World Bank, IMF Face Competition in China, Russia; Adjust to Stay Relevant
Byline: Patrice Hill, THE WASHINGTON TIMES
The World Bank and International Monetary Fund are grappling with diminished roles and relevance since China, Russia and other rapidly developing countries have amassed wealth to the point they now outstrip the Bretton Woods institutions as the biggest lenders in the world.
The $600 billion in reserves amassed by China and other emerging nations just in the first half of this year doubled the total reserves of the IMF, while those same nations have established "sovereign wealth funds" totaling $3 trillion that dwarf the aid budgets of the World Bank, IMF and Western nations. The U.S. government, by comparison, provides about $11 billion a year ininternational aid.
China, dipping into its more than $1 trillion in cash reserves, has taken the lead and is particularly eclipsing the World Bank in Africa by providing resource-rich countries such as Sudan with no-strings-attached loans in exchange for stable supplies of raw materials for its fast-growing economy.
The World Bank, by contrast, usually attaches unpopular conditions such as forced privatization to its loans and scrutinizes the corruption and human rights records of client countries. Development experts say the Chinese loans to corrupt regimes in Africa has made it easier for them to avoid international pressure to clean up graft.
Robert B. Zoellick, the new president of the World Bank, "has his work cut out," said Elizabeth Stuart of Oxfam International, an anti-poverty group. "The bank now is facing more competition than ever as Africa looks to Beijing rather than Washington."
Ms. Stuart said the bank will have to reassert its relevance by refocusing efforts on poverty reduction rather than on spreading Western-style economic policies as it did in the past.
The World Bank and IMF are holding their semi-annual fall meeting in Washington this weekend.
Mr. Zoellick said yesterday he would respond to the growing competition by for the first time seeking to enlarge the bank's resources by taking contributions from private corporations as well as big developing countries. The bank's loan funding is now derived largely from U.S., European and Japanese contributions.
IMF Managing Director Rodrigo De Rato called yesterday on China to cooperate with the World Bank and IMF and ensure that its lending in Africa doesn't fuel a spiral of debt in the vacuum left by recent debt-forgiveness programs that wiped out the obligations of many African nations.
"China is showing a growing interest in Africa, and that is welcome," he said. "But it should work with others to ensure that countries can absorb resources efficiently. …