China and India are expected to be the largest investors by 2030, accounting for 38 percent of all global investment. Credit: Bigstock

Over the next decade and a half, a major global shift will result in the developing world controlling roughly half of the world’s capital, up from less than a third today.

According to new scenarios released Thursday by the World Bank, developing countries could control some 158 trillion dollars (at 2010 rates) by 2030, particularly in East Asia and Latin America. By that time, the developing world could account for 87 to 93 percent of global growth.

Under certain scenarios, “financial markets in economies like Brazil, India, and those of the Middle East will develop considerably, with these countries attaining, by 2030, a level of financial development comparable to the United States in the early 1980s,” a new report from the Washington-based development lender states. “Similarly, the quality of institutions in developing countries will tend to improve significantly.”

This analysis suggests that developing countries will soon gain the resources necessary to bankroll the major investments that the bank says will be necessary, particularly in infrastructure and services. This would mark a stark contrast with the past.

Further, World Bank analysts foresee a massive escalation of global investment from these countries. Whereas in 2000 international investment from developing economies constituted just a fifth of the global total, this could now triple over the next decade and a half.

“We found that developing economies will come to dominate investment,” Maurizio Bussolo, a World Bank lead economist and author of the new Global Development Horizons report, told reporters Thursday.

“By 2030, for every dollar invested around the world, 66 cents will be in developing countries. That’s a dramatic change, as for almost four decades such investments made up just 20 cents on the dollar.”

In fact, Bussolo suggests that developing countries will overtake the developed world in this regard much sooner, perhaps by the end of this decade.

Fast-strengthened systems

China and India are expected to be the largest investors by 2030, accounting for 38 percent of all global investment, almost as much as all high-income countries combined. In fact, China alone could be responsible for nearly a third of global investment by that time, the bank says, while Brazil, India and Russia will together constitute a larger investment bloc than the United States, at around 13 percent.

This means that total investments in the developing world could be half again as large as among developed countries, at 15 versus 10 trillion dollars.

Such changes will require the exponential development and strengthening of financial sectors in developing countries, as emerging economies inevitably move to quickly integrate with the international financial system in a way never before seen.

“Developing countries are currently almost absent from international financial markets, so you can see that we have a very long way to go in a historically short time period – 15 or 20 years for developing financial markets is not long,” Hans Timmer, director of the Development Prospects Group at the World Bank, told reporters.

“But we have seen in high-income countries that if you deregulate too rapidly you have a very dangerous situation. So we have a dilemma: the role of developing countries is increasing very rapidly, but we must deepen these financial markets only very gradually.”

Already, weak financial systems across the developing world are allowing for illicit outflows of capital that are at times far greater than the countries’ external debt, inexorably impacting on those countries’ ability to finance their public sector.

One report last year estimated that North African countries alone lost nearly a half-trillion dollars over the past four decades, almost the equivalent of their combined gross domestic product for 2010.

“It’s important to note that the World Bank is only talking about recorded capital here, but there’s so much illicit capital currently sloshing around that the multilateral institutions haven’t yet gotten their heads around,” Dev Kar, formerly with the International Monetary Fund (IMF) and currently the chief economist with Global Financial Integrity, a Washington advocacy group, told IPS.

“Our studies suggest that the unrecorded capital coming from developing countries is absolutely huge – the losers are losing far more than the gainers are gaining. As a result of these developments, you can understand why the North African countries blew up, as that kind of massive outflow of resources must have some kind of social impact.”

A level field

Of potentially considerable concern in the bank’s projections is where this new wealth will end up being concentrated.

“It’s one thing for the pie to be increasing, but how equitably is it being distributed?” Kar asks.

“Equity is a huge problem, as the rich seem to be getting richer and the poor getting poorer. Further, it seems the nouveau riche in the developing countries are a bit more callous than the established rich in developed countries.”

Kar notes that income inequality is generally not being helped through current redistribution mechanisms aimed at ensuring broader equal opportunity. Meanwhile, the poor, being unable to take advantage of globalisation, are being left behind across the globe.

According to the World Bank and numerous other analysts, wealth in developing countries is today largely locked up among the elite.

“For most of these countries, the first quarter of the population provides almost no savings. The bulk of savings comes from the richest quarter – there is lots of concentration,” the World Bank’s Bussolo told IPS.

In a separate statement, he noted: “Even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit. Policymakers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor.”

In particular, the new report places significant focus on increasing government funding for education. It points to analysis from Mexico suggesting that changes in education could result in a five percent greater household saving rate by 2050.

“If the distribution of education among workers of future generations were to remain as unequal as it is today, this would perpetuate inequality of earning capacity, saving, and wealth in the future,” the report states.

“Leveling the playing field in terms of educational opportunities could thus be supported not just in terms of fairness but also – given the positive effect on private saving – in terms of efficiency.”

In a new paper, bank researchers offer findings that six more states are on track to meet individual development targets ahead of the MDG’s 2015 deadline.

“This should be a wake-up call to the global community not to dismiss these countries as lost causes. These signs of progress do signal that development can and is being achieved, even amid fragility and violence,” World Bank President Jim Yong Kim said Wednesday.

“But these challenges ahead for many countries are extremely tough. While these successes offer hope, the reality is that far too many fragile and conflict affected countries lag behind the rest of the world. We need to offer timely and critical support to improve the lives of people living in these fragile countries.”

The findings indicate significant improvements from a 2011 World Bank report that indicated that no low-income, fragile or conflict-affected country had achieved a single MDG.

The MDGs are eight international development goals, established in 2000 when all 193 United Nations member states and more than 20 leading international organisations agreed to a deadline for achievement by 2015.

According to the new report, the greatest progress has been on gender parity in education, the ratio of girls’ to boys’ enrolment in school. The analysis finds that eight fragile and conflict-affected states (including Guinea, Nepal, Bosnia and Herzegovina and Timor-Leste) have already met the goal to halve “extreme poverty”, those living on less than 1.25 dollars a day.

“The message that we feel these findings send is that fragile – and what some people refer to as ‘basket-case nations’ – can achieve and make progress in many of the areas associated with the MDGs,” Joel Hellman, director of conflict and fragile states at the World Bank, told IPS.

