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How the economy is affecting the poor
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TEXT OF INTERVIEW
Kai Ryssdal: It’s going to be a busy weekend in Washington. Not only is Treasury Secretary Geithner hosting his counterparts from the world’s larger economies. They’re having yet another meeting on the worldwide recession. But the International Monetary Fund and the World Bank are having their annual spring meetings, too.
Last year as the dimensions of this recession were becoming more clear, Robert Zoellick — the president of the World Bank — warned against leaving the developing world out of any recovery plans. Earlier today I asked him what’s changed for the poorest countries in the world as the financial crisis and recession have gotten worse.
ROBERT ZOELLICK: What you saw start in the financial sector in the United States and the developed world and then it spread to what economists call the real economy, the manufacturing, services, others, then flows through those sectors in the developing world. And so it depends, if you’re a textile producer, there will be a big drop in sales. In Africa, many of the commodity producers have been hurt. If you have a great dependence on remittances from foreign workers in Africa and Latin America, those have really dried up.
Ryssdal: This week the World Bank announced a new series of social-protection programs — $12 billion worth for the developing world. What do you hope to get done with this, and what else are you going to do now?
ZOELLICK: Well, the starting point is we’re trying to learn some of the lessons from prior crisis, for example, Latin America in the 80s and East Asia in the 90s. And one of the lessons is that, you may recall, that there was this big balance of payout packages often put together by the IMF. Those are very important. But what we saw in those crisis is if you didn’t focus on safety-net policy, so nutrition issues, school feeding programs, it really could have an effect for a generation. So we’re trying to push forward a more aggressive agenda depending on a country’s capacity in that area.
Ryssdal: You know a couple of weeks ago before the G-20 you stressed that there is responsibility among the leading economies to do something for the developing world. And you asked them to set up this thing called the “vulnerability fund,” to set aside some money to help these countries out. Any luck with that?
ZOELLICK: Yeah, the key point is, what I’ve been trying to emphasize is that this needs to be more than a discussion about high finance. We have to try to focus on the most vulnerable. And what the G-20 agreed to was to support the creation of these funds, we’ve got some initial contributions by the British and the Dutch. But frankly, we’re going to need more. And we’re going to need more support, and that’s one of things that I’m going to be trying to urge with the ministers that will be coming to Washington this weekend.
Ryssdal: Well, this is going to sound uncharitable, but at time when political leaders, finance ministers and heads of state, are facing immense political pressure in their own countries to do something about their own economies, how do you convince people to take care of those less fortunate?
ZOELLICK: Well, it’s much more than an issue of charity. American people, for example, have always been very generous when people are in need. But the bigger issue is we’re in a global crisis, and you’re going to need a global solution. So growth in a number of the developing countries will also be important in getting the United States and Europe back on its feet. If you looked as we were heading into this crisis, one of the strongest parts of the U.S. economy was the export sector. So if you get infrastructure projects in the developing world, for example, some of those are going to buy capital goods from the United States and Europe. And so it’s not just a question of generosity, it’s a question of self-interest.
Ryssdal: How optimistic are you that you’re going to get what you need coming out of this weekend’s meetings?
ZOELLICK: Well, I think given the stress that you pointed out in the developed world, it’s not going to be easy. I think we build support as we go. And in our case, we already have the capital to do about an extra $100 billion of lending for some of the medium-income countries and low medium-income, about $42 billion for the poorest. And if we can use that to mobilize resources from governments and the private sector in area like trade liquidity, I think we can make an important dent at the problem. But frankly, this is an uncertain environment, no one is certain how long this is going to last, how deep it’s going to run, so we’re going to have to keep flexible and be able to adjust to the new, uncertain problems that arise.
Ryssdal: Robert Zoellick. The president of the World Bank. Thanks a lot for your time.
ZOELLICK: Happy to be with you.
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