Global Policy Forum

By Alan Friedman

Kofi Annan, secretary-general of the United Nations, will warn international business and political leaders Monday that globalization risks a devastating boomerang effect if the world's elite fail to increase spending to battle poverty and disease in developing countries and act quickly to open up markets in rich countries.

In a speech to the 2,500 participants at the World Economic Forum, Mr. Annan is expected to make a stark reference to the terrorist attacks of Sept. 11 and to warn that if more money is not spent on reducing poverty, some poor countries will collapse into conflict and anarchy and become a threat to global security and international business.

Using uncharacteristically strong language, the UN chief is expected to say that the protests against globalization reflect the reality that power and wealth are unequally shared and that more than 1 billion people live in extreme poverty and degradation. Mr. Annan plans to bluntly point out that the anger rests on a perception that globalization itself is to blame and that those driving the process - the very same leaders attending the forum meetings - are responsible.

According to an advance copy of his speech, obtained by the International Herald Tribune, Mr. Annan will say that, though the perception of globalization opponents may be wrong, the only way to counter it is by doubling aid to poor countries from $50 billion to $100 billion and by making small corporate contributions aimed at alleviating the effects of AIDS and other diseases.

The text of Mr. Annan's speech highlights the unusual spotlight given this year to concern over of the worldwide wealth gap. More than at any previous forum, business and political leaders have discussed the need for increased spending to shrink the gap between rich and poor.

The New York meeting opened Thursday with a warning from James Wolfensohn, president of the World Bank, that "hard-headed politicians" should act out of self-interest and see more financial aid to the poor countries "as an insurance policy against future terrorism."

On Saturday, Secretary of State Colin Powell acknowledged the link between terrorism and poverty, telling the forum that "terrorism really flourishes in areas of poverty, despair and hopelessness, where people see no future."

Paul O'Neill, the U.S. Treasury secretary, later said that he rejected a mere increase in aid money and would prefer to use aid more effectively. Still, as thousands of nonviolent protesters stood on Park Avenue and shouted slogans, Mr. O'Neill was inside the Waldorf-Astoria hotel, in the company of the billionaire Bill Gates and Bono, the lead singer of the rock band U2, discussing ways to alleviate poverty.

In one of the ironies of the forum this year, Bono announced that he and Mr. O'Neill - as odd a couple as the 21st century has yet produced - would travel together to Africa later this year in an effort to understand how to make foreign aid more effective.

"I'm going to go to Africa with Secretary O'Neill and he's going to come back with more than a souvenir spear," said Bono, a vigorous campaigner for more aid to poor countries. A senior Treasury official confirmed plans for the trip.

Mr. O'Neill, meanwhile, was unusually reflective about aiding the poor. "Over the last 50 years," the Treasury chief said, "the developed world has spent trillions of dollars in the name of aid, and I would submit we have precious little to show for it. How much money we spend is not the right issue. How fast we raise every human being's living standard to our own, that's the question."

The United States spends about 0.1 percent of its $10.2 trillion economy on foreign aid, the lowest proportion of any other industrialized country.

Horst Koehler, managing director of the International Monetary Fund and a frequent target of the anti-globalization movement, emerged as another unusual voice on behalf of a more equitable world. Mr. Koehler won applause from a forum audience full of finance ministers and chief executives when he scolded rich countries for failing to open their markets to exports from poor countries and criticized U.S. agriculture subsidies that damage developing countries. "Societies in the advanced countries are too selfish to give up their privileges," Mr. Koehler told a weekend panel. "If we really want to make globalization work for the benefit of all, then the advanced countries have to realize it can no longer be business as usual."

Mr. Annan's speech compares the earth to a small boat driven through a storm. If the world ignores the fate of those crowded aboard the boat, those who are sick risk infecting everyone, and those who are angry could hurt many others. Mr. Annan is also expected to tell the forum that the same poor countries that are breeding grounds for terrorism can be transformed into a very large potential market.

Mr. Annan's speech, which formally closes the five-day forum, comes as the power elite he is criticizing are in fact making gestures, both real and symbolic, toward the developing world.

A group of company executives, for example, joined with global health leaders such as Gro Harlem Brundtland, director-general of the World Health Organization, to call on other business leaders to increase efforts in the fight against AIDS, malaria and tuberculosis. Raymond Gilmartin, chief executive of the pharmaceutical group Merck, Goran Lindahl, chairman-designate of Anglo American, the world's No. 1 gold producer, and Anthony Ruys, the incoming chief executive of Heineken, presented a statement urging private sector aid in fighting disease in developing countries.

Meanwhile, Mr. Koehler of the IMF issued a couple of highly unusual mea culpas over the weekend.

"I think the IMF has to recognize that it has made mistakes, and in one or two cases there was too much concentration on fiscal adjustments," Mr. Koehler told the forum in an apparent reference to criticism that IMF austerity policies had hurt some Asian and Latin American economies in the 1990s.

Mr. Koehler also made the surprising acknowledgment that while the IMF had in the past insisted that emerging economies open their capital markets to investment, "Today, I would never advise a country to open its capital market without first having established internal regulatory institutions such as banking supervision so they can cope with huge capital flows."

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