World Bank President James Wolfensohn gave a speech at the annual meeting of the World Bank and the International Monetary Fund in September that highlighted the problem with the developed world’s continued hypocrisy when it comes to free trade.
Wolfensohn rightly chastised the developed world for spending just $56 billion in foreign aid while devoting $300 billion to farm subsidies. Wolfensohn said,
There is further imbalance between what rich countries spend on development assistance– $56 billion a year– compared with the $300 billion they spend on agricultural subsidies and $600 billion for defense. The poor countries themselves spend $200 billion on defense-more than what they spend on education. Another major imbalance.
. . .
Action on trade is equally important. It is inconsistent to preach the benefits of free trade and then maintain the highest subsidies and barriers for precisely those goods in which poor countries have a comparative advantage. Developing countries also need to help themselves on this point, since they pay substantial tariffs in South-South trade.
Certainly good to hear as far as it goes, but at least one attendee — Demba Moussa Dembele of Senegal — told the BBC that Wolfensohn and the World Bank were also engaged in their own form of hypocrisy,
It was the World Bank which insisted our countries open up to trade and investment from the North and told us to trust in global markets.
Didn’t the Bank know about the market distortions created by subsidies and trade restrictions? It should not just urger the North to change its policies, but take responsibility for misleading us down the path of rigged prices and poverty.
In fact, it is interesting that while Wolfensohn devoted plenty of time to criticizing the developing and developed countries, he couldn’t afford even a single sentence for a little introspection about the World Bank’s failures.
Being from the World Bank apparently means never having to say you’re sorry.
Sources:
A New Global Balance: The Challenge of Leadership. James Wolfensohn, September 23, 2003.
Growing gulf between rich and poor. Rick Rowden, The BBC, September 24, 2003.