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SAPs have played havoc with lives of millions

June 14, 2004

With his eyes half-shut James Wolfensohn glanced at the learned audience before outlining the challenges facing the development economists and practitioners.

The challenges, he argued, were how to educate children in the west about Islam; how to educate children in the developing world not to hate the west; and how to reform madrassahs.

As the President of the World Bank addressing a gathering of celebrated economists, Wolfensohn was brutally honest and right on the money. The early May event was the 16th Annual Bank Conference on Development Economics (ABCDE) and the venue was the World Bank's headquarter in Washington, DC.

His comments took the conservative audience by surprise. Whereas the development experts bury their analysis in a jargon laced with artificial constructs, such as willingness-to-pay, Wolfensohn adlibbed his 40-minute address in which he offered his candid views on the growing disparities between the developed and the developing world.

I must confess, I was, and to an extent remain, a bit weary of the way the big Bank operates. The Bank and its sister organization, IMF, have forced structural adjustment programmes (SAP) down the throats of many a developing nations.

SAPs have failed to reduce poverty and instead have played havoc with the lives of millions. It was refreshing to see that senior bank officials were promising change and questioning the conventional wisdoms.

Earlier at the Urban Symposium held in December 2003, I met with senior Bank officials concerned the slow pace of development. How long should the poor wait for prosperity, asked one official at the concluding session of the urban forum.

What I hear and see at the Bank is more refreshing than what I hear from experts in Pakistan, who argue for patience. Earlier in January, one such expert told the audience at a seminar in Islamabad that reforms take time to deliver.

I prefer what I heard at the Bank that time was running out. Leaving masses in poverty and despair breeds the evils that we witness around us. Could this be a new Bank, a different institution, as Wolfensohn claimed in his speech. He asked the detractors to give the Bank a fresh look. The Bank is more human based, he proclaimed.

I hope he is right. It is high time for the Bank and the governments all over the globe to move beyond the statements and invest in people. Despite the words of encouragement from the Bank, the prognosis for improving the welfare of poor remains bleak. Last year, governments around the world spent $900 billion on defence.

At the same time, fewer than $58 billion were donated in development aid. It has been estimated that the United States squandered $7.9 billion on bombing the already embattled Afghanistan in 2001-02. In comparison, the United States spent a fraction of that amount on restoring the shattered lives of Afghans.

Other nations in the developed world are no better. Their $300 billion annual tariffs on agricultural produce are equally destructive as bombs for millions of farmers in the developing world.

The creative accounting behind the $58 billion leaves even fewer actual dollars in development aid to go around. Less than 50 per cent of the $58 billion is available in cash. Consultants and others walk away with almost $14 billion, while another $6 billion is reserved for the debt relief of heavily indebted countries.

Lip service is indeed the name of the game. The players are savvy and they know the ins and outs of getting the biggest bang for the buck. Wolfensohn exposes this "shadow play."

Six months before the G-8 meeting, bureaucrats from the developed world convene on mountaintops to determine the least amount in development aid required to secure banner headlines around the globe.

Remember the creative finance behind the billion dollars in aid that President Bush promised for Pakistan after the attack on World Trade Centre. The real amount was merely $250 million amortised over 25 years at a discount rate chosen by a bureaucrat in the state department to inflate $250 million to $1 billion dollars.

This got President Bush the headline and General Musharraf the legitimacy he so coveted. Remained uncounted in this arithmetic of deceit were millions of poor Pakistanis.

The wants of a few should not rule over the needs of many. Consider that restoring downtown Manhattan carries a price tag of 20-plus billion dollars. Compare that to the pennies being spent on the Aids epidemic in Africa.

Today, countries in Africa face the threat of de-population. The American government handed out hundreds of millions in rental subsidies to restore property markets in downtown Manhattan. What is more important to restore, an inflated property market or the dignity and health of a failed generation of Africans?

Wolfensohn likens the image of falling towers in downtown Manhattan with the images of the two worlds coming together. An odd juncture indeed. The growing disparities between the developed and the developing world are not sustainable and are likely to create unpleasant rendezvous.

The benefits of wealth creation require more equitable distribution among nations and within nations. The governing principles behind the global finance ought to be changed. The agenda of unlimited profits need to be replaced by a charter of social justice.

Make no mistake; there is plenty to go around. On one hand are the poverty-stricken faces of billions and on the other hand are a few hundred million, lining up outside the weight loss clinics to shed the fat resulting from over consumption.

Even in the United States, the largest economy in the world, the economic disparity between the rich and the poor has touched levels not witnessed since the Second World War.

Wolfensohn calls for an agenda for hope. He asks for restoring hope for Palestinians. He hopes for the transfer of land in Gaza. Let us do our part in the operation restore hope by lending a hand to a neighbour, by volunteering at a hospital, by helping out at a school. Do not forget, the agenda for hope is about taking responsibility and not transferring the blame.

(Dr Murtaza Haider, is a professor of urban planning at McGill University, Canada).