Washington Post | November 19, 2001
U.S. Hesitant as IMF, World Bank Urge Bigger Contributions
by Paul Blustein
OTTAWA -- The International Monetary Fund and World Bank wrapped up a weekend meeting today with fresh calls for increasing aid to developing countries, but resistance to the idea by the United States raised doubts about how much new assistance would be forthcoming.
A "substantial increase" in current levels of official development assistance would be required in coming years, the World Bank's policy-setting development committee said in a statement. The bank's president, James Wolfensohn, said support among panel members for a major increase in aid was the highest he had ever seen.
Wolfensohn, at a press conference after the meeting of the panel, which represents the World Bank's 183 member countries, said there has been a "growing realization" since Sept. 11 that aid "is not just charity; it's self interest" for donor nations.
Wolfensohn acknowledged, however, that the most powerful member of the committee, U.S. Treasury Secretary Paul H. O'Neill, was by far the least enthusiastic about that proposition.
Exhortations by Wolfensohn and others underscored the view among aid advocates that the chance and the need for mobilizing more assistance for poor countries was greater than ever since Sept. 11. That is because the slowing global economy has hit developing countries particularly hard, which has raised concern about a worsening of conditions that foster anti-Western sentiment.
The issue was teed up for this weekend's meeting in a speech Friday by Gordon Brown, Britain's chancellor of the exchequer, who proposed a $50 billion increase in aid provided annually to developing countries to reach a United Nations goal of halving global poverty by 2015. Brown's speech drew cheers from Oxfam, a leading advocacy group for the world's poor. The proposal, which doubles the current amount of aid, was "extremely welcome," Oxfam said.
At a press conference, O'Neill agreed that rich nations "need to pay attention and try to do something" about the millions living in poverty, but he gave the idea of more aid a cold reception. "Over the last 50 years the world has spent an awful large amount of money in the name of development without a great degree of success," he said.
Rich countries need to concentrate on "producing results" in poor countries, O'Neill said. "It's time for us to become determined and purposeful about making a difference in living conditions [of the poor] by creasing real economic development and not just more giving," he added.
The disparities over aid between the United States and its allies is a longstanding source of tension. U.S. aid contributions total about 0.1 percent of the nation's gross domestic product, the lowest among the Group of Seven major industrial countries. That amount compares with with an average 0.22 percent of GDP for all rich nations, with several European nations contribution about 1 percent of their GDP.
In remarks today to the development committee, O'Neill urged his colleagues to rally behind a U.S. proposal, first advanced last summer, that the Bush administration has cited as evidence of the "compassionate conservatism" behind its aid philosophy. Under the proposal, up to half the World Bank's aid to the poorest nations would be converted from loans to grants.
The administration, however, has proposed no additional contributions to the World Bank to pay for the plan, which has raised European suspicion that it was intended to starve the bank of funding.
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