Monday, May 21, 2007

A Birth Day Gift to the World Bank Post Paul Wolfowitz!

Today’s Headlines: Monday, May 21, 2007

Post-Wolfowitz Planning Begins
G-8 Finance Officials Stress Support For Africa, Urge Smart Investing,
Good Financial Governance
Dubai Ruler Launches $10 Billion Education Fund
Most People In Transition Nations Not Living Better
UN Climate Change Meeting Lays Ground For Kyoto Successor
Briefly Noted

Post-Wolfowitz Planning Begins

“The World Bank's board reconvened [Fri]day to ensure that responsibility
for operations was effectively transferred following Paul Wolfowitz’s
departure [on June 30]. …

Heidemarie Wieczorek-Zeul, the German development minister, who speaks for
Germany on Bank affairs, said his decision to quit deserved ‘thanks and
recognition.’ … She would not be drawn on whether Washington should retain
the right to name a successor, but a spokesman for the German chancellor,
Angela Merkel, said this should be the case. …” [The Financial Times (UK,

The White House said Friday that it would move quickly to name a new World
Bank president, affirming its traditional prerogative. European
governments are intent on continuing the arrangement, thus safeguarding
their claim on choosing the IMF leader. …” [The Wall Street Journal

The Times notes that “… The World Bank Group Staff Association, which
represents the Bank's 10,000 employees on matters such as compensation and
benefits, [Fri]day said that the Bank should seriously consider
non-American candidates for the presidency. …” [The Times (UK,

AP adds that “… The new chief will need to regain trust, rebuild
credibility and mend frayed relations inside the poverty-fighting
institution as well as with its 185 member countries. All of those things
are critical for Wolfowitz's successor, who will have to persuade
countries to contribute close to $30 billion over the next few years to
fund a centerpiece Bank program that provides interest-free loans to the
poorest countries. …” [The Associated Press (05/18)/Factiva]

The Guardian writes that “…In his first comments on the departure [of
Wolfowitz…], Gordon Brown said it was almost certain the next head of the
Washington-based bank would be American. … Brown went out of his way to
praise Wolfowitz, adding: ‘I think whatever has happened in the last few
weeks should not detract from the huge effort he made to put the needs of
the poorest countries at the centre of the whole world's agenda.’ …” [The
Guardian (UK, 05/21)/Factiva]

Deutsche Welle and AFP note that “… Holding 16.38 percent of the Bank's
shares, the US is its principal stakeholder, followed by Japan (7.86
percent), Germany (4.49 percent), France and Britain (4.3 percent each).
Japan kept away from the fray sparked by the Wolfowitz controversy, but
the Germans, French and British have made it clear that they favored his
departure. His decision to resign has helped avoid a vote by the Bank's
24-member board of directors that could have resulted in his dismissal. …”
[Deutsche Welle (Germany, 05/20) and Agence France Presse (05/20)/Factiva]

NYT reports that “… Wolfowitz told weary colleagues on the World Bank's
board of directors, in a letter released Friday, that ‘we must move
forward in a spirit of forgiveness, both for the sake of each of us as
individuals and for the sake of the Bank Group's mission to serve the
world's poor.’

Although he plans to remain in office until June 30, he said he would not
make major personnel or policy decisions and would delegate day-to-day
functions to subordinates. ‘I may make a farewell trip to Africa at the
request of a number of leaders, but would consult with you prior to making
any plans,’ he told the board of directors. …” [The New York Times

G-8 Finance Officials Stress Support For Africa, Urge Smart Investing,
Good Financial Governance

“G8 Finance Ministers and officials called for responsible practices in
lending decisions to African countries and vowed not to forget pledges to
the poverty-stricken continent.

At Saturday's conclusion of two days of talks…the officials said Africa
would be a central point of next month's wider G8 summit in Heiligendamm,
and called for more aid, increased debt relief and improved financial
oversight. …

But advocates for Africa said the summit did not focus enough on ensuring
the continent receive funding pledged to it, and urged a more thorough
accounting next month…” [Associated Press (05/20)/Factiva]

Xinhua writes that “…In a communiqué issued at the end of their two-day
gathering …Finance Ministers… said that they strongly support efforts to
increase the effectiveness and efficiency of public financial management
in Africa….[and] also put up a set of recommendations to this purpose in
the ‘Action Plan for Good Financial Governance in Africa’ attached to the
statement. …” [Xinhua (China, 05/19)/Factiva]

AFP adds that the G8 “…Finance ministers …vowed to make good on African
aid pledges and insisted that Africa itself was responsible for applying
sound financial management. . …” [Agence France Presse (05/19)/Factiva]

Dow Jones notes that “…Some G8 countries have expressed concern that the
availability of cheap financing from China…may lead to another debt crisis
on the continent shortly after G8 nations have written off much of the
debt owed to them by African nations.

