World Bank's war on poverty

Who should pay to tackle poverty and disease?

by Steve Schifferes BBC News Online economics reporter

The World Bank, the agency that lends to poor countries, has called for a doubling of foreign aid by rich countries ahead of a controversial development summit later this month.

On September 11th the imaginary wall that divided the rich world from the poor world came crashing down

James Wolfensohn, President, World Bank

The head of the World Bank, James Wolfensohn, says that rich countries must build on the global war against terrorism by launching a new war on poverty.

But the United States appears set against making any concrete commitments at the special world development summit in Monterrey, Mexico, which begins on 18 March, despite pleas from UK Chancellor Gordon Brown.

World Bank chief James Wolfensohn: "Wealth gap unacceptable"

According to the UK pressure group War on Want, the plans so far are "characterised by a lack of ambition and a host of missed opportunities."

Last chance for the poor?

The United Nations has pledged to halve poverty in developing countries by 2015, and to reduce childhood disease and raise education levels - and the Monterrey conference was supposed to demonstrate how that goal could be achieved.

Mr Wolfensohn argues that such a goal was more vital than ever.

"On September 11 the imaginary wall that divided the rich world from the poor world came crashing down," he said.

He said that the world could no longer view as normal "a world where less than 20% of the population dominates the world's wealth and resources and takes 80% of its dollar income."

Millennium development goals

50% reduction in people living on $1 per day

Primary school for all children

67% reduction in child deaths

75% cut in maternal deaths

Halve the number of people without clean water

To meet these "millennium development goals," the World Bank says that foreign aid must be increased by around $40bn-$60bn a year.

Mr Wolfensohn argues that the farm subsidies paid by rich countries are six times as much as foreign aid, and called for them to lower their trade barriers to products from poor countries.

The call for increased foreign aid is backed by UK Chancellor Gordon Brown, who has called for a "new deal between developed and developing countries".

"The issue is whether we manage globalisation well, or badly; fairly or unfairly," Mr Brown has said.

US doubts

But US Treasury Secretary Paul O'Neill has recently expressed scepticism about the need for greater funding for development.

He says that past policies of the World Bank, the IMF and other organisations "have driven poor countries into the ditch".

He wants fewer grants, to be given without conditions, and sent directly to non-governmental organisations on the ground.

And the US wants to emphasise the importance of private investment flows to developing countries, not public money.

Rich country row

The split between Europe and the United States - already evident on trade policy - is likely to intensify at Monterrey.

More radical measures to fund development - such as a tax on currency transactions and greater debt relief - have apparently been ruled out of the discussion after lobbying by the Americans.

The development summit was once seen as the culmination of attempts by world leaders to counterbalance unfettered globalisation.

Now, many developing countries will see a conference which yields little in terms of concrete results as a signal that the world's rich countries are no longer interested in that goal.