World Bank President Lays Out Vision for New Multilateralism

Oct 7th, 2008 10:38 AM UTC
By Nora Coghlan

Yesterday, World Bank President Robert Zoellick called for a new system of international cooperation to deal with the global impacts of the current U.S. financial crisis. In a speech at the Petersen Institute for International Economics, Zoellick said that the impact of the financial crisis will be far-reaching, warning that the “events of September could be a tipping point for many developing countries,” many of whom are already struggling to cope with soaring food and fuel prices. He explained:

A drop in exports, as well as capital inflow, will trigger a falloff in investments. Deceleration of growth and deteriorating financing conditions, combined with monetary tightening, will trigger business failures and possibly banking emergencies. Some countries will slip toward balance of payments crises. As is always the case, the most poor are the most defenseless.

The current multilateral system, he said, is ill-equipped to deal with the global ramifications of the financial crisis, pointing to the collapse of the Doha Round of trade talks, tense ongoing climate negotiations and the failure of markets to respond to the food crisis as evidence. Zoellick called for deeper international collaboration on everything from financial and economic issues to climate change and trade and called for a fundamental overhaul of the multilateral system.

The Wall Street Journal reports

The G-7 should be doubled in size to include rising powers such as China, Russia, Saudi Arabia, Brazil, India, Mexico and South Africa, Mr. Zoellick said. Along with the G-7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada, the new group would account for over 70% of the world’s gross domestic product, 62% of its energy production, as well as the biggest greenhouse-gas emitters and development-aid donors.

Instead of becoming merely a G-14, the new “steering group” would have a more flexible makeup and coordinate more actively with public and private institutions, he said.

Zoellick’s speech comes just days before government officials and activists gather in Washington, D.C. for the bi-annual meetings between the World Bank and the IMF. We’ll be giving you some updates from our team at the meetings. The global effects of the financial crisis are expected to be a high on the agenda.

You can watch the speech here and read the full transcript here.

-Nora Coghlan

TAGS: Policy News, World Bank