“It’s limited progress, but there are glimmers of hope that show that countries who make concerted efforts can and are making progress in individual areas. This is important because it highlights the areas that need further support in these countries. In addition, when you can see that progress tangibly, it creates further support for these goals.”

Hellman says the new numbers reflect both progress and better data-gathering and analysis on the part of the World Bank and the United Nations.

“We can’t make policies without information, and the MDGs have really galvanised countries and the international communities to support getting information to assess what is happening on the ground,” he says.

“With better information, we can start making better policy. Now that we have a lot more information about what is happening in these countries, this helps us assess where they are making progress in individual areas – targeting areas and sectors where particularly strong efforts have been made across the entire spectrum of targets associated with the MDGs.”

Still, Hellman cautions that there is a long way for these countries to go, noting that few of these countries will accomplish many more of the MDGs, with just 1,000 days left until the deadline passes. Further, these signs of success are in volatile countries, meaning that this progress could quickly be reversed.

Fractured model

Others suggest that this data could inadvertently paint an unduly rosy picture – and one that may not be filtering down to all of a country’s inhabitants.

“Countries are now in the midst of this global recession, facing really desperate conditions, so even in a country where you have growth, this growth is coming primarily from extractive industries, particularly oil, gas and mining,” Emira Woods, co-director of Foreign Policy in Focus at the Institute for Policy Studies, a think tank here, told IPS.

“So the successes on this list only represent the ‘one percent’, the elites who are benefiting. So for the World Bank to highlight that these countries are meeting at least one of the MDGs seems a bit superficial – remember, there are eight goals.”

Woods notes that countries of the global South need a role for government to determine their paths towards development, and she worries that the foreign direct investment-focused development model pushed by multilateral lenders has been shown to be detrimental to many developing economies.

“Foreign direct investment is mainly directed at extractive industries, and does not take into account environmental damage, worker’s health and rights, and the long-term cost for future generations,” she says.

“What we have seen is that this model for development continues to concentrate wealth in very few hands – often local elites – while large multinational oil, gas and mining companies benefit from an unregulated market where the role of government is kept out. Unless you change the fundamentals of those policies, countries will not be able to cut poverty in half.”

The alternative, she says, would create the space for national governments in developing countries to more actively choose their own development paths. This would include ensuring that those countries maintain the ability to protect particularly valuable sectors.

Countries with large rural populations and agriculture potential, for instance, need to be able to focus on creating opportunities for smallholder farmers to maintain their livelihoods.

“What we have instead, is the privileging of large corporations, many from the U.S. and Europe with heavily subsidised agribusiness, that create an uneven playing field where small landholders are unable to compete,” Woods says.

“The alternative is to have a local manufacturing base that creates jobs with liveable wages, so workers can feed their families and afford access to health care and housing. These are the elements of a stable community – and are needed not only in developing countries but even right here in Washington, D.C.”

An orphanage in Kenya marked for demolition to make way for a road project funded by the World Bank. Credit: Richard Portsmouth/CC by 2.0

Backed by the German government and prominent civil society voices, United Nations experts are calling for the World Bank to explicitly incorporate international human right standards into its “safeguards” to minimise negative impacts of bank financing on vulnerable communities and environments.

The bank is currently wrapping up the first of a two-year review of its environmental and social safeguards, a process that has included dozens of global consultations. Initial discussion on those developments is slated for Saturday during semi-annual meetings between the bank and the International Monetary Fund (IMF) held in Washington. A publication date for a draft of the reforms has not yet been decided.

“All activities supported by the World Bank…should be included in the review to ensure consistency with international human rights standards,” a group of independent U.N. experts stated in a release Friday. “Doing so would improve development outcomes and strengthen the protection of the world’s poorest from unintended adverse impacts of activities financed by the Bank.”

Groups around the world are advocating for a broadening of the bank’s safeguard policies to more fully take into account specific needs related to gender, disability, indigenous rights and labour. Others worry that the reforms process could actually weaken safeguards, a fear reiterated by the U.N. experts.

As a development institution and a member of the U.N. family, the bank is obligated to give “due weight to international human rights standards”, Cephas Lumina, the U.N.’s independent expert on foreign debt and human rights, noted. “States must also adhere to their international law obligations when they act through international organisations. The World Bank is no exception.”

German model

U.N. experts are being joined in this call by the German government. In February, Germany began a unique initiative under which all of its bilateral and multilateral engagements – including at the World Bank – would be required to undergo a rigorous human rights-related assessment.

“The World Bank is increasingly turning its attention to human rights issues,” Ralf Wyrwinski, an official with the German Ministry for Economic Cooperation and Development (BMZ), told an audience at the World Bank’s Washington headquarters on Friday. “[But] we view the [safeguards] review as an opportunity for the World Bank to include a human rights aspect more comprehensively,” Wyrwinski added.

While Wyrwinski said the German programme will require two or three years before officials can judge results, he said it has already introduced a sea change in how German development programmes look at local stakeholders.

“The major value added is that we do not look at people as target groups anymore, but rather take people as rights-holders,” he explained. “You change the view and perception of the people affected by a project.”

The World Bank has never included explicit reference to human rights in its safeguard policies, introduced in the early 1980s. This is in part because the bank is not meant to function as an “adjudicating” institution, with such polarising issues long seen as better left to the U.N. and national governments.

Yet bank officials emphasise that the institution’s actions – particularly through its core focuses on empowerment, access, accountability, transparency and related issues – highlight the value it places on human rights and lead directly to results on the ground.

“There’s been a lot of general counsels who have said that we have done a lot as an institution to help achieve the realisation of human rights through policies that represent a wide range of human rights principles,” Charles Di Leva, the chief counsel for environmentally and socially sustainable development at the World Bank, told IPS.

“Any time any borrower of ours would like support in implementing any of their legal obligations, if we can do that, we would support them in doing so.”

Sustained focus on human rights gained some momentum three years ago, when an initiative called the Nordic Trust Fund (NTF) began strengthening knowledge on the subject among World Bank employees. Beyond this, bank officials have pointed to a lack of data directly linking human rights and development indicators.

