Tuesday, September 20

Pundita catches Wolfy speaking WorldBankese; World Bank faction tries end run around Blair and Bush

Because nothing of any substance whatsoever occurred at the United Nations summit, we should look to the World Bank annual meeting this weekend, where the real fireworks will be found.

First, the really important news from the Bank -- long expected but now firmed:
Report filed by Lesley Wroughton, September 19

The World Bank plans to increase funding for infrastructure projects in developing countries by $1 billion a year over the next several years, according to a Bank report obtained by Reuters.

The plan, to be discussed at the Bank's annual meeting in Washington this week, would reverse nearly a decade-long decline in infrastructure spending.

"Most developing countries now face the challenge of correcting the huge infrastructure gaps that threaten growth and the achievement of social and other broader development goals," the report said.

"At the same time, the World Bank faces the challenge of rebuilding its lending and non-lending support and increasing its leverage to reverse the declines in infrastructure support experienced over the past decade," it added.

The increase would mean World Bank infrastructure lending could reach about $10 billion annually, from $7.4 billion last year. The move would lift spending to 40 percent of total Bank lending from a low of about 21 percent in 1999.

The plan follows a decade of cutbacks in spending by governments, particularly in the developing world, on infrastructure such as roads and power generators, due to low economic growth.

Now, with increased growth, infrastructure investment would need to be equivalent to 5.5 percent of gross domestic product, the report said. For poorer countries, the target should be as much as 7-9 percent.

Currently, governments are spending an average of about 2-4 percent of GDP on infrastructure investment, the report added. It said private businesses had not filled the infrastructure spending gap, with private sector investment falling to about $50 billion a year, significantly down from $100 billion a year in the late 1990's.

The report suggested a bigger role in infrastructure investment for the Bank's private sector wings, the International Finance Corp (IFC) and the Multilateral Investment Guarantee Agency (MIGA). [...]
For the rest of the Reuters report, which presents region-by-region analysis of spending on infrastructure, click here. The reason for the expected fireworks at the Bank annual meeting is slipped in at the very end of the report.
"In many of our client countries, decentralization of administrative responsibilities is proceeding at a rapid pace," [the report] said. "With many sub-national entities lacking adequate technical, institutional and credit capacity, there is a need for capacity-building assistance to help them achieve standards of administrative efficiency and financial transparency," it added.

It also said more emphasis was needed to help member countries manage infrastructure spending more efficiently, as well as using World Bank financial support to leverage private investment funds and help governments manage risk.
Translation: The Bank is planning to come down hard on corruption.

Note to US Congress: Watch World Bank for tips on oversight of federal projects earmarked for storm reconstruction in Louisiana, Mississippi.

Other Bank News
The Gleneagles G8 plan to cancel all debts owed by the 18 poorest (mostly African) countries to international lenders such as the World Bank has come under fire.
Tony Fratto, a senior American Treasury official, told The Sunday Telegraph: "It's not a done deal by any means. There are people who want this rewritten."

[...] An internal World Bank briefing paper has concluded that its International Development Association (IDA) will be hampered in making loans to low-income countries if the debts are written off, as the Bank itself would no longer receive interest payments.

In a second attack on the deal, the Netherlands and Belgium, apparently frustrated that they were not consulted over the G8 deal, have questioned some of the conditions of the debt write-off.

British and American officials are exasperated that the critical internal World Bank report, drawn up by a group of economists and analysts, overlooks provisions made at Gleneagles for the G8 countries to compensate for the lost interest payments, thus ensuring that the IDA can continue lending money.

"I'm not going to name names, but some people within the World Bank are dead set against debt cancellation because they feel it undermines their role," Mr Fratto said.

"There are people out there who want to make the deal seem untenable by chipping away at it. And there are some who just resent the American commitment to this.

"But there is no plan B. One hundred per cent debt cancellation was agreed at Gleneagles and we're not going back on that. This is the only deal on the table and the IDA will be compensated for the lost revenue."

[...] London believes that the deal will receive the required Yes vote, as the G8 countries make up the most powerful voting bloc on the World Bank board.(1)
In other Bank news, Wolfy reports that the Bank still hasn't made up its mind about putting a mission office in Iraq. "There is no question it is dangerous. It is not going to be a simple decision."
The bank evacuated its staff from Iraq in August 2003 after a deadly bombing at the UN headquarters in Baghdad, but has maintained a small Iraqi staff in the country.

The bank's coordination for Iraq has been run from an office in neighboring Jordan, but some in Washington feel it should have a presence inside Iraq to effectively manage the $500 million allocated for Iraq's reconstruction.

"What we are looking at is weighing the relative risks against the potential gains in terms of greater effectiveness," Wolfowitz said.

"Until I see a specific proposal as to what we are going to do and where we are going to be, I cannot predict when a decision will be made." (2)
With regard to that last utterance, every Bank employee down the entire chain of command is saying exactly the same thing. From this we can surmise: everyone has agreed that the Iraq field office stays in Jordan for now.

1) (UK) Sunday Telegraph

2) Reuters

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