World Bank's Wolfensohn: Poverty Fueling Global Unrest

World Bank President James D. Wolfensohn warned yesterday that it's impossible to win the war on terrorism unless global poverty and inequity are tackled aggressively, Dow Jones reports.

"Knocking off heads of fundamentalist organizations is no doubt meritorious, but it will not deal with the question of fundamental stability," argued Wolfensohn in an address to the Council On Foreign Relations.

The head of the Washington-based multilateral lending agency noted that 1 billion of the world's 6 billion people live in developed economies and own 80% of the wealth, and that 3 billion people in other parts of the world are trying to subsist on less than $2 a day.

He said that by 2025, the population in developing countries is expected to grow by another 1.5 billion, while rich countries will only see a rise of 50 million people. By 2015, he added, there will be 3 billion people under the age of 25.

At the same time, rich countries are spending $300 billion a year on agricultural subsidies and $600 billion for defense - and just $56 billion on development assistance. Of that $56 billion, only half is delivered in cash and the rest is spent on consultants and "other diversions," he said.

"This is not a speculative issue. This is an issue that is on a train that is just coming down that track and we are not addressing it," Wolfensohn warned. According to the World Bank, development aid has fallen to about 0.22% of gross domestic product from 0.5% in the early 1960s, despite the fact that incomes in developed countries have never been higher. A promise made three years ago by world leaders at the Millennium Summit to cut poverty in half by 2015 is already faltering, Wolfensohn said.

Among their many commitments, world leaders vowed to provide educational funding for 115 million children that aren't in school worldwide. But a pilot project for seven countries, covering just 4% of the target population, has managed to fall far short of the $800 million in annual funding needed for 10 years.

"We've succeeded so far, with a lot of trouble, in raising $207 million for the first three years and we're almost at a brick wall," said Wolfensohn. He commended the administration of George W. Bush for recently vowing to hike U.S. development assistance over the next three years by $5 billion, or 50%, and promises by the European Union to increase contributions by $7 billion or $8 billion. Yet, "today, with the background of less growth than we'd want, and many other distractions, the money's not flowing," he said.

Wolfensohn voiced concern that U.S. taxpayers, angry about $150 billion in spending requests by the Bush administration to rebuild Iraq, are beginning to question foreign aid in general. "That I find to be a tremendously worrying development," he said. Wolfensohn was asked if the huge outlays for the relatively small country of Iraq seemed out of whack with the aid money being spent in the rest of the developing world. "I think you're 100% right," he responded, says the news report.

Further, World Bank Environment Director Kristalina Georgieva told Reuters that the long-established divide between rich northern nations and poor southern states was becoming more entrenched and more complicated as divisions opened up between the southern hemisphere countries themselves. Those countries that had embraced globalization had seen all their people get richer while at the same time seeing the gap between rich and poor get wider. On the other hand, those such as much of sub-Saharan Africa, which had failed to get aboard the globalization gravy train were sinking without trace, to the extent that they were not even able to tackle their own problems. Technology transfer could offer a solution, but historically almost every advance brought with it a downside so it should be adopted with caution. What was needed was strong leadership through multilateral organizations, but just when it was needed most it was at its weakest for generations. "What you see now is the growth of bilateralism unilateralism, clubism—the G8s, G20s and so on. If you are not a member of a club you have no voice. "That disenfranchises people who have no hope and nothing to care for, “ she said.