“When I started this job, I asked all of the econometricians and economists about the value added [by incorporating human rights], and they said that they just couldn’t establish such a connection,” NTF coordinator Anders Zeijlon told IPS. “It seems there are too many variables at stake.”

Zeijlon noted that he was “surprised” by the findings, but admitted it is difficult for the bank to prioritise human rights-related indicators without “hard-nosed data” that can explain their impact. However, related studies are underway.

“In the coming years you will see a large number of evaluations and more detailed looks at specific sectors and so on,” he said. “The challenge will be to take that information and try to aggregate it in a useful way.”

New vision

World Bank officials and member states are currently discussing a recent vision paper, spearheaded by the bank’s new president, Jim Yong Kim, that outlines an evolving focus for the institution in coming decades, including a goal of ending extreme poverty by 2030 and a renewed pledge to focus on diminishing “pockets” on extreme poverty.

Yet some suggest that as countries make strides in lifting more people out of poverty, many of those left in “extreme poverty” will likely belong to groups that have long been marginalised due to ethnicity or political views. In such situations, an inability to deal with human rights directly could seriously undermine anti-poverty efforts.

“This new focus on the most vulnerable is absolutely key to sustainable development, but missing is any mention of human rights or of the problems that discrimination, marginalisation and exclusion create, both as hurdles to getting out of poverty and as underlying causes,” Jessica Evans, a Washington-based researcher with Human Rights Watch (HRW), an advocacy group, told IPS.

“What we would like to see is for the bank to take a conscious approach to eliminating discrimination and effectively promoting substantive equality,” Evans said. “This would include examining the environment of exclusion and marginalisation at the national level whenever it is negotiating country strategies.”

On Friday, HRW and eight other organisations called on Jim Yong Kim “to make a firm commitment to respect, protect, and fulfil human rights in all [World Bank] activities”.

Informal settlers on prime land in Papua New Guinea’s capital, Port Moresby, are living under tarpaulins amid the debris of their homes after two attempted evictions to make way for a luxury waterfront development. Credit: Catherine Wilson/IPS

Two of the world’s largest multilateral institutions have released new data linking greater urbanisation with higher levels of human development, and are announcing that they will place greater priority on issues of urbanisation in coming decades.

According the World Bank and International Monetary Fund (IMF), urban areas in the developing world look set to pull in a staggering 96 percent of the additional 1.4 billion people expected in those countries by 2030. According to some metrics, that could offer significant opportunities – if done correctly.

Unveiling a major joint annual report here on Wednesday, the two Washington-based institutions noted that more-urbanised countries have shown far higher strengthening of development indicators than have less-urbanised countries. This is particularly striking with regards to the Millennium Development Goals (MDGs), the international development-related aims agreed to in 2000 and which are to be achieved by 2015.

“Countries with a degree of urbanization above 60 percent are expected to achieve 50 percent more MDGs than those with a degree of urbanization of 40 percent or less,” the new Global Monitoring Report 2013 (GMR) states. “In fact, virtually no country has graduated to a high-income status without urbanizing, and urbanization rates above 70 percent are typically found in high-income countries.”

The GMR report, now in its 10th year, offers an annual snapshot of global progress towards the MDGs. An accompanying brief suggests that significant progress has been made in reducing extreme poverty in recent decades, with those living on 1.25 dollars a day going from half the developing world in 1981 to 21 percent in 2010 – despite the population in those countries increasing by nearly 60 percent during that period.

A notable outlier in this data is sub-Saharan Africa, however, where levels of extreme poverty have doubled over the past three decades, to around 414 million. The World Bank recently unveiled a new goal of ending extreme poverty by 2030.

“The sharp increase in the number of poor people in Africa is a sad indictment of the fact that the needs of rich countries and elites have too often been pursued at the expense of the poorest,” Emma Seery, a spokesperson with Oxfam, a humanitarian group, told IPS in an e-mail.

“Accelerating progress towards the World Bank’s goal of ending extreme poverty means taking tough choices and tackling the vested interests that stand in the way of a fairer world.”

While the new GMR offers a far sunnier view of the international macroeconomic environment than it did last year, with head IMF economists suggesting that today’s situation is far more conducive to achieving the MDGs, the MDG “scorecard” Wednesday was rather gloomier.

“There’s really no time to be complacent,” Jos Verbeek, a World Bank economist and lead author of the GMR, told reporters at the report’s launch. “Current analysis shows that without a vast acceleration of progress, the world should expect that globally hardly any additional MDG will be attained.”

Yet Verbeek suggests that fast-growing levels of urbanisation could offer governments a key opportunity. Urbanisation and higher incomes have been found to go hand in hand, he points out, and urban areas have been found to be doing far better at attaining the MDGs than rural areas, particularly in rates of extreme poverty.

“One conclusion is that we should encourage urbanisation – not hinder it or try to slow it down – while another conclusion is we should facilitate mobility, particularly in those countries that have partly urbanised,” Verbeek notes.

“How do we promote urbanisation? … Better urban planning comes first, which will allow government and city officials to be in the driver’s seat, and not be pushed around by private financiers or donors, who often emphasise their own priorities, which are not always aligned with the country or the city.”

Rural-urban divide

At the same time, nearly three-quarters of the global poor continue to live in rural areas. Reflecting a broad consensus, both the bank and fund are clear that efforts need to be increased in coming years to help bridge the rural-urban divide.

“Providing high-quality health and education remains a huge challenge that is vital to reducing poverty wherever it occurs,” Oxfam’s Seery says.

“But for the rural majority of poor people, access to land and investment in smallholder agriculture are also crucial steps towards escaping the poverty trap. The World Bank’s call to end the scourge of extreme poverty is timely and requires tackling these obstacles head on.”

Further, while much of the correlation between development and urbanisation is because service provision is far more efficient when people live closely together, World Bank and IMF officials are clear that poorly planned urbanisation can also have the opposite effect – resulting in slums in which many inhabitants are deprived of both civic amenities and, at times, civil rights.