In his press conference following the G8 meeting, German Finance Minister
Peer Steinbrueck singled out China and said he wants to talk about the
principles of responsible lending at the meeting of the Group of 20
countries in Cape Town later this year. …

In the G8's action plan, finance ministers also expressed support for the
UK-led Extractive Industries Transparency Initiative... The plan
highlights the need for contributing to good financial governance through
bilateral and multilateral development assistance, strengthening African
tax systems and establishing transparent and comprehensive budgeting
procedures. …” [Dow Jones (05/19)/Factiva]

WSJ writes that “…A task force commissioned by Finance Ministers and
central-bank governors had recommended that financial authorities,
counterparties, investors and hedge-fund managers take steps to boost
protection ‘against potential systemic risks relating to hedge funds and
other highly leveraged institutions.’ But Germany failed to persuade
finance officials at the two-day gathering here to support any move toward
greater oversight. …” [The Wall Street Journal (05/21)/Factiva]

Kyodo News reports the G8 “…called for ways to strengthen market
infrastructure to foster local bond markets in emerging economies, which
would reduce their foreign exchange risks and boost financial stability. …
The G8 ministers asked their deputies, the International Monetary Fund
(IMF) and the World Bank to report before their meeting in October on how
to implement the action plan. … [They] also encouraged the IMF and the
World Bank ‘to enhance regional cooperation to develop local currency bond
markets where that would be effective. …” [Kyodo News (05/19)/Factiva]

In a separate piece, Dow Jones notes that “UK Chancellor of the Exchequer
Gordon Brown said Saturday that the actions of so-called ‘vulture’ funds
are ‘nothing short of scandalous’ and an issue that the world must take
seriously. Speaking on the sidelines of [the G8 meeting]…,

Brown said he was determined to limit the damage done by such funds…He
added finance officials wanted to ensure that such countries had access to
legal support to defend themselves against litigation, and they would
support the African Development Bank's proposals to develop a legal
assistance facility. …‘we want the World Bank to take action to make the
debt reduction facility available earlier to highly indebted countries.’
[he said] …” [Dow Jones International (05/21)/Factiva]

Dubai Ruler Launches $10 Billion Education Fund

“The ruler of the Mideast's booming economic capital, Dubai, launched a
$10 billion foundation on Saturday at [a] Dead Sea resort [during the
World Economic Forum (WEF) in Southern Shuneh, Jordan] to fund education
and human development in region.

Sheik Mohammed bin Rashid Al Maktoum, who also serves as the oil-rich
United Arab Emirates' prime minister, said the money, which he donated,
would be used to create research centers, support university research and
distribute scholarships to students. … [In a speech before the WEF he
noted that] 18 percent of people under 15 in the Mideast are illiterate
and that number jumps to 43 percent for women. He also said the Arab world
spends 0.02 percent of its gross domestic product on scientific research,
while developed countries spend between 2.5 percent and 5 percent on such
research. The Mohammed Bin Rashid Al Maktoum Foundation will be based in
Emirates and plans to begin handing out scholarships to students next
year, a statement said. …” [The Associated Press (05/19)/Factiva]

AFP reports that at the conference “… Jordan's King Abdullah II also urged
delegates to think of the future. … Of 325 million people living in the
Arab world, more than 200 million are under 24, the king said. Appeals to
invest in people were also echoed by other participants, with one panelist
pointing out that only 298 patents have been issued in the Middle East and
North Africa. …” [Agence France Presse (05/20)/Factiva]

In a separate piece, AFP further adds that “Israeli Deputy Prime Minister
Shimon Peres, sitting alongside Arab officials in Jordan on Sunday, urged
Arab states to talk with the Jewish state about their revived Middle East
peace plan. The Nobel peace laureate told them that Israel would make a
counter-offer to the Saudi-drafted blueprint first adopted in 2002 and
relaunched at an Arab summit in March. But he gave no firm timeframe for
the counter-proposal, drawing questions from Arab League chief Amr Mussa
about the Israeli government's seriousness. …” [Agence France Presse

Xinhua notes that “The WEF on Saturday released its latest regional
scenario study which examines three possible futures for the Gulf
Cooperation Council (GCC) countries. The report, titled ‘the GCC Countries
and the World: Scenarios to 2025,’ presents three possible scenarios for
the region over the next 20 years: Oasis, Sandstorm and The Fertile Gulf.
The Oasis describes a scenario where regional stability continues to be a
challenge for the GCC countries, but they are nevertheless able to achieve
substantial institutional reforms. … The Sandstorm scenario describes a
future where regional instability is the defining factor affecting the
ability of the GCC countries to effectively carry out much-needed
institutional reforms. … The Fertile Gulf describes the rise of the GCC
countries as innovation hubs in a global environment characterized by
robust demand for energy and increasing globalization. …” [Xinhua (China,

