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The World Bank, which way forward. Lecture by Konstantin Huber
On May 24, 2012 the SID Vienna Chapter organized a discussion event in cooperation with the Austrian Research Foundation for International Development ÖFSE: The Role of the World Bank in a globalized World and its relevance for Austria. Konstantin Huber, Austrian Executive Director and Chair of the European EDs to the World Bank, gave a presentation on recent developments and future prospects of the World Bank Group, with a focus on the main streaming of green and inclusive growth. SID journal Developement, Vol. 55.1, on Greening the Economy was launched and presented by SID Vienna President, Thomas Nowotny, who chaired the event.
Summary report by SID Vienna (pdf version)
In the recent world economic crisis, the World Bank had been able to pursue a strong anti-cyclical policy, with an annual disbursement of about 40 billion USD. But much of its power is now used up. The capital replenishment of 2010 had not added significant new resources. And, as it stands, a new replenishment is not in sight. One has to assume that the annual disbursements will not amount to more than 15 billion USD per year. That amount is much below the still very vivid demand for secure, long term investment credit. The new IBRD president Jim Kim is American, thus maintaining the American/European duopoly on the Brettonwood institutions. The rapidly changing balance of global economic power might have counseled a break-up of this duopoly, giving the presidency to a representative of middle/low income countries. Nonetheless there are advantages with Jim Kim, as an American, holding the post. Given his closeness to the US president, he is well placed to 'keep the US on board', something which is essential for the future of the IBRD. Also, he is highly sensitive to the issue of development. Informal international groups such as the G-8 and the G-20 use the World Bank for analysis and implementation. As these groups have no real bases in international law, that is a development that is perhaps gratifying but also a bit troubling, given the limited membership and thus the non-representative nature of these groups.
The following sectors will continue to receive priority attention: agriculture/food, infrastructure, energy, governance. These are traditional priorities which will be joined by new ones such as adaptation to climate change, promotion of economic South/South relations, assistance in fragile states and in conflict situations and gender issues (now really and effectively central). Dr. Huber also stressed what he perceives as enduring deficiencies: failure to become active in projects to mitigate the climate change effects; insufficient attention to the uneven distribution of income and life-chances and little attention to regional integration. Activities continue to be country-centered, with too little regard for the global commons. The World Bank aims to further enlarge its interface with international non governmental and civil society organizations.
Linking to Greening the Economy (the latest issue of the SID journal Development presented during the lecture by SID Vienna President Thomas Nowotny), Dr Huber then tackled the issue of green and inclusive growth: It has been main streamed into all country strategies. Traditional gauges of development such as GDP (ppp) per capita will be adjusted to include data of natural capital and ecosystems. Even more concrete is the World Bank’s contribution to the upcoming RIO +20 summit as it will set clear targets in the fields of: oceans, energy, water and food.
The WB stands ready to offer relevant know-how to support the implementation of national strategies for green and inclusive growth and for the creation and harmonization of tools for measuring and evaluating both success and failure of such policies.
From a political perspective and concerning the future of world governance, the most relevant issue is however a growing cleavage between poor and emerging countries on one side, and the wealthy countries on the other. As in other venues, in the World Bank too (with China and India having powerful leaders), the first group increasingly resents 'conditionality' as imposed by the second group. As a consequence Dr Huber predicts that in the future less emphasis will be put on relations with INGOs and CSOs, and issues like environment, sustainability, climate change and social standards. On the other hand, political and economic issues, such as the 'public vs private' debate, will be dealt with in a very pragmatic manner, disregarding former ideological rigidities.
To learn more about SID Vienna activities, how to participate or how to become member of the chapter, please visit the SID Vienna Chapter website at: www.sidvienna.org