“Poets wax eloquent about rural settings and rustic life, but … it’s frightfully expensive to provide basic provisions to people in rural areas – ironically, poor countries are least able to serve people living in rural settings, even though most of the people in poor countries live in rural areas,” Kaushik Basu, the World Bank’s chief economist, told reporters Wednesday.

“The urban indicators for most of these targets are superior to the same indicators in the rural sector. At the same time, if you allow for completely unplanned development of the urban areas, what you’ll get is development of the slums, where there will be pockets in which the standard of living will be much worse.”

Basu warns that “unfettered urbanisation is [no] cure-all”. He also emphasises that urban planning is not an area in which market forces alone can deliver acceptable results, stating instead that this process needs “conscious effort” – clearly indicating an area in which the bank sees its technical support increasing in coming years.

Already, experts today estimate that almost a billion people live in slums, nearly two-thirds of which are thought to be in Asia – one of the world’s fastest-urbanising areas.

“To cope with urban growth, a coordinated package of essential infrastructure and services is needed,” the GMR states.

“Only by meeting essential needs related to transportation, housing, water and sanitation as well as education and healthcare can cities avoid becoming hubs of poverty and squalor.”

Egyptian protesters demonstrate against President Morsi and the new draft constitution outside the presidential palace in Cairo. Credit: Khaled Moussa al-Omrani/IPS

Women and minorities should be a top priority in U.S. policy toward Egypt and its Muslim Brotherhood government leaders, experts here said on Friday, despite increasingly unfavourable public views towards Egypt.

While Egypt is a critical and longtime U.S. ally, the June 2012 election that resulted in the Muslim Brotherhood’s victory has severely strained those ties. The situation has been further complicated by a massive economic crisis that has roiled Cairo since the uprisings of the Arab Spring two years ago.

Even as Egyptian officials are currently engaged in talks for a loan from the International Monetary Fund (IMF) – an institution in which the U.S. has an effective veto – that could be upwards of five billion dollars, conservatives in the U.S. Congress have recently refused to offer their Egyptian counterparts more than token foreign assistance.

“The Egyptians are so firmly a part of the American patronage network that Egypt’s destiny will stay irrevocably linked to the United States, and will thus remain a client state of the U.S.,” Joshua Stacher, a fellow at the Wilson Center, a Washington think tank, told IPS.

“This limits to a great extent where it can turn for money, and I think they are content to remain part of this U.S. constellation. This is really a problem of the IMF serving as an auxiliary of U.S. power rather than an international financial institution that is neutral and providing balance of payment policy suggestions for member countries.”

Still, political disagreements here in Washington over how to engage with Egypt have not yet been cleared up.

“There is a fundamental tension between U.S. values and U.S. interests in our policy toward Egypt, whether it be about cooperation on regional issues, the rights of women, protest laws, freedom of expression or sectarian rhetoric on the part of the Muslim Brotherhood,” Michael Wahid Hanna, a senior fellow at the Century Foundation, a Washington think tank, said Friday.

“These issues aren’t just about values anymore. An embargo is off the table so it’s not just about affording support to an elected government that is polarising and we see autocratic tendencies coming to the fore that are destabilising. Before we can even talk about values, we must have a stable Egypt – and not just repressive stability.”

Hanna said there is no option of pulling back U.S. support, noting that the situation in Egypt was not like that in Syria. Yet compounding the political calculations, a public poll released last month found that U.S. attitudes toward Egypt have plummeted in recent years.

“Throughout the last two decades, Egypt’s favourability ratings in the U.S. were in the 60 percent range,” James Zogby, Director of Zogby Research Services, a Washington opinion research company, said Friday.

“In 2011 – at the beginning of the demonstrations against [former President Hosni] Mubarak, the numbers dropped down to 40 percent … In 2012, they dropped to just 30 percent. Americans don’t know Egypt, and their previously ‘soft’ associations of the country – like for instance, the pyramids –have now been replaced by its volatility.”

Budget crisis

Intensifying Egypt’s foreign relations issues with the United States, the Morsi government must still devise an economic plan to convince the IMF to hand over a pending 4.8-billion-dollar loan, a figure recent reports suggest could go up. The Egyptian government has said it hopes to reach a final agreement with the IMF within the next two weeks, while the government of Qatar has made repeated emergency cash infusions into Egyptian coffers.

The stakes are high for the Muslim Brotherhood-led administration. Foreign currency reserves are critically low, reportedly now covering less than three months of imports, and the local currency has lost a tenth of its value just since the start of the year.

With an IMF team currently in Cairo, Egyptian officials must convince the Washington-based fund that it will make reforms to boost growth and curb an unaffordable budget deficit. Economists say the situation will eventually require unpopular tax hikes and politically risky cuts to the current system of state subsidies for fuel and bread.

“The subsidies are definitely an important component of the economic problems facing Egypt, and it’s an important issue in a lot of low-income Egyptian households,” Hesham Sallam, co-editor of Jadaliyya, an online political magazine, told IPS.

“Yet the government has not shown publicly any intention of finding a fair way of distributing the costs, of dealing with the deficit, of easing pressure on the underprivileged in an open and fair manner.”

Despite being the world’s largest wheat importer, Egypt has been forced to cut back on these imports. Yet doing so is running down grain reserves and will almost certainly exacerbate its struggle to feed the country’s 84 million people.

Sallam also warns that the IMF negotiations have been notably opaque, leading to rising frustration.

“The terms of the loan do not have much transparency, and those terms are going to be very important in determining the orientation of the Egyptian economy,” he said.

“Social justice has been one of the main slogans of the revolution, but the decisions that will decide the future of the Egyptian economy are mainly taking place behind closed doors, with very little engagement with the Egyptian people or the stakeholders.”

Sphere of influence

The threat of future instability versus the current perception of the Muslim Brotherhood has defined much of the policy debate here in Washington.

Particularly conservative members of Congress have expressed discomfort sending aid to the Muslim Brotherhood government, with some suggesting not only a reduction but an outright discontinuation of U.S. aid to Egypt.

“Congress is trying to score some cheap political points on this, but the Defence Department, State Department and the president understand that disengagement would be against national security interests,” the Wilson Center’s Stacher said.

