World Bank president Robert Zoellick outlined new approaches for the World Bank to take to help solve global problems in a major speech delivered at an event organized by the Center for Global Development ahead of the Bank/IMF Spring Meetings.
The wide-ranging speech included a proposal for sovereign wealth funds to invest one percent of their holdings in sub-Saharan Africa as a way of tapping global liquidity to boost investment opportunities and development. Other issues he discussed included high global food prices; the need for a global trade deal; and efforts to address the so-called "resource curse," the troubles that often plague countries rich in oil and other high-value commodities.
The April 2 speech was well-received by a standing room-only crowd of nearly 200 people including development policy experts, policymakers, researchers, and representatives of international NGOs. A key theme--and one that Zoellick returned to during the Q&A--was the need for the bank to go beyond its traditional focus on country lending. (More photos, transcript, and video available here)
"In some ways, the bank is becoming more of a venture fund for development," he said. "Part of my message today is we need to be agile in addressing what comes up in the market place. . . . So part of the governance issue will be whether we get the freedom to do that."
CGD president Nancy Birdsall welcomed Zoellick's interest in pushing for solutions in which the bank would play a catalytic role, offer new non-loan financial products, and help to create new financial markets that serve the interests of poor people in developing countries.
"This speech may well mark the moment when you are truly ushering the World Bank finally into the 21st century," she said, congratulating Zoellick after the speech. "Many of us applaud these ideas. We will be continuing our efforts to help you make a reality out of the many good ideas and the 21st agenda you are setting."
In a blog post the next day, Birdsall said that she hoped that Zoellick would be able to quickly bring on board the bank's 10,000 staff members and its shareholders--the nations of the world. On climate change, she noted, progress so far has been painfully slow.
During his speech, Zoellick said that sovereign wealth funds hold an estimated $3 trillion in assets.
"If the World Bank Group can help create the platforms and benchmarks, the investment of even one percent of their assets would draw $30 billion to African growth, development, and opportunity," he said. He pledged that the World Bank Group would work with sovereign wealth funds to achieve this goal.
On rising food prices, Zoellick also called for a New Deal for Global Food Policy.
"The World Bank Group estimates that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices. For these countries, where food comprises from half to three-quarters of consumption, there is no margin for survival," he said.
Zoellick said the immediate priority was for the United States, the European Union, Japan, and other developed countries to provide the United Nations' World Food Program with the $500 million it needs for emergency food supplies. For its part, the bank is backing feeding and cash programs for vulnerable people and public work-for-food programs, he said.
But he said a New Deal for Global Food Policy also required a shift from traditional food aid to funding programs that help to build local food markets and boost farm production in order to create a "Green Revolution" for sub-Saharan Africa.
Zoellick also warned the time was "now or never" for breaking the Doha Round impasse and reaching a global trade deal, and he criticized rising protectionism in the U.S. and elsewhere.
"This moment of decision is not only for the Doha Round. It is for trade itself. Powerful voices across the political spectrum, including in my own country, are calling for, and rationalizing, protectionism," he said. This economic isolationism signals a defeatism that will reap the losses, not the gains, of globalization."
Zoellick said the Bank Group was also working to help developing countries seize the opportunities of high prices for energy and minerals, while at the same time ensuring the benefits for resource rich countries were inclusively spread among their people.
He said the Bank was building on the Extractive Industries Transparency Initiative (EITI), which encourages resource rich countries to publish and verify company payments and revenues from oil, gas, and mining so their citizens can hold them more accountable. An EITI++ would expand this approach to include such areas as the awarding of contracts, improving economic management, and investing revenues effectively in sustainable development," he said.