Globalization

Minister Wieczorek-Zeul plays a very important role in the relationship that the World Bank enjoys with Germany. I am delighted to have had the opportunity to meet with her again. We have had, and continue to have, a deep and long-standing association, in which we both share common perspectives, and in which her department and my colleagues in the Bank work effectively together in our common fight against poverty. I am also glad to see Professor Ernst-Ulrich von WeizsÐ'cker, Chairman of the Enquкte Commission, here today.

You have just heard my friend Horst Kцhler outline the role of the International Monetary Fund. As he mentioned, we recently returned from a joint mission to Africa. I want to join with him in saying not only that these were extremely productive discussions with 22 African heads of state, but also that Horst and I both came away from that trip with a very strong sense of how African leaders are now taking charge of their continent and their countries.

African development can only result from a partnership in which the leadership and basic responsibility must be borne by the Africans. And the role of the international institutions and bilateral donors must be to give wholehearted support, with knowledge and experience, and to give liberally in terms of material resources and access to markets.

It is a supreme irony that just at the time when African leaders are putting the right policies in place and are showing results, overseas aid to Africa has fallen from $32 per person in 1990 to $18 per person in 1998. We must reverse that trend. I join Horst in saying that it is time for a concerted appeal to the heads of governments and major aid donors, to make it clear, once and for all, that development assistance is not charity, but a vital investment in global peace and security.

Current levels of foreign aid, at some 0.24 percent of annual GDP, fall far short of the 0.7 percent target developed countries promised to meet. The difference between these figures is worth $100 billion a year. For millions of poor people, this is the difference between life and death. And it is surely an amount that, if correctly used, could make the achievement of global objectives possible.

Never was this more necessary. With each passing decade the challenge intensifies. Today half the world's population lives on less than $2 a day, 80 percent of the global population has only 20 percent of global GDP, and within each country there is a massive imbalance between rich and poor. And the challenge does not end there. Over the next 25 years, 2 billion people will be added to the planet, almost all of them in the developing world. We will go from a world of 6 billion people to a world of 8 billion people-with maybe over 6.5 billion living in the developing world. How many people will be condemned to live on less than $2 a day then? How the international community answers that question will be the key determinant of whether our children will live in a peaceful world or a world of rising conflict.

Let me make some brief remarks about how the World Bank has changed, how we fit into the international development architecture, and where we are headed. When I look back over the last six years since I came to the World Bank, I see an institution that has been undergoing a process of continuous renewal-with significant results.

In 1995, there was no comprehensive mechanism in place for debt relief for the poorest countries, by either the multilateral institutions or other creditors. Today, 22 countries have begun receiving debt relief under the Heavily Indebted Poor Country (HIPC) Initiative, 18 of them in Africa-for a total of $34 billion. The total external debt of these countries will be reduced by two-thirds, lowering their indebtedness to levels below the average for all developing countries.

After HIPC debt relief, these countries will spend about 2 percent of GDP on debt service-well below the level in other developing countries-compared to about 7 percent on social expenditures. More countries will join the first 22 by the end of 2001. We hope that the remaining countries eligible for relief under the HIPC Initiative will emerge from war or conflict so that they too can complete the program.

Let me take this opportunity to pay tribute to the far-reaching proposals that Germany made, beginning with the 1999 HIPC review and, subsequently, culminating with the pledges made at the Kцln Summit. Chancellor Schrцder's leadership in the events leading up to Kцln deserves our deepest admiration. I am also extremely grateful for Germany's pledge of $226 million to the HIPC Trust Fund.

But agreements on debt relief alone are not enough. They need to be linked with explicitly articulated development strategies targeting poverty reduction. We are helping countries prepare such poverty reduction strategy papers (PRSPs). Today, we have interim PRSPs with 32 countries and completed PRSPs with 4 countries.

Development is not about a quick fix or a silver bullet. Nor will it endure if it does not have broad-based support. What is significant about this new approach, embodied in the PRSP, is that it is comprehensive, long-term, and involves the participation of all the players, including the private sector and civil society. As such it stands a much better chance not only of surviving major political shifts, but also of reaching deep into communities and societies where real change takes place. We now need to broaden this approach further by including in it measurements of results and accountability for performance by governments, the international and bilateral institutions, civil society, and the private sector so that we can track progress as we go forward.

There have been other important changes in the Bank's work and its focus. HIV/AIDS has infected more than 50 million people worldwide and killed close to 21.8 million, over 17 million of them Africans. Six years ago the Bank was committing $35 million to fight HIV/AIDS; we have now moved to a commitment of $1 billion, an increase of almost 30 times. And we will make more money available as effective programs are developed.

We are working on prevention and working through public education programs, local clinics, and village groups; but we have also been active on the issue of treatment and the cost of retroviral drugs. And we are all too conscious of the fact that HIV/AIDS and other communicable and deadly diseases can only be addressed after dealing with health service delivery systems in general, and in this aspect we have been, and will continue to be, engaged.

We are also stepping