New global equilibrium

New global equilibrium

The World Bank and International Monetary Fund (IMF) annual
meetings ended in Dubai last week with an increasingly urgent
call for more equality between rich and poor countries -- a more
equitable global system.

This message was a surprise indeed as it came from two
multilateral institutions where the voting power is based on the
size of share ownership and is, consequently, always controlled
by the developed countries.

However, those closely monitoring the proceedings of the
meetings would have expected such conclusions because the tone of
the conference had clearly been set by World Bank President James
D. Wolfensohn in his opening speech.

Wolfensohn reiterated the urgent need for a new balance
between developed and developing countries on aid and trade, a
new global equilibrium. He called for more concerted efforts by
the developed countries to help reduce extreme poverty in the
developing nations, warning that peace and prosperity in the
world would be sustainable only with a more equitable global
system.

It was not simply a coincidence that Indonesia's President
Megawati Soekarnoputri conveyed a similar message to world
leaders in New York last week. Addressing the UN General
Assembly, Megawati warned essentially that injustice in the
global system was one of the root causes of terrorism.

There is virtually nothing new in Wolfensohn's message, nor in
Megawati's warning. The developing nations have been fighting
since the mid-1970s for a similar course, which was then
alternately called either a new world order or new economic
order, to correct what they criticized as a grossly inequitable
global system.

However, these latest warnings purveyed a stronger sense of
urgency, especially in view of the collapse of the recent Cancun
trade talks held as part of the Doha round of global trade
negotiations under the World Trade Organization (WTO).

Finance ministers from developing countries who addressed the
meetings in Dubai referred to the Millennium Development Goals
(MDGs), notably those in cutting absolute poverty by 50 percent
in 2015, and contended that no progress had been made since the
launching of the MDGs in 1990.

The World Bank chief drove the message home in a harsher tone
when he pointed to the irony whereby the developed countries
annually gave only US$56 billion in development assistance to the
developing nations, but at the same time spent US$300 billion on
farm subsidies and $600 billion on defense.

It is indeed imperative now for the developed countries to
increase their overseas development assistance (ODA) to achieve 1
percent of their gross domestic product, the minimum level set
more than three decades ago. More financing is required to
achieve the MDGs, which include universal primary education, a
reduction in child mortality, improvements in maternal health and
environmental sustainability.

However, much more important than mere financing, the
developing nations need more market access, which in the MDGs is
defined as a global partnership for development.

This is what the developing nations have been striving for
since the launching of the Doha round of trade talks in 2001.
However, as the WTO conference in Cancun earlier this month
painfully showed, the developed countries have yet to demonstrate
their commitment to true global partnership with the developing
nations.

True, aid is necessary to help accelerate the development of
physical infrastructure and human resources in developing
nations. Likewise, market access is essential to help poor
countries sell their products to gain better earnings. But they
are not enough to achieve the MDGs in poor countries.

The developing nations need to put up their share by
implementing reforms, building good governance, establishing
sound macropolicies and enhancing people's participation in the
development process.

Experience has shown that development aid, market access and
policy reform always interact and reinforce each other in the
development process.

Hopefully, the strong message from the World Bank-IMF meetings
in Dubai will serve as another wake-up call for the international
community to be more determined to promote a true global
partnership, fully realizing that all its members are in one
boat, in an interdependent world.

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