“They understand that there is a longstanding relationship with Egypt – that it’s not a perfect relationship, but is one that has long been cultivated, and they want to keep the country in the U.S. sphere of influence. So, Congress is going to keep putting up roadblocks and the executive branch – and the Defence Department – is going to find crafty ways to get around them.”

There are also major business interests involved in this situation. Egypt is a massive market, and has traditionally imported a significant amount of military hardware and industrial machinery from the United States.

“Certainly there is a domestic American economic consideration here about changing our relationship with Egypt,” Stacher continues. “If they are going to keep buying tanks, we would rather they buy our tanks.”

Women farmers in Bangladesh are opting for climate-proof crop varieties. Credit: Naimul Haq/IPS

The World Bank will be placing stronger emphasis on issues of land tenure and socially and environmentally sustainable agricultural investing, it announced Monday.

The bank, one of the world’s largest development lenders, also formally reiterated its concern over the large-scale corporate “land grabbing” that has affected vast swathes of Africa in recent years.

“The World Bank Group shares these concerns about the risks associated with large-scale land acquisitions,” World Bank President Jim Yong Kim said in a statement from the bank’s Washington headquarters Monday.

“Securing access to land is critical for millions of poor people. Modern, efficient, and transparent policies on land rights are vital to reducing poverty and promoting growth, agriculture production, better nutrition and sustainable development.”

Following on decades in which agricultural sectors were almost completely bypassed by international investors – including bilateral donors and multilateral lenders such as the World Bank – recent years have seen a surge of interest across all types of investors and development institutions.

On Monday, Kim noted that the World Bank, too, had stepped up its agriculture-related investments, but warned that “additional efforts must be made to build capacity and safeguards related to land rights – and to empower civil society to hold governments accountable.”

Ahead of a four-day annual World Bank conference on land and poverty here this week, the institution stated that it expected the global population to grow by two billion by 2050, requiring an expansion of global agricultural production of 70 percent.

While the institution is reiterating longstanding calls for significant new public and private investment in both small-scale and large agricultural operations, it has warned that “investment alone will not be enough” to attain these levels.

Rather, citing spiking food and fuel prices coupled with the looming uncertainties of climate change, the bank is urging the adoption of stronger national and international standards on investments and land rights as a way of helping farmers across the globe raise yields.

“Usable land is in short supply, and there are too many instances of speculators and unscrupulous investors exploiting smallholder farmers, herders and others who lack the power to stand up for their rights,” the bank notes. “This is particularly true in countries with weak land governance systems.”

As such, the bank will now be strengthening efforts aimed at improving land governance, protecting the rights of landowners, and promoting policies “that recognise all forms of land tenure and help women achieve equal treatment in obtaining land rights”.

Growing global discussion

Particularly following the rise in both global food-price volatility and demand for biofuels over the past half-decade, agricultural land has become a lucrative commodity for international investors, who have focused particularly on Africa.

According to 2011 research by the bank, some 60 million hectares of land in developing countries were purchased or leased by private sector investors in 2009 alone, a process that has continued. In many cases, local civil society organisations have warned that these transactions are being carried out with government complicity and without following international standards on stakeholder inclusion.

“There’s been a tendency recently towards governments giving large plots of land to international investors for free or at concessional rates, thinking that doing so will fast-track development,” Nicholas Minot, a senior research fellow with the International Food Policy Research Institute, a Washington-based think tank, told IPS recently.

“To some degree there’s logic to that, but there is a huge question as to whether that land was owned by the government or whether it was previously occupied by small-scale farmers without titles. Establishing secure land rights for people in rural areas is a massive but critical issue.”

Organisers say that this week’s World Bank conference on land and poverty – the 14th – is the largest they’ve ever put on, and includes participation by government officials from several countries. Bank officials also say that the conference’s focus, titled “Moving towards transparent land governance”, is indicative of a new global discussion on the issue.

“This year we have dozens of sessions on issues of land governance, transparency and implementation of the Voluntary Guidelines, which wouldn’t have been as prominent four years ago,” Jorge Munoz, a land tenure adviser for the World Bank, told IPS.

“This is not a new subject for the bank, but it has become much more prominent globally – though clearly some countries are much more interested in increasing transparency for improving land governance than others.”

As part of the bank’s scaling-up on the issue, Munoz points to the institution’s rollout of a new tool with which governments are able to get a snapshot analysis of their current land tenure and related laws. Called the Land Governance Assessment Framework, Munoz says 33 countries have now started to use it.

In addition, the bank is now assisting in implementing new international guidance, approved in May under the auspices of the U.N. Food and Agricultural Organisation (FAO), called the Voluntary Guidelines for the Responsible Governance of Tenure of Land, Fisheries, and Forests in the Context of National Food Security.

According to USAID, the Untied States’ central foreign assistance agency, at least 22 countries have now requested technical assistance on implementing the Voluntary Guidelines. Although the project is still in a pilot phase, a “zero draft” of the guidelines is to be released within the coming month.

“Voluntary regulations don’t always work, of course, but in this case these guidelines may be the only way to solve the problem of ensuring that small-scale farmers don’t get abused and are able to access lands they may have used for generations,” Danielle Nierenberg, co-founder of Food Tank, a Washington think tank, told IPS.

“Without these guidelines, we’d be left with anarchy. Still, governments and consumers now need to take the initiative to push corporations to take this seriously.”

The bank is also involved with another FAO process to develop an international set of Principles for Responsible Agricultural Investment, aimed at offering global guidelines on socially and environmentally sustainable investments in agriculture.

In recent years, some civil society groups have questioned the bank’s own part in facilitating large-scale land acquisitions (including here and here), particularly that of its private sector arm, the International Finance Corporation (IFC). Yet Munoz says much of this criticism has overstated the institution’s role, which he suggests has focused less on financing than on offering technical assistance on reforms.

“There is a major global problem with land-grabbing,” says Munoz. “The bank’s role is, essentially, to be leaders in assisting countries in improving land governance and improving the behaviour of private investors.”

