Wednesday, May 25, 2005

[Global Poverty] Poverty tsunami: Wolfensohn departs with a stark warning

By Michael Gawenda
Herald Correspondent in Washington
May 26, 2005

At his last media interview, James Wolfensohn, the outgoing president of the World Bank, offered an apocalyptic view of what would happen if world poverty and the lack of equity and social justice were not urgently addressed.

There would be a "tsunami", a great wave of instability, he said, which would threaten world peace and cause great suffering around the globe.

The Australian-born former investment banker was nominated for the World Bank post by the former US president, Bill Clinton, and retires having been only the second president of the bank to serve two five-year terms. Poverty, he said, had "consumed" him for the past decade. "I believe we have made progress but I believe it has not been adequate," he said. "In the next 25 years, the world's population will grow by 2.5 billion and all but 50 million of these people will be in the developing world.

"Unless we look seriously at the issues of poverty and equity, the chances of stability on our planet are very remote."

Mr Wolfensohn, who became an American citizen to improve his chances of winning the World Bank post, takes up his new job as an envoy to oversee the non-military aspects of Israel's withdrawal from Gaza.

He has already moved out of his office at the bank to make way for the new president, the US Assistant Defence Secretary, Paul Wolfowitz, but has left behind him an extensive collection of Australian art, including a number of Aboriginal paintings on the walls of his former suite.

At 71, the frenetic energy levels for which Mr Wolfensohn is well known seem undiminished, the broad Australian accent unchanged and the shock of unruly and raffishly long grey hair still as thick and out of control as ever.

There have been mixed reviews of Mr Wolfensohn's stint as World Bank president, but most observers agree he has been indefatigable in defending and expanding the bank's reach and influence.

With a fortune estimated at around $US350 million ($A460 million) amassed during his investment banking career, he is probably the richest public servant ever to run a development and aid organisation.

On leaving the bank he made an initial donation of $US1 million to establish a new centre of development at the Brookings Institution in Washington, with the promise of another $10 million over the next five years.

Mr Wolfenson has not always been a favourite of the Bush Administration and it is said that when he checked to see whether there would be support for him serving a third term at the bank, the message was clear - it was time to go.

His has consistently argued the US foreign aid budget is inadequate, that the imbalance between military spending and spending on development is too great. And his suggestion that poverty and hopelessness helps breed terrorism has annoyed many. He praised George Bush for his commitment of $US15 billion over five years to fight AIDS, but said much more needed to be done. "I don't see how we can continue to distort our spending," he said. "A thousand billion dollars around the world on military spending and around $60 billion on development is a huge imbalance. And we think we are dealing with the issue of peace."

Mr Wolfensohn said some progress had been made, but for about 500 million people living in non-performing states, the future looked dire. "Population will grow by a billion or a billion-and-a-half as we go forward and we just can't leave these people behind," he said. "Too many leaders in the developing world have not assumed that equity and social justice is at the core of their mandate. There are still too many corrupt rulers."

As for his successor, he has this advice: "I hope he'll be moderate in the changes because the bank is pretty strong. But I have faith in Paul Wolfowitz - I think he's motivated by the right instincts."

Mr Wolfenson's Middle East tenure is due to finish at the end of the year, and he will spend more time in Australia where he has family and a property near Wagga Wagga. "I've spent 38 hours and one night there in the past decade," he said. "I certainly expect to do better than that in the next 10 years."