Global Policy Forum

Banker Presses Aid for Poor to Fight Terror


By Elizabeth Becker

New York Times
April 22, 2004

When he visits foreign capitals, James Wolfensohn is treated like a head of state, given a red-carpet welcome at the airport, police escorts around town and banner headlines trumpeting the arrival of the chief of the world's largest development agency.

But back in Washington, Wolfensohn, the president of the World Bank, says he is treated like just another senior official whose mission to help the poor is decidedly out of favor - especially after Sept. 11, 2001.

"There is no doubt that today the priority is being given, and maybe correctly so, to terror, to conflict," Wolfensohn said in a wide-ranging interview at the World Bank headquarters two blocks from the White House.

"I would argue that there is also a need for a parallel and equally urgent attention to the question of development as a way to prevent terror, and to prevent conflict," he said. "And I really passionately believe that."

At this weekend's annual spring meetings of the Bank and the International Monetary Fund, Wolfensohn will be facing this familiar dilemma. The United States, the most powerful member of both institutions, will be focusing on getting help for Iraq, even though the official agenda concentrates on global development issues

As he nears the end of a decade as president of the World Bank, Wolfensohn laments what he calls a growing imbalance in global spending by the world's governments: $900 billion is spent annually on defense; $300 billion on support for the world's richest farmers; and only $56 billion on development assistance for the poor.

If the priorities were reversed, the war on terror would be better served, Wolfensohn argues. People without hope, he says, can be influenced by terrorists.

Even as Wolfensohn, a nominee of President Bill Clinton, concedes that few people in the Bush administration share his convictions, he is bracing for a weekend of protests against him and the Bank from the other side of the political spectrum - the activists who view him as a sellout to the establishment.

Yet this self-made millionaire investment banker, former Olympic fencer and accomplished cellist has not given up the idea of a third term in the impossible job.

"This is meaningful," he said. "I'm not diminishing a career on Wall Street, but whether you do another deal is not important. This is important."

If President George W. Bush is re-elected, Wolfensohn will not be considered the top choice for the post. Nor would his chances be much better if John Kerry, the presumptive Democratic presidential nominee, wins the White House and needs to repay people who helped him in the campaign.

Yet even without a third term, Wolfensohn has already left what many observers - friend and foe alike - feel is a considerable legacy, in sometimes unpredictable areas.

"In a funny kind of way, his most decisive contribution has been in the social sector even though when he arrived he came with a great private investment reputation," said Mark Malloch Brown, the administrator of the United Nations Development Program and a former senior aide to Wolfensohn.

A fireplug of a man with a thick shock of white hair, Wolfensohn, 70, immediately broke several taboos at the Bank. He convinced the Bank to forsake huge infrastructure projects like dams and move instead to fund public health, education and even culture projects.

During the period that Wolfensohn has headed the World Bank, the number of people in poverty worldwide has declined in absolute terms; and advances in public health throughout the poor world have made strides.

Wolfensohn has led the Bank to forgive two-thirds of the collective debt of 27 of the poorest nations, adhering to a precedent-setting pledge he made in his first meeting with nonprofit organizations.

John Cavanagh, the director of the Institute for Policy Studies, was at the meeting where the World Bank chief took the vow. He said he remembers being "very impressed with Mr. Wolfensohn's openness, his willingness to open up the Bank to new ideas."

Nonetheless Cavanagh will be protesting on the streets this week. "Ultimately," he said, "I think Jim has failed to transform the Bank into an organ that can truly help poor people."

Nominated in 1995 to a post traditionally held by an American, Wolfensohn has faced what many experts consider extraordinary challenges.

With the cold war ended and globalization all the rage, poor countries were asked to place their faith in newly opening markets and expanded free trade, rather than handouts from wealthy nations.

Money for development projects soon started to dry up.

"Jim has been one of the very few consistent public voices to speak out against the grossly irresponsible neglect of the world's poor by the United States, first and foremost, and other rich countries as well," said Jeffrey Sachs, the Columbia University economist.

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