IMF chief calls for open markets

IMF's Koehler has called on rich nations to play fair

David Schepp BBC News Online North America Business Reporter

The head of the International Monetary Fund (IMF) has blasted the US, the European Union and Japan for continuing to aid farmers and manufacturers within their countries at the expense of poor nations.

Wolfensohn: Efforts to reduce poverty must be a 2-way street

"It is unconscionable of the United States, Japan and the European Union (EU) to spend hundred of billions of dollars on maintaining marginal activities for the benefit of a few of their citizens, while devastating agricultural sectors that are central to peace and development in poor countries," he said.

IMF managing director Horst Koehler made the comments during remarks at the start of a poverty-reducing conference, co-sponsored by the World Bank.

Additionally, Mr Koehler called on wealthier nations "to open up their own markets and phase out trade-distorting subsidies in areas where developing countries have a comparative advantage".

Basic industries

The industries he had in mind include agriculture, processed foods, textiles and clothing and light manufacturing, Mr Koehler noted.

Creating better trading opportunities for the poor is a win-win proposition for all

Horst Koehler, IMF managing director

His comments came at the start of a four-day meeting on combating worldwide poverty being held at IMF headquarters in Washington, DC.

The conference, the last in a series to review the IMF's and World Bank's new initiatives on reducing poverty, has brought participants from over 200 countries - some of whom nodded their heads in agreement with Mr Koehler's criticism.

But Mr Koehler's world view runs counter to domestic politics, and ending such subsidies is not easy in the countries of the EU, nor the US and Japan.

Saving jobs

Both within Britain and the US there have been calls by textile workers for those countries to invest in factories in order to keep some domestic industry.

The poverty conference is being held at IMF headquarters

Without some sort of subsidy, workers they would lose their jobs with no prospects of finding others elsewhere.

Nevertheless, Mr Koehler in addressing conference attendees on Monday said lowering barriers to international trade was a sure-fire way for countries to harness their resources and attract investment.

"Creating better trading opportunities for the poor is a win-win proposition for all," he said.

Effect on the poor

Mr Koehler was followed by the president of the World Bank, James Wolfensohn, who noted the importance of reducing poverty in post 11 September world.

He talked of the need for listening to poorer nations and tailoring programmes to better suit their needs.

Mr Wolfensohn said there was need by developing nations for the deliberations over poverty-reducing programmes to be a two-way street.

"We as donors need to walk the walk, not just talk the talk with respect to stepping up our assistance," he said.

This latest meeting in Washington follows regional sessions held in Africa, Asia and Latin America.

As part of Monday's presentation, nine countries, who have completed the PRSP process, discussed their experiences. Forty more countries have prepared interim plans since the program began two years ago.

The recently introduced PRSPs are a departure from IMF/World Bank policies that many critics complained were too rigid.

Even so, the PRSP process - intended to set in stone poverty reduction policies that will use the money saved from debt service charges - has itself been criticised as being too prescriptive.