Look Who’s Talking – World Bank Edition

Really, this is rich:

This is the same World Bank, which, along with the IMF, used to encourage countries to base their economic development on their comparative advantage (simply put, what do countries have to offer to the global market? Once such an advantage  – resource, skills, labor – has been identified, then, that is where the country should invest to fund its development).

Because, right now, there is no issue that all poor countries need to tackle and spend on, like, oh, say, food and fuel prices.

"The finance minister has said subsiding high food and fuel prices is essential to prevent instability.

But the Bank says it fears the subsidies may backfire, threatening economic stability, and creating uncertainty – all of which will make it much harder for Timor to wean itself off its reliance on oil and gas."

Emphasis mine: the Bank does not really know what will happen but its really successful models (snark) tells it that subsidies = bad, hence the letter. And, of course, substitute oil and gas for "welfare" and you have the usual conservative argument that government support and assistance = also bad because of dependency (it’s false for welfare).

And again, it is pure speculation. The World Bank does not know that this is what will happen. So, how about letting the government (which, according to the article, has not been a big spender so far) weather the food price crisis and then see what happens rather than jump the gun in a pavlovian fashion?

World Bank President Urges a New Deal to Fight Hunger

It’s about damn time . The bad news regarding food supplies have been out for months now. Better late than never though (via the BBC):

“The World Bank has called on the international community to co-ordinate its efforts in a “new deal” to fight global hunger and malnutrition. A move was needed because of soaring global food and energy prices, said the bank’s president, Robert Zoellick. Mr Zoellick said the top priority was to give the UN World Food Programme an extra $500m for emergency food aid. The World Bank estimates 33 countries face potential social unrest because of rising food and energy prices. As well as urging the US, the EU, Japan and other developed countries to provide the World Food Programme with extra funds for emergency aid, Mr Zoellick said the new deal required a shift towards a broader concept of food and nutrition assistance.”

So, what exactly is this New Deal? In addition to the immediate emergency funding, Zoellick proposes that emerging countries use 1% of their sovereign wealth funds to invest in Sub-Saharan Africa (what he calls a “one percent solution”). According to Zoellick, these funds hold $3 trillion in assets. One percent would liberate $30 billion to invest to promote development and trigger a new Green Revolution in Sub-Saharan Africa. Moreover, he also proposes a more open trade system when it comes to agricultural goods, criticizing the unfairness and the protectionism of the United States in this matter. As such, he promotes an end to core countries’ agricultural subsidies that distort the market and strangle the agricultural sectors of poor countries. All these are remarkably progressive ideas.