DEVELOPMENT: World Bank, IMF Meet’s Success a Subjective Matter

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Analysis - By Peyman Pejman

DUBAI, Sep 25 2003 (IPS) - After two days of official debates and many more days of informal gatherings and seminars during the joint session of the board of governors of the World Bank and the International Monetary Fund (IMF), the question remains: What did they achieve? The answer depends on whom you ask.

Officials such as James Wolfensohn, the Bank’s president, argue that while some of the topics were not new and had been discussed before, there were some new issues, or at least old issues that have now gained enough prominence so something could possibly be done about them.

Two such issues, in his opinion and that of other Bank and Fund officials, are questions of aid to developing and underdeveloped countries, and representation of African and developing countries in the decision-making process of the two bodies.

“There was a discussion and many governors made clear there was a need for voice and representation of the developing countries and I have said that I very much hope that the shareholders of the advance countries would listen. I think consensus is possible,” Horst Kohler, the IMF managing director said.

Wolfensohn said there was “enough discussion” so that he believes the question “will not be tabled”.

According to the Bank and Fund charters, the voting right of each country is tied to its share of the world economy. The United States, according to IMF figures, holds 17.46 percent of the world economic activity and thus has 17.14 votes. To make any changes to the charter, 85 votes are needed.

Many African countries argue that factors other than economic activity should be considered in the voting right, or that the voting criterion should at least be applied even-handedly.

For example, they argue, Zimbabwe accounts for .17 percent of the world economy according to IMF figures, but has no voting rights. Croatia has the exact same contribution figure but has .18 votes.

Aid to underdeveloped and developing countries, while an old topic discussed in just about every Bank and Fund meeting, also seems to have attracted more traction for at least two reasons.

“I think there is a serious shift on the part of many developed countries that there is a linkage between terrorism and aid,” said one IMF spokesperson who spoke on condition of anonymity.

“A few years ago, it would have been very hard to get the United States to pay even lip service to African countries. Now you see President (George W) Bush trying to show the caring side by dedicating billions to Africa for things such as AIDS. It might not be direct economic aid but it is a message nonetheless,” the spokesperson said.

But officials such as Wolfensohn and Kohler argue that decentralised and small aid packages do not solve the overall problem.

To achieve the Millennium Development Goals, a set of ambitious goals that the world community said it wants to achieve by 2006, world nations must increase their current level of funding by 40 to 60 billion U.S. dollars each year.

Britain attempted without success to generate a consensus – which is needed for all Bank and Fund decisions – that a screw account be established to help under-developed and developing countries. Wolfensohn said London has now asked the Bank for more ideas.

There are two primary reasons why the world community is not paying its share to help poorer countries.

First is governance, or lack thereof. Rich countries, such as the United States, find international organisations, be they the United Nations or the IMF and the World Bank, bureaucratically inflated and organisationally inefficient. They also see African governments as corrupt.

The second reason is that there are competing interests over the rich countries’ resources. One year ago Afghanistan needed 10 billion dollars. Today, the world’s countries are being asked to triple that amount. Although there is no precise figure for the reconstruction of Iraq, the amount will likely be between 50 billion to 75 billion dollars over the next three to five years.

There are others who argue that the Dubai meetings achieved very little, if anything.

“I think, to be honest, it was a nice time here and the speech by the World Bank president was very nice, but I don’t think they will lead to aid to most countries or lead to any tangible help,” said Abdel Rahman Bouri, a delegate from Djibouti.

“Ultimately rich countries look at things in a capitalistic and self-interest way. They say there is corruption (in Africa). There is some corruption. There is corruption everywhere. But the rich countries are using that as an excuse because deep down they don’t really care about helping people,” he added.

Some officials say perhaps the rich countries are missing the ball in this discourse.

In his opening speech, Sheikh Hamdan bin Rashe al Maktoum, the finance minister of the United Arab Emirates, said countries worldwide do not just need money. What they need equally as much is educational and vocational training, tools to empower their people.

At the meeting that came on the heels of the collapse of the trade talks in Cancun, Mexico earlier this month, many delegates were also concerned about unilateralism on the part of some major economic players.

“Even more important than money is the recognition that we are on the same boat, poor countries, rich countries, and emerging market countries. There is no way to move forward in peace and prosperity unless there is a recognition that this is an interdependent world and multilateral cooperation is needed,” said Kohler.

“I did not see a hostility in the aftermath of the Cancun talks. What I do see is a sense that we need to find a way to get back on track. The best aid is trade,” said Wolfensohn.