Zoellick addresses World Bank Board of Governors

Last week The World Bank Board of Governors held its Annual Meeting in Washington, DC. Here are the remarks of Robert B. Zoellick, President of The World Bank Continued
Robert Zoellick
Robert Zoellick

Last week The World Bank Board of Governors held its Annual Meeting in Washington, DC. Here are the remarks of Robert B. Zoellick, President of The World Bank

Continued

The WTO and the Global Trading System

The Doha global trade negotiations in the WTO are gasping on life support.   It is vital that the WTO and an open global trading system not be buried with them. 

Trade negotiations will continue elsewhere.  Recent research has shown how FTA negotiations can support broader opening of markets.  But FTAs and preferential arrangements that are not broad-based could weaken global liberalization. 

They need to be linked to global disciplines.  And the multilateral system remains the only option for lifting the heavy hand of trade-distorting support for agriculture, still running at some $260 billion per year in OECD countries.

One option to continue fostering global liberalization is to recognize trade facilitation as part of a development plan.  There are opportunities to cut costs of trade far in excess of those imposed by tariffs and other trade barriers.  The World Bank’s “Doing Business” trading and “Logistics” indicators have done the diagnostic groundwork.  Regional bodies such as APEC have pointed the way.

The World Bank Group is helping countries to simplify and harmonize procedures and documentation across a supply chain.  We are currently working on a Trade Facilitation Facility to provide technical assistance, capacity building, and project preparation. 

We can support both country-level projects that respond to client needs and multi-country projects that can facilitate regional trade integration. 

And we can help with the implementation of trade facilitation commitments associated with multilateral and regional trade agreements.  

A new trade facilitation and development agenda puts the self-interest of lowering costs of trading to work for a multilateral interest of encouraging more integration, efficiencies, and opportunities – meaning more growth, more jobs, less poverty. 

This is multilateralism by practical steps, moving ahead where it is possible to do so.

Energy and Climate Change
The New Multilateral Network must also interconnect energy and climate change.

World energy markets are a mess.  Producers, fearful of collapsing prices, are wary of new investments.  Consuming countries want lower prices for consumers, but prices high enough to encourage conservation, efficiencies, alternative supplies, and new technologies. 

And the most vulnerable countries and people are victimized by the whole confusion – hit by high prices, price volatility, and climate change.

Most oil production is now controlled by national oil companies.  These suppliers do not respond to market signals in the same way as private producers.

We need a “global bargain” among major producers and consumers of energy.  A few years ago, China suggested that the major energy consumers organize to deal more effectively with the producers’ cartel.  This is an idea worth considering, though with a broader purpose.

At a minimum, such a bargain should involve sharing plans for expanding supplies, including alternative energy; improving efficiency and lessening demand; assisting with energy for the poor; and considering how these policies relate to carbon production and climate change policies. 

The World Bank Group can play an important role here.  Last year, our funding for renewable energy and energy efficiency projects in developing countries grew by over eighty percent to reach US$2.7 billion.

Part of the bargain will also be to provide an opportunity for developing countries to make longer-term investments to reduce vulnerability to high and volatile fuel prices while supporting the poor with safety nets. 

With less than one quarter of Sub-Saharan Africans currently having access to electricity, improving access for the poorest is a critical complement to clean energy investments. 

Just as we are assisting those most vulnerable to high food prices by expanding agricultural production, we need to help those vulnerable to high and volatile energy prices by improving efficiencies, options for alternative supplies and off-grid technologies, and regional cooperation. 

At the request of shareholders, the World Bank Group is developing an “Energy for the Poor” initiative to help the poorest countries meet energy needs in efficient and sustainable ways. 

We might consider taking the global bargain further.  There might be a common interest in managing a price range that reconciles interests while transitioning toward lower carbon growth strategies, a broader portfolio of supplies, and greater international security.

Multilateral understandings about energy futures – leading to clear pricing for carbon –might also be vital for the United Nations Framework Convention on Climate Change. 

A climate change accord also will have to be supported by new mechanisms to support forestation and avoid deforestation, develop new technologies and encourage their rapid diffusion, provide financial support to poorer countries, and assist with adaptation. 

As we discussed at the Bali Breakfast yesterday, we need to strengthen carbon markets.  The World Bank Group’s launch of two new facilities – the Forest Carbon Partnership Facility and the Carbon Partnership Facility – enables us to support clients seeking lower carbon development paths.

