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World Bank and IMF reform vital to end poverty, says UN
Jonathan Steele and Charlotte Denny
Wednesday July 24, 2002
The Guardian
Global progress on reducing poverty has slowed to a "snail's pace"
and the international goal of halving the share of the world's population
living on less than $1 (63p) a day by 2015 is likely to be missed, the
United Nations will warn today.
In its annual survey, which has become the most authoritative study of
human development, the UN says that at the current rate of progress it
will be 2130 before the world is free of hunger.
Calling for an end to rich countries' dominance of the institutions of
global financial governance, the UN Development Programme says that decisions
about how to manage globalisation must become more democratic.
The countries' control over the International Monetary Fund and the World
Bank must be reduced, says the report, suggesting an end to the veto rights
of the five permanent members of the UN security council. It says the
poorest countries must also have a bigger voice in the World Trade Organisation.
Such calls, along with demands for the international financial institutions
to open up their procedures, have become commonplace among prominent non-governmental
aid groups. But this is the first time concrete steps to reform the IMF
and World Bank have been endorsed by a UN agency.
"Powerful states are always going to have a major role in global
decision-making," says Mark Malloch Brown, the administrator of the
programme, which commissions the report. "But there is plenty of
room to give poorer countries a real say."
One method the report suggests is increasing the weight of the "basic"
votes in the IMF - one is allocated to every country - compared with the
other votes given to countries based on economic size. At the moment the
"basic" votes count for only 3% of the total.
Another suggestion is giving developing countries more seats on the executive
boards of the IMF and World Bank.
The report uses cautious language to attack the convention whereby an
American leads the bank and a western European the IMF, saying the selection
process "needs to be opened and perhaps made somewhat more substantive
regarding the candidates' views". It points out that vetoes by the
security council's permanent members have become very rare and says they
are seen as "fundamentally undemocratic".
A call for a UN economic security council to act as a watchdog over the
financial institutions was repeated.
The extent of development in the first post cold war decade, when neo-liberal
policies of urging countries to privatise held sway, was also the subject
of criticism.
"Having figures for the year 2000 gave us a chance to look at the
decade as a whole and the picture is less rosy than when you take longer-term
trends over 30 years. We have seen a process of increasing fragmentation
and division in the world," Sakiko Fukuda-Parr, the chief author,
says.
Development is still uneven in the first years of the new millennium.
Progress towards the goals proclaimed by world leaders at the millennium
summit is poor. The target of halving the number of people in extreme
poverty by the year 2015 has been so slow in many countries that it already
looks unattainable, the report says.
"Deepening democracy in a Fragmented World", available at www.undp.org/hdr2002
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