Nicholas Stern has been credited with having had perhaps the most significant impact on the international public understanding of the threats posed by climate change. Credit: IMF

“This combination of political circumstances in 2013 is as good as it’s likely to get,” Stern said Tuesday in a major address at the International Monetary Fund (IMF) headquarters here, warning that failures of political will had made action on climate change progress occur “far too slowly”.

Still, he cited new or renewed administrations in the United States and China that won’t have to face further elections, alongside strong pledges by leaders in both Washington and Beijing. Stern also noted new commitments by the IMF, World Bank and Organisation for Economic Cooperation and Development (OECD), continued support from European leaders, and important movement among developing countries.

“Look at plans in Ethiopia, Mexico, South Africa – these countries have leaderships taking this issue very seriously,” he said. “So 2013 is the best possible year to try to redouble efforts to create political will that hitherto has been much too weak … [but] we need to do much better at knowing what others are doing and to collaborate.”

Stern, the author of a major 2006 report for the U.K. government on the economic impacts of climate change, has been credited with having had perhaps the most significant impact on the international public understanding of the threats posed by climate change. Yet at the IMF on Tuesday, he warned that his landmark study “badly underestimated” these risks.

Warning that the world now looks on track to raise the global temperature by as much as five to seven degrees Celsius by the end of this century – which he said would result in a “radical transformation” – Stern noted that his previous forecasting “should have been much stronger”.

“Today, emissions are at the top of or even above what we thought about then, while some effects are coming through faster,” he said.

“We didn’t say enough about the interactions of climate ecosystems. Further, regarding those elements missing from the scientific models, we now recognise those are even more important than we thought at the time … a lot of things aren’t in the models simply because scientists don’t fully understand them yet.”

Modelling human welfare

In fact, Stern puts down these underestimates to an inherent inability of the types of models that both scientists and economists still use in forecasting global weather systems changes.

“The failure … is that lasting destruction isn’t a part of these models – they’re ahistorical in terms of economic impact,” Stern, a former U.K. chief economist for the World Bank, said.

“Following the Pakistan floods in 2007, some parts of the country saw development pushed back by 20 years. But if these types of events were to happen, say, every 10 years, the current models don’t allow us to speak about this.”

Stern called for a “new generation” of modelling that can take into consideration the impact of climate change on human lives and human welfare.

“If we had to describe the destructive events of the last century – World War I, World War II, the Holocaust – we wouldn’t do it in terms of aggregate gross domestic product,” he said. “Instead, we have to learn to discuss risk to describe, as well as we can, all dimensions, including loss of life. What would we be ready to pay to reduce this risk?”

Stern was particularly disparaging about three aspects of the current global discussion on climate change. First and foremost, he warned against the common tendency, particularly among policymakers, to view the discussion as one of climate action versus jobs and economic growth.

Second, he noted the danger of decoupling issues of development, mitigation and adaptation to climate change, stating these three always need to be considered “bound up” together.

Third, he pointed out the “acute contradiction” of believing simultaneously that current pricing of oil and gas – widely seen as far too low – can coexist with a goal of keeping the planet’s temperature rise to just 2 degrees Celsius this century.

Single biggest threat

Stern’s appearance at the IMF comes as both the fund and its sister institution, the World Bank, are taking significant new steps into the global climate discussion. He called both lenders “absolutely fundamental to this whole story”.

The economist was introduced on Tuesday by IMF managing director Christine Lagarde, and spoke just hours after World Bank President Jim Kim gave a major address here on the bank’s new climate focus for coming decades.

“It’s not odd or off point for the World Bank and the IMF to be talking about climate change as the single biggest long-term threat to economic growth,” Rachel Kyte, the bank’s vice-president for sustainable development, said Tuesday, speaking alongside Stern.

“If we have a mission that is aimed at speeding up the rate at which we end poverty, building more inclusive societies through shared prosperity, then climate change is the rug that will get pulled out from beneath all of our clients. And it will be pulled unevenly, with the poor and vulnerable suffering the most.”

While many are applauding the new climate focus by both of these institutions, some are expressing concerns about a current lack of policy harmonisation. On Wednesday, 55 civil society organisations from 20 countries sent an open letter to President Kim, urging the World Bank to stop funding fossil fuel projects unless they are specifically aimed at increasing energy access for the very poor.

“Nicholas Stern puts a significant emphasis on getting the price of carbon right, and clearly bank officials do understand this,” Janet Redman, director of the Sustainable Energy and Economy Network at the Institute for Policy Studies, a Washington think tank, told IPS.

“Yet there’s a sense that the poorest of the poor still need dirty fuels to facilitate energy access. In fact, there’s been a lot of work, including by the bank, showing that burning fossil fuels not only doesn’t increase energy access for the poorest of the poor, but actually increases poverty.”

In response, the bank’s Kyte told Bloomberg News Wednesday that her institution’s fossil fuel-related lending last year amounted to around 19 percent of total energy funding, aimed at ensuring that poor countries can deal with everyday needs. She also said that, over the past decade, the bank has doubled its investments in renewables.

World Bank president Jim Kim urged countries to “break the taboo of silence” around inequality. Credit: World Economic Forum/cc by 2.0

In a major speech at Georgetown University here on Tuesday, Kim fleshed out themes that he first introduced last fall, outlining a vision for how the World Bank can evolve and remain relevant in the coming decades. With an annual lending budget of around 30 billion dollars, the Washington-based bank remains one of the world’s largest development institutions.

“We are at an auspicious moment in history, when the successes of past decades and an increasingly favourable economic outlook combine to give developing countries a chance – for the first time ever – to end extreme poverty within a generation,” he said.

While those living on less than 1.25 dollars a day stood at 43 percent of the developing world in 1990, by 2010 that figure had fallen to 21 percent. The new plan would now bring this number down to three percent by 2030.

Kim warned that the new goals were extremely ambitious and would require “concerted global action on an unprecedented scale”. While cutting global extreme poverty levels in half – the first of the Millennium Development Goals (MDGs) – took some 25 years to accomplish, Kim said the 2030 goal would require cutting poverty levels in half, then in half again, then nearly in half a third time.

“If countries can achieve this, then absolute poverty will be brought below three percent,” he said. “Our economists set the goal line here because below three percent the nature of the poverty challenge will change fundamentally in most parts of the world. The focus will shift from broad structural measures to tackling sporadic poverty among specific vulnerable groups.”

