[stop-imf] Emerging fight on IDA

[Robert Weissman]

Excerpts from World Bank's Development Press Review

Headlines for Tuesday, January 15, 2002:
- DEADLOCK IN DISPUTE OVER MONEY FOR POOR NATIONS.


DEADLOCK IN DISPUTE OVER MONEY FOR POOR NATIONS.
A dispute between rich countries over money for poor nations to be channeled
through the World Bank has reached deadlock, with the US and European countries
at loggerheads over aid policy, and some governments trying to reduce their
proportion of the total, reports the Financial Times (p.6).  The dispute
concerns governments' contributions to the International Development
Association, the soft-loan arm of the World Bank which lends to the world's
poorest countries.

The  Bank  has asked for around $12.5 billion in new contributions over
the next
three  years,  a  16  percent increase from the last round.  The US is
making an
increase  in  its  proportion of the total provided conditional on a last-minute
proposal-unveiled at a closed-door donor meeting in Switzerland last
month which
was  supposed to finalise the deal-to tie increases in the second and
third year
of  the  three-year  programme  to  performance  targets in recipient countries.
While  individual  country programmes are already linked to performance
over the
medium term, other government representatives argued that it was absurd
to judge
a global development programme on successes within 12 months.

Meanwhile  France,  Japan  and  Germany,  citing  domestic  budgetary  pressure,
indicated that they wanted to reduce their proportion of the total
compared with
the  last  round  of contributions. The French mooted a reduction in
their share
from  7.3  percent  of  the  total  to  around  six percent.  The French Finance
Ministry said: "France will contribute at a level which is consistent
with sound
public  finances."  It argued that the decline in the value of the euro
made IDA
contributions more expensive.

The  UK offered to raise its own share of the total to compensate but
made clear
that  the  increase was dependent on getting its way in an existing
dispute with
the  US,  which  wants  to  replace  half  of  World Bank lending to the poorest
countries  with  grants.   The  UK, backed by several European
countries, argues
that  a  switch  to  grants on this scale would deprive the World Bank
of future
income.

British  International  Development  Secretary  Clare  Short  said: "IDA
is very
valuable  and  we are looking to increase our contribution
substantially. But if
it is compromised we would look to give more bilaterally instead."

A  final meeting has now been called for the middle of next month to
resolve the
dispute, which seems likely to overshadow a UN-sponsored conference on financing
development  in  Mexico  in  March.  The  UN yesterday opened the final
round of
preparatory talks for the March conference.

Quoting  World  Bank  President  James Wolfensohn as saying at the
Bank's annual
meetings  in  November  that  "the  tragic  events  of September 11 give renewed
emphasis  to  our  efforts to make the world a better and a safer
place," the FT
(p.6)  says  in  a  separate report that the dispute between Bank's rich-country
shareholders  suggests  that  they have missed the message.  Despite the general
agreement-not  least  in the communique of the World Bank's ministerial steering
committee  in  November-that  more  aid  will be needed if poor
countries are to
halve extreme poverty by 2015, there is little sign of a burst of generosity.

The  prospect  of  the World Bank, the world's largest development
agency, being
left  bereft of income means that some kind of uneasy compromise will
have to be
reached.   But  undignified squabbles over policy and penny-pinching
over aid do
not  augur  well  for the prospect of building a new compact with the developing
world,  says  the  story.  In the first international test of commitment towards
more  money  for  the  poor, the reality has yet to match the rhetoric.
It seems
that  with  economic  slowdown putting pressure on government budgets worldwide,
development aid is being restricted just at the time it is most needed.

The  US  Treasury  official  admits:  "There  has  been  a  lot  of 
talk  about
international  aid.  But in reality, with a few exceptions, there has
been a lot
of turning in towards domestic issues."

The  news  comes as former US President Bill Clinton writes in Le Monde (France,
p.1)  that  the  crucial  question  of  the  new  century  is whether
the era of
interdependence  be  a  good  or an ill for humanity?  The answer will
depend on
three  factors,  says  Clinton.  Will the rich nations be able to
distribute the
benefits  of  the  modern world and lighten its burden?  Will the poor countries
work  for  the  changes  needed  to make progress?  Will we be able to
rise to a
level  of  consciousness lofty enough for us to understand our mutual
duties and
responsibilities?

We  will not achieve this if the poor people of the world are led by
people like
Osama bin Laden, who believe their redemption lies in our destruction. 
Nor will
we achieve this if the rich are led by people who indulge short-term selfishness
and who perpetuate the illusion that we can continue to claim for
ourselves what
we deny to others.

Noting that it is essential to understand the fight against terrorism
within the
larger  context  of  managing a world of interdependence, Clinton says
we cannot
have  a  global trading system without a global economic policy, a
global health
policy,  a  global  education policy, a global environmental policy and
a global
security  policy.   We  should  without delay give the sums sought by
the UN and
other agencies for these purposes, Clinton says.