poorest workers and rob them of markets for their products.

"The horrifying events of September 11th have made this a time of reflection on how to make the world a better and safer place, and we will not create that world with bombs or brigades alone," Wolfensohn says. "We will not win the peace until we have the foresight, the courage, and the political will to redefine the war. Today we fight a different kind of war in a different kind of world. A world where violence does not stop at borders; a world where communications sheds welcome light on global inequities: Where what happens in one part of the world affects another. Inclusion, a sense of equity, empowerment, anti-corruption -- these must be our weapons of the future. Poverty is the war we must fight. I believe we have a greater chance today, than perhaps at any other time in the last 50 years, to win that war and forge that new partnership for peace.

"On September 11 the crisis of Afghanistan came to Wall Street, to the Pentagon, and to a field in Pennsylvania. And the imaginary wall that divided the rich world from the poor world came crashing down. Belief in that wall, and in those separate and separated worlds, has for too long allowed us to view as normal a world where less than 20 percent of the population -- the rich countries in which we are today -- dominates the world's wealth and resources and takes 80 percent of its dollar income. Belief in that wall has too long allowed us to view as normal a world where every minute a woman dies in childbirth. Belief in that wall has allowed us for too long to view the violence, disenfranchisement, and inequality in the world as the problem of poor, weak countries and not our own. There is no wall. There are not two worlds. There is only one."

Wolfensohn's speech comes just days before the United Nations Financing for Development Conference in Monterrey, Mexico on March 18-22. Wolfensohn says Monterrey offers a chance for the international community to live up to its commitment to the UN's Millennium Development Goals, which call for a halving of world poverty by 2015 and improvements in health and education.

In order to reach those Goals, developing countries must pursue sound policies but rich countries need to do more. The Bank estimates that it will take on the order of an additional $40 to $60 billion a year to reach the Goals -- roughly a doubling of current aid flows. In his address, Wolfensohn says budgetary realities in rich nations may make it impossible to double aid overnight. He calls for a gradual phasing-in of more aid -- an additional $10 billion a year for the next 5 years, building up to $50 billion in year 5.

On trade, Wolfensohn calls on rich nations to open their markets for imports from developing countries, and to cut agricultural subsidies.

The European Union's lead on the Everything But Arms Agreement should be followed by others and the benefits extended to all low income countries now to end the trade barriers that harm the poorest nations and poorest workers. This action does not need to wait on WTO agreement.

"Yes there will be powerful political lobbies ranged against any such action," says Wolfensohn. "But it is the task of political leaders to remind electorates that lowering of trade barriers will not cost the rich countries anything in the aggregate; they gain from freer trade in these areas. Second, rich nations must also take action to cut agricultural subsidies. Farm support goes mainly to a relatively small number of agribusinesses, many of them large corporations, and yet those subsidies are six times what the rich countries provide in foreign aid to a developing world that includes 5 billion people.

"Yes there are powerful political lobbies ranged against this action too. But the fundamental truth here is that agricultural subsidies constitute a heavy burden on the citizens of developed countries. With skillful political leadership they can be cut back. But we need that leadership. And reducing these subsidies would have the additional benefit of yielding significant budgetary savings for governments of rich countries."

Wolfensohn says development assistance represents the best investment in long-term peace and points to the success foreign aid has helped achieve in recent years. The number of poor people worldwide has fallen by 200 million since 1980, even as the world's population rose by 1.6 billion. Life expectancy at birth in developing countries increased by 20 years during the past four decades. And in education, the adult illiteracy rate in the developing world fell during the past 30 years, from 47 percent to 25 percent.

The experiences of several countries reflect the gains made. In Vietnam, the number of people in poverty has halved over the last 15 years; in Uganda, the number of children in primary school has doubled; and in Bangladesh, dramatic strides have raised the enrollment of girls in high school to about par with boys. In Brazil, the number of AIDS-related deaths have been cut by more than a third; and in Ethiopia, six million people are now benefiting from better education and health services.

"To the doubters I would say: Look at the facts," he says in his prepared remarks. "For the facts show that yes, we have made progress in the past, and we will make progress in the future. Together we must promote understanding that national policy can no longer exist in tidy boxes labeled foreign and domestic; home and away - squirreling away 0.1 percent or 0.24 percent of GDP on aid. Together we must persuade finance ministers that when they discuss budgets, together with defense, together with domestic spending, must be international spending."

Previous Stories:
  World bank warns that poverty will rise in wake of attacks on US   (10/2/2001)
  World Bank calls for new compact to fight global poverty   (5/18/2001)
  James D. Wolfensohn on the challenges of globalization; the role of the World Bank   (4/3/2001)

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