Two weeks ago, to help provide additional resources for these challenges, the Bank hosted a pledging session that raised $6.1 billion from ten countries for new Climate Investment Funds – resources which developing countries can use to address climate change issues within their own development and anti-poverty strategies. 

Fragile States: Securing Development
Nowhere is the New Multilateral Network needed more than in the fragile and post-conflict states where the “Bottom Billion” live. 

Too often, the development community has treated states affected by fragility and conflict simply as harder cases of development. 

Yet these situations require looking beyond the analytics of development to a different framework of building security, legitimacy, governance, and the economy.  This is not security as usual, or development as usual. 

Securing Development is about bringing security and development together first to smooth the transition from conflict to peace and then to embed stability so that development can take hold over a decade and beyond. 

Only by securing development can we put down roots deep enough to break the cycle of fragility and violence.

Our appreciation of how best to secure development – to synthesize security, governance, and economics to be most effective – is still modest.  We face critical gaps in international capabilities.

Ultimately, the most important element in fragile or post-conflict states is the people of those countries. 

But it will take much stronger and longer-lasting multilateral assistance to help these people shift from being victims to becoming the principal agents of recovery. 

At the World Bank, we are devising new, and I hope improved, partnerships with the United Nations and others. 

A new UN-World Bank Fiduciary Principles Accord will significantly speed up joint responses to crises. 

We are pushing ahead with desperately needed arrears clearance operations, and establishing a new $100 million State- and Peace-Building Fund to support a more strategic and innovative approach to conflict and fragility.  

The Six Strategic Themes
Mr. Chairman,
Last year I outlined six strategic themes for the World Bank Group to help guide our work – for the poorest countries, especially Africa; fragile and post-conflict states; middle income countries; global and regional public goods; expanding opportunity for the Arab World; and building knowledge and learning. 

These strategic themes run throughout our work.  I have highlighted a few examples today. 

As we move forward with the six themes, we must continue to mainstream anti-corruption and good governance across all our activities.  The public is  right to expect a sharper focus on governance and anti-corruption.  Corruption is a cruel tax – first and foremost on the poor.  We must fight it wherever we find it. 

I am grateful to Paul Volcker and his fellow Commissioners for their excellent work – and practical recommendations.  We are implementing the panel’s recommendations and  scaling-up our work – including by strengthening our Institutional Integrity Department, creating a new preventative and advisory unit to better share and implement lessons learned, and appointing an International Advisory Board to help advise our new Vice President.

This work is based on our fiduciary obligations.  But it does not end there.  We must build an institutional culture of honesty, integrity, and trust.  And we must encourage and assist our clients – from the youngest procurement officer to Prime Ministers and Presidents – to embrace this culture, too.

Conclusion
Mr. Chairman, as one executive director recently observed, since our last Annual Meetings a year ago, the World Bank Group has moved from crisis to catalyst.   Now the world faces a crisis. 

It is a moment for the World Bank Group to step up.
We have a sound capital base, strong liquidity, unmatched global experience with worldwide reach, and extraordinary people.

Yet we can and must do better.
The World Bank Group is at its best when it brings together global expertise, constantly challenged and updated; investments in people, markets, and institutions; and innovative financing – always conscious, as the Growth Commission emphasized this year, that there is no single template for development. 

Each country’s circumstances are unique – and special.  We must have the humility, practicality, and honesty to learn what works – and to fix what doesn’t.

In that endeavor, our greatest asset is the staff of the World Bank Group here in Washington and around the world, who have worked tirelessly this year with clients and partners to support these efforts. 

Drawing talent from over a hundred countries, we are striving to show how people with vastly different experiences and from different cultures can come together to make a whole far greater than the sum of its parts.

I am fortunate indeed to gain from the richness of their diversity.  I want to thank them and to let them know I am proud of them.

We also have an active Board with which we work every day.  It has offered invaluable guidance as we advance to meet the needs of our clients, for which I am grateful.  
In closing, Mr. Chairman, a word of perspective: 

Unless we can better share the opportunities and the responsibilities in the new global economy; unless we can look beyond the financial rescues to the human rescues; unless we can craft international policies that will help bring more peoples and more countries into the economic mainstream, we will not build an inclusive and sustainable globalization. 

And our world will not be stable – no matter how big our financial rescue packages.

Fate presents an opportunity wrapped in a necessity:  To Modernize Multilateralism and Markets. We must seize it.

Ends

 

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