WORLD ECONOMIC FORUM: World Bank Presses U.S. To Increase Foreign Aid
International Herald Tribune
January 31, 2002
Alan Friedman

A battle that pits the United States against leading voices in the international community over increased foreign aid to poor countries is shaping up as a central issue at the World Economic Forum, beginning Thursday in New York.

Calling increased aid to developing countries "an insurance policy against future terrorism," James Wolfensohn, president of the World Bank, criticized the United States for opposing a specific call for doubling aid to $100 billion this year

Mr. Wolfensohn argued that increasing foreign aid would reduce the threat that poor countries might become breeding grounds for terrorists and should be seen in this light by officials of President George W. Bush's administration and by "hard-headed politicians" in all rich countries.

"Spending more money to fight poverty is not just a moral thing to do," Mr. Wolfensohn said in an interview with the International Herald Tribune.

"It is in the specific self-interest of world political and financial leaders meeting at the World Economic Forum in New York because it is also an insurance policy against future terrorism. You cannot win the war against terrorism without winning the peace," he said.

Mr. Wolfensohn joined other leaders, including the UN secretary-general, Kofi Annan, and the British chancellor of the Exchequer, Gordon Brown, in calling for a $50 billion increase in aid, saying the total was still less than would be needed to fulfill a failed pledge by the Group of Seven leading industrialized countries at their last summit meeting in Genoa.

In criticizing the Bush administration, Mr. Wolfensohn said it would be a mistake for the United States to oppose proposals to double aid.

The proposals are to be presented at meetings in New York this week that are to complete plans for a United Nations conference on financing for development.

"The $50 billion that the international community today devotes to aid is paltry," Mr. Wolfensohn said, noting that agricultural subsidies in Europe and the United States amounted to seven times as much each year.

"No matter how politically unpopular in some circles, we need to keep up the pressure for an immediate doubling of aid," he said.

Mr. Wolfensohn said that he was not falling prey to idealism. "I am not saying this as a dreamer," he said. "I spent 30 years in business. I am saying this as a realist who has visited 114 countries."

The issue of bridging income gaps between rich and poor countries to fight terrorism will be one of five major themes at the New York gathering of 3,000 political and financial leaders in the Waldorf Astoria Hotel, according to Klaus Schwab, who heads the World Economic Forum.

Mr. Schwab said other issues would include an assessment of recession and recovery in the world economy, the question of how to achieve more security after the attacks of Sept. 11, ways to increase understanding between cultures as diverse as those in the Western and Islamic worlds, and the question of leadership.

"We need to re-evaluate leadership," Mr. Schwab said.

"If you look at country meltdowns like Argentina or imploding companies like Enron," he said, "it is clear we have to find better ways to prevent such crises."

The decision to shift the annual World Economic Forum meeting from its traditional venue in the Alpine ski resort of Davos, Switzerland, was not popular with all members, Mr. Schwab conceded in an interview.

But Mr. Schwab denied reports that the reason for the shift had been fears about terrorist threats in Davos.

The event last year was marred by scattered violence from protesters opposed to globalization.

"The reason for the move was clearly a tribute to New York after Sept. 11, and I think it will be a success," Mr. Schwab said.

"We have 1,100 participants staying in the Waldorf Astoria and we aim to make this year's forum much more interactive," he said.

He announced that the annual summit meeting would return to Davos next year and said the Swiss federal and local authorities would contribute the lion's share of about 10 million Swiss francs ($5.9 million) in security costs

The New York City Police Department, meanwhile, is bracing for anti-globalization demonstrations against the Waldorf Astoria meeting.

The U.S. authorities are also on alert against possible threats of terrorist activity.

The New York meeting will be the highest profile global summit meeting held in New York since Sept. 11.

It will include appearances by former President Bill Clinton, Chancellor Gerhard Schroeder of Germany, Prime Minister Mahathir bin Mohamad of Malaysia, President Gloria Arroyo of the Philippines and many others.

"I think it is an extremely important event for New York City and for the world," said Robert Hormats, vice chairman of Goldman Sachs International.

"For New York, it will focus a lot of attention on what happened here, but for the world it shows that, more than ever, we are all in this together."

Mr. Hormats, noting that people from 89 countries had been killed at the World trade Center, said "those people symbolized the best of globalization, and also the greatest vulnerabilities of globalization."

He said having the Davos event just a few miles from Ground Zero "reminds us of how interlinked all of our economic, political, and security interests really are."

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