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|“We Cannot Let a Financial Crisis Become a Human Crisis” Meeting Covered in Washington DC by Hakim Almasmari|
Article Date: October 20, 2008
“Over recent weeks, attention has focused on the size of financial packages, and on the impact on Main Street. There are Main Streets all over the world. We must look beyond the financial rescue to the human rescue,” President of the World Bank Bob Zoellick, told journalists at his Annual Meetings opening press conference Thursday.
Some 28 countries are already fiscally highly vulnerable from the twin shocks of food and fuel, he said, and they are not expected to receive aid increases with G7 countries still behind on their Gleneagles commitments.
“The poorest cannot be asked to pay the biggest price. For the poor, the costs of crisis can be life-long.” (A Development Committee background paper on rising food and fuel prices addresses the risks to future generations; another background paper addresses fiscal vulnerabilities in developing countries.)
A Modern Multilateralism
Echoing his speech Monday at the Peterson Institute, Zoellick stressed the need to modernize multilateralism and markets to deal with these crises. “Looking ahead to tomorrow, I hope the G-7 meeting will point toward coordinated action to show that authorities are getting ahead of the curve.”
“The changing conditions that trigger failure will increasingly be dependent on shifts in the world economy. Just as the crisis has been international because of interconnectedness, the actions and reforms will need to be multilateral.”
Asked about his remarks on Monday suggesting the need for an entity broader than the G7 to deal with current global issues, Zoellick stressed that the issue was not the identification of specific countries but the potential benefits of having a steering group that “could be a capstone of a larger network that would deal with the issues that we’re debating today, but that also will be looking at tomorrow, such as climate change and energy.”
“The nature of the group has to evolve in how it does business; it needs to be recognizing that it has to be a flexible, networked operation. The numbers can change as other countries assume responsibilities as stakeholders,” said Zoellick, adding that there is a role for the World Bank and IMF to play in supporting such a process.
On Sovereign Wealth Funds
Zoellick also responded to interest on the potential role of sovereign wealth funds, describing the Bank Group as a financial intermediary that can help connect such funds with growth opportunities, especially in sub Saharan Africa. Describing the “One Percent Solution,” Zoellick said that 1 percent of $3 trillion in sovereign wealth funds could amount to $30 billion channeled into African equity, and was hopeful that such investments may be moving forward by the end of the year.
But, he said this type of investment is part of a bigger issue: “How can we channel opportunity and investment into sub Saharan Africa so that 15 years from now they are a pole of growth just as China and India are poles of growth.”
On TradeOn trade, Zoellick described Doha discussions as being “on life support.” Because of this, he said, there is a need to recognize “dangers of protectionism, which could exacerbate some of the breakdown in markets.” The World Bank, he said, would work to try to support the trade facilitation agenda, cutting the costs of doing business of trade as a fundamental part of a development system.