The speech is being widely welcomed by development agencies and scholars.

“It’s refreshing to see a world leader outline a bold, focused and measurable vision,” Didier Jacobs, acting head of the Washington office of Oxfam, a humanitarian agency, told IPS. “Oxfam applauds refocusing the World Bank on eradicating extreme poverty while reducing inequality and curbing climate change.”

Indeed, climate change and inequality will now constitute a primary focus in all World Bank projects. On the first issue, Kim stated the bank is currently exploring ways to institute carbon markets and eliminate fossil fuel subsidies, among other initiatives.

On the second, Kim urged countries to “break the taboo of silence” around inequality, warning that around 1.3 billion people continue to live in extreme poverty despite massive economic leaps over the past decade.

Still, some are worried that the bank’s focus on the poorest 40 percent in each country will not do enough to address this growing inequality.

“The shared prosperity goal lacks a target,” Oxfam’s Jacobs says. “It is not enough to increase the income of the bottom 40 percent in every country. Income of the poor should rise faster than average and the gap between the very rich and poor should be reduced.”

As the bank begins to implement Kim’s new vision, Jacobs is urging the institution to commit to specific policies and investment priorities, including free universal public health and education services, fairer taxation, and replacing fuel subsidies with programmes that build the resilience of poor people in the face of climate change.

South-South delivery

Kim’s new vision for the World Bank comes in the context of two milestones. First, this week marks a thousand days until the end of 2015, the deadline for achievement of the MDGs.

While Kim said progress towards the MDGs, which are to be achieved by 2015, has been notable but uneven, he also pointed out that many developing economies have weathered the international economic crisis better than developed countries. World Bank forecasts currently suggest developing economies as a whole will grow by 5.5 percent this year, followed by incremental increases the following two years.

Second, Tuesday’s speech comes just days after five middle-income countries – Brazil, Russia, India, China and South Africa, known as the “BRICS” – unveiled new plans for a BRICS-funded development bank, to be initially capitalised at around 4.5 trillion dollars, that would work in concert but also in competition with the bank.

Due to this and other fast-changing dynamics, many are suggesting the bank will need to adopt new models to maintain its relevance. On Tuesday, Kim announced a new institutional focus on what he’s calling a “science of delivery for development”, which he says will position the bank to facilitate networking between development practitioners in developing countries.

“Knowledge transfer of new models of downstream work that takes a more social enterprise approach, rather than being state led – this is what is fresh and exciting in the new models of global South-South collaboration currently taking place,” Asif Saleh, communications director for BRAC, an international development organisation based in Bangladesh, told IPS.

“On a mass scale, how we highlight such partnerships will determine the success or failure of our fight against global poverty.”

While others suggest that development and delivery issues are more art than science, the initiative in general appears to be signalling a new direction for the World Bank.

“‘Science’ suggests that these approaches work the same the world over, whereas delivering development is entirely context dependent,” Charles Kenny, a senior fellow at the Center for Global Development (CGD), a Washington think tank, told IPS.

“Nonetheless, helping partners learn from one another is clearly a big future role for the bank. This would appear to suggest that the bank is moving away from the one-size-fits-most model and towards one that admits that what will work in development will depend on country circumstances and everyone learning together.”

Despite the scope of the new goals unveiled on Tuesday, Kenny says that Kim’s speech outlines a realistically scaled-down vision of the bank’s long-term global role.

“If absolute poverty is gone in 2030, the bank will need something to do, so this is a vision for the bank’s role in a richer world,” he notes.

“A new model where the bank is focused on small subsets of people and global public goods provision, rather than trying to do all of development, is a very pragmatic approach. A bank that focuses on where it can have the biggest impact – on remaining pockets of absolute poverty, on cross-country learning – seems like a very sensible agenda.”

A Shell oil refinery in Martinez, California. Credit: cc by 1.0

The International Monetary Fund (IMF) is urging national governments around the world to roll back or eliminate subsidies on petroleum-based energy sources, estimating that this alone could result in a 13-percent decline in global carbon dioxide emissions.

In an unusual new paper marking its full entry into the climate change debate, the Washington-based fund on Wednesday said the cost of “pre-tax” subsidies for these products, when consumers pay less than the cost of supply, stood at about 480 billion dollars in 2011.

Further, the “post-tax” cost of these subsidies – wherein a government doesn’t charge enough to take into account the negative ramifications of energy consumption, including environmental impact – are far higher. Suggesting a figure far higher than previous estimates, the IMF puts this number at around 1.9 trillion dollars, or 2.5 percent of global GDP.

While developing countries and emerging economies account for much of the pre-tax subsidies, IMF researchers have found that developed countries make up some 40 percent of the post-tax total. The United States leads all countries in this regard, at nearly a half trillion dollars in annual subsidies, followed by Russia and China.

The implication is that these countries should be charging consumers far higher for coal, gasoline and other petroleum products, both in order to offset their negative impacts and to give consumers a clearer understanding of the full consequence of their use. Following on previously stated policy, the IMF is also reiterating its support for some sort of carbon tax.

“By boosting energy consumption and thus emissions, subsidies aggravate climate change and worsen local pollution and congestion,” David Lipton, the IMF’s first deputy managing director, said in a major speech here on Wednesday.

“Our estimates indicate that subsidy reform could play a significant role in offsetting climate change … These estimates point to the substantial benefits of using fiscal instruments to achieve climate change objectives. The time has come for subsidy reform and carbon taxation.”

The new estimates on the environmental and other costs of energy subsidies – what the IMF refers to as “externalities” – are far higher than previous such estimates. In part, this is because the IMF is incorporating traffic-related costs, such as from accidents and congestion.

But for the majority of this cost estimate, IMF officials say they are using a fairly conservative figure of 25 dollars per tonne of carbon dioxide, from a widely referenced 2010 study by the United States Interagency Working Group on Social Cost of Carbon. Other estimates for this number have been significantly higher, up to 80 dollars per tonne.

