Financial Daily from THE HINDU group of publications
Thursday, Mar 07, 2002
Industry & Economy
Rich nations asked to fight poverty
NEW DELHI, March 6
THE World Bank says that the forthcoming United Nations Financing for Development Conference in Monterrey, Mexico from March 18 to 22 provides a chance for the global 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 an address at the Woodrow Wilson International Centre for Scholars in Washington on Wednesday, the World Bank President, Mr James D. Wolfensohn, said that in order to reach these goals, developing countries must pursue sound policies "but rich countries need to do more''.
The Bank estimates that it would take on the order of an additional $40 to $60 billion a year to reach the goals roughly a doubling of current aid flows.
Mr Wolfensohn said budgetary realities in rich countries might make it impossible to double aid overnight. He called 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 the fifth year.
He urged the rich world to build on the global war on terrorism by launching a new war on global poverty. In this context, he appealed to the wealthy donors 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.
On trade, Mr Wolfensohn called on rich nations to open their markets for imports from developing countries and to cut agricultural subsidies.
The European Union's lead on `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, he added.
Pointing out that there were powerful lobbies ranged against any such action, Mr Wolfensohn said that "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, he said, rich nations must also take action to cut agricultural subsidies. Farm support goes mainly to a relatively small number of agri-businesses, 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.
But the fundamental truth is that agricultural subsidies constitute a heavy burden on the citizens of developed countries, he said adding that "with skilful political leadership, they can be cut back''.
Mr Wolfensohn said development assistance represents the best investment in long-term peace and highlighted 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, expectancy at birth in developing countries rose by 20 years during the past four decades.
And in education, the adult literacy rate in the developing world fell during the past 30 years from 47 per cent to 25 per cent, he added.
Finally, Mr Wolfensohn said, "together we must promote understanding that national policy can no longer exist in tidy boxes labelled foreign and domestic, home and away squirreling away 0.1 per cent or 0.24 per cent of GDP on aid. Together we must persuade finance ministers that when they discuss budgets, together with defence, together with domestic spending, must be international spending.''
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