IMF, World Bank Admit Barriers to Development

World finance leaders wrapped up their annual meetings Sunday with renewed pledges to promote global prosperity, amid warnings that the battle against poverty had taken a back seat to the war on terrorism.

“We have become preoccupied with security,” World Bank President James D. Wolfensohn told delegates from 184 nations attending weekend sessions of the International Monetary Fund and the World Bank. The events took place behind concrete barricades a few blocks from the White House.

The IMF and the World Bank have taken special precautions since U.S. officials warned Aug. 1 that intelligence reports indicated that Al Qaeda had targeted the financial institutions.

“It is absolutely right that we fight terror,” Wolfensohn said. “The danger is that in our preoccupation with immediate threats, we lose sight of the longer-term and equally urgent causes of our insecure world: poverty, frustration and lack of hope.”

In 2000, wealthy nations endorsed an ambitious set of “millennium development goals,” including reducing by half the number of people living in extreme poverty, achieving universal primary education and decreasing child mortality by 2015.

On Sunday, IMF and World Bank officials acknowledged that beyond fast-growing China and India, most developing countries stood little chance of achieving their millennium goals.

“Four years ago ... almost every single country signed up for a historic shared commitment to right the greatest wrongs of our time,” said Gordon Brown, Britain’s finance minister. “Unless we take concerted action now ... we will be remembered not for promises made, but for promises broken.”

The problems are particularly acute in sub-Saharan Africa, where many of the world’s poorest countries have been ravaged by war, famine and the HIV/AIDS epidemic and haven’t participated in global economic growth.

Instead of attaining millennium goals by 2015, Brown said, current trends indicate that sub-Saharan Africa will not achieve universal primary education until 2130, a 50% reduction in poverty until 2150 and the elimination of avoidable infant deaths until 2165.

“I believe the whole world will say 150 years is too long for a people to wait for justice,” Brown said.

Although poor countries are expected to do their part by combating corruption, lowering trade barriers and promoting private enterprise, some delegates attributed the lack of progress in large part to the reluctance of wealthy nations to provide promised financial aid.

To hold up their end of the bargain, wealthy nations need to roughly double the $50 billion a year in development assistance they provide to poor countries, according to World Bank officials. So far, they have been slow to step forward.

Pakistan’s Salman Shah said his country had initiated a “sea change” of financial reforms but would be unable to achieve its development goals without a significant increase in international aid.

In countries such as Pakistan, which has been a training ground for Al Qaeda operatives, the ultimate solution to the immediate problem of terrorism is a long-term commitment to economic growth and alleviating poverty, Shah warned.

“Global security and prosperity are not only directly linked, but are indivisible,” Shah said. “We cannot have a secure world when it is full of grave imbalances, where the absolute number of poor is growing. Only if you succeed in providing hope can you win the war against terror.”

IMF and World Bank officials expressed their determination to deal with current risks to the global economy, including high oil prices and record trade imbalances, as well as longer-term challenges such as crisis intervention and development aid. The World Bank provides support to developing countries, while the IMF’s role is to ensure the stability of the international monetary system.

In some cases, the officials were putting the best faces on their failure to reach agreement before adjourning their annual meetings.

The United States, for example, balked at a British proposal for wealthy nations to make big contributions to resolve the remaining debt of the world’s poorest countries. Some European nations, in turn, rebuffed a U.S. plan to write off as much as 95% of Iraq’s $130-billion foreign debt.

“I want everyone to know the United States is fully engaged with our other partners in trying to make sure we find answers to this critical problem,” Treasury Secretary John W. Snow said. “The details aren’t important. What is important is that we all embrace the objective.”

Wolfensohn, who has headed the World Bank since 1995, said he had met with poor people in more than 100 countries and was convinced that they were no less concerned about safety than people in the developed world.

“They want security, but they define it differently than we do,” he said. “For them, it is not about concrete barriers and military force. For them, it is the chance to escape poverty.”