More productive spending

The new paper looks into the environmental impact of energy subsidies, including the distortions that subsidies cause by leading consumers to make decisions without reference to their full impact. But it also outlines several additional ramifications of these practices, particularly in developing countries.

For instance, over decades these subsidies have been found to crowd out investment in energy production, including in renewables. Simultaneously, they constrict state coffers such that governments have less money with which to fund public spending, for instance on education, health or infrastructure.

“In countries across sub-Saharan Africa, governments are spending an average of three percent of GDP on energy subsidies – the same as on public health – so reducing these subsidies would free up space for more productive spending that is much needed,” Roger Nord, a senior advisor in the IMF’s African Department, told reporters Wednesday.

“As elsewhere, energy subsidies in Africa benefit principally those who are already better off. Take electricity – the poor are typically not even connected to the grid; they don’t have air conditioning or SUVs.”

Subsidies have also discouraged much-needed investment in electricity production. Nord notes that the total production in sub-Saharan Africa is lower than that of Spain, while the past three decades have seen no per capita increase in electricity production.

There have been examples of success in this regard. Proponents point to Ghana, for instance, which was able to reduce subsidies and, in turn, to allocate part of those savings to rural electrification. Likewise, when Kenya liberalised its energy sector it was able to double new investments in power generation in just 10 years, a stark contrast with many other African countries.

Fierce politics

At a time of continued concern over mounting debt in capitals throughout the world, the IMF is emphasising the short-term implications that reducing or eliminating energy-related subsidies would have on governments in search of new revenues. And indeed, coupled with the new and increasing concern over global climate change, it would seem as though the push to roll back subsidies would be newly pertinent for many policymakers.

Yet while Wednesday’s paper constitutes the most significant public stance the IMF has taken on this issue, the fund’s research teams have telling governments for years that reducing subsidies would bring in additional revenue – with relatively little change on the ground.

Likewise, as energy costs have increased, other multinational groupings have begun to raise alarms. Most prominently, the Group of 20 (G20) countries have now twice committed to halting “inefficient” energy subsidies over the “medium term”.

Yet according to the new analysis, most countries have seen little progress in following through on this pledge. Certainly this is the case in the world’s largest subsidiser, the United States.

“The United States government has subsidised fossil fuels for the past 100 years,” Doug Koplow, the founder of Earth Track, an energy subsidy watchdog, told IPS.

“We subsidise the extraction, capital formation and clean-up of extraction sites, as well as offer corporate structures that entirely exempt oil and gas companies from corporate taxation. In the last two decades, we have also started significant subsidies for renewable energy. To a great extent, this is all just hardwired into the system.”

Meanwhile, despite widespread understanding that change is needed, significant political inertia on the subject here does not appear to be dissipating.

“Almost every year we get new proposals to reform these subsidies that inevitably get defeated, and I don’t have a lot of confidence that will change in the near future,” Koplow says.

“In some countries – New Zealand is a typical example – severe fiscal crises have indeed allowed governments to deal with all of their energy subsidies at once, and this could happen in the U.S. as well. But the politics on this stuff is fierce.”

With banks due to reopen on Thursday, Finance Minister Michael Sarris said he expected the control measures to be ready by noon (1000 GMT) on Wednesday.

“I think they will be within the realms of reason,” Sarris said in a Cyprus television interview, without going into details.

Cypriots have taken to the streets of Nicosia in their thousands to protest against the bailout deal they fear will push their country into an economic slump and cost many their jobs.

European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

A banking official said on Wednesday that new controls will include restrictions on large-scale transfers from Bank of Cyprus and Laiki, two of the country’s largest and troubled lenders, which are both being restructured.

Authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros, for at least a week until the situation stabilises, according to the official who spoke to AP news agency.

Banks will have heightened security across the island nation for the “comfort of both bank staff and clients, with the police also present”, according to John Argyrou, the Cyprus managing director of private security firm G4S, which will deploy 180 of its staff to all bank branches.

“There may be some isolated incidents, but it’s in our culture to be civil and patient, so I don’t expect anything serious,” said Argyrou.

Run on banks

“Banks will open on Thursday … We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals,” Sarris said in the interview.

The central bank governor said earlier that “loose” controls would apply temporarily to all banks.

Earlier, the finance minister said they could be in place for weeks. Banks have been shut since final bailout talks got under way in mid-March.

Russia, whose citizens have billions of euros in Cypriot banks, cautioned Nicosia against imposing onerous controls on healthy banks.

“If there are such measures, this will not foster trust but only provoke additional problems for participants, depositors,” Russian Finance Minister Anton Siluanov, in South Africa for a summit of the BRICS emerging powers group, told reporters late on Tuesday.

State-controlled Russian bank VTB has a subsidiary in Cyprus, Russian Commercial Bank, which has not been affected by the bailout deal.

Siluanov cautioned that Russian willingness to restructure and extend a 2.5-billion euro loan to Cyprus in 2011 would depend on the island’s decision on capital controls.

“We will discuss (restructuring of the loan) in the context of the decisions the parliament adopts,” he said. “We are prepared to discuss within these parameters.”

Bank executive sacked

Meanwhile, the chief executive of the Bank of Cyprus, the island’s biggest lender, was sacked by the central bank governor as part of the bailout deal, state media said.

Yiannis Kypri was fired on the instructions of the so-called troika of the European Union, European Central Bank and International Monetary Fund, the Cyprus News Agency reported.

The terms of the 10-billion euro (13-billion-dollar) rescue have stirred popular anger within Cyprus at the country’s partners in the EU, notably Germany, the bloc’s main paymaster and fiercest advocate of austerity.

On Tuesday, up to 3,000 high school students protested at parliament, in the first major expression of popular anger since the bailout was agreed in the early hours of Monday morning in Brussels.

The deal largely side-stepped parliament, and has triggered opposition calls for a referendum.

“They’ve just got rid of all our dreams,” one student, named Thomas, said.

Outside the central bank, about 200 employees of the country’s biggest commercial lender, the Bank of Cyprus, demanded the resignation of central bank governor Panicos Demetriades, chanting “Hands off Cyprus” and “Disgrace”.

*Published under an agreement with Al Jazeera.