Meanwhile, Dow Jones reports that on the sidelines of the WEF, “Jordan's
king told a newly formed group of developing countries that prosperity
would come by focusing on key areas for international assistance and
enlisting the support of industrialized nations. The G11 was launched by
Jordan's King Abdullah II during September's UN General Assembly meeting
to unify the development efforts of 11 low-income countries, including
Jordan, Pakistan, Sri Lanka, Morocco, Tunisia, Georgia, Croatia, Honduras,
Paraguay, Ecuador and Indonesia. …

Abdullah also told the G11 that efforts were under way to institutionalize
the group's relationship with the G8 … . He said a ‘white paper’ had been
submitted to the G8 in March outlining specific areas where the two groups
could work together, including ‘investment in infrastructure, support for
small and medium-sized enterprises, scientific research and development,
and technology transfer.’ …” [Dow Jones (05/19)/Factiva]

Most People In Transition Nations Not Living Better

“The majority of people living through the transition from planned,
state-run economies to market economies say they are not living better now
than in 1989, research by the European Bank for Reconstruction and
Development (EBRD) and World Bank showed on Sunday. The Life in Transition
survey, unveiled at the EBRD’s annual meeting, asked 29,000 people across
29 countries questions about their lives. The results were mixed. …

Access to credit, something new for consumers in the transition countries,
has helped drive economic growth. But accessing services and public
utilities is difficult. … The survey found 36 percent preferred living
under democratic and market economic principles versus 10 percent,
generally the elderly, poor and unemployed preferring authoritarian
government and a planned economy. A fifth of the respondents said it
didn't matter, but corruption was still perceived as an intractable
problem. …” [Reuters (05/20)/Factiva]

Reporting about EBRD’s annual assembly, AFP writes that it “…will
highlight a shift in its attention from central Europe towards the east,
when it meets this weekend in Russia. …

The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia
and Slovenia … are now considered to have ‘sufficiently solid’ markets and
an access ‘to other sources of financing’, EBRD spokeswoman Brigid Janssen
told AFP. ... The resources thus freed up will be redeployed eastwards and
southwards to… the Balkans, central Asia and Russia, especially its
regions. Mongolia was also accepted in 2006 as a beneficiary country. …

The EBRD's success in Eastern European countries has given rise to another
issue: what to do with the EUR 2.4 billion of net earnings raised in 2006,
which was boosted by gains from stock investments. Three solutions are
being mulled, Janssen said: strengthening reserves, redistributing the
surplus to shareholders and creating a special fund devoted to ‘technical
cooperation’, attributing funds which have little chance of returns.”
[Agence France Presse (05/18)/Factiva]

Dow Jones adds that “…a number of the governments that own the EBRD have
said that they want it to start paying dividends, rather than to keep
amassing reserves by retaining all of the income from its various
projects. …” [Dow Jones (05/19)/Factiva]

FT reports that “The US on Sunday launched a shareholders’ protest at the
annual meeting of the EBRD, over its refusal to pay a dividend… The
American challenge will not change the bank’s decision to put all the
money into reserves and postpone consideration of dividends until later
this year.

However, despite the criticisms, many governors praised the EBRD’s
investment record, including its recent expansion from the advanced states
of central Europe into riskier countries in the former Soviet Union and
South-East Europe. Meanwhile the bank reported the economies of Eastern
Europe and the former Soviet Union were growing even faster than expected.
...However, the EBRD warns that in several new EU countries ‘buoyant
demand and credit markets have created inflationary pressures, not least
on asset prices, and led to growing external deficits.”
[The Financial Times (UK, 05/20)]

UN Climate Change Meeting Lays Ground For Kyoto Successor

“A UN conference on climate change ended in Bonn on Friday with a UN
official saying it had taken an important step towards comprehensive
negotiations on a successor to the Kyoto Protocol. …The UN Framework
Convention on Climate Change (UNFCCC), the parent of the Kyoto agreement,
said this week's meeting in the western German city of Bonn had laid the
ground for Bali. …

Among the issues discussed by the 191 signatories to the UN convention -
of which 173 signed up to Kyoto - were how to enhance the transfer of
‘clean’ technologies and how to avoid deforestation…The Bonn meeting was
the first chance for experts to react to the findings of a fourth UN
assessment report on climate change released in Bangkok on May 4. …”
[Agence France Presse (05/18)/Factiva]

Reuters notes that “…despite recent UN reports ringing alarm bells on
global warming, the US and Japan saw little prospect for launching formal
talks to extend Kyoto at the Bali conference. …

The UN's head of climate change Yvo de Boer acknowledged the ‘sticking
points’, but pointed to some shifts in Bonn, and especially the
willingness of Brazil and South Africa to see developing countries talk
about shouldering commitments… Agreement was made in Bonn, to be signed
off in Bali, that an adaptation fund would be made available for most
vulnerable countries, and to set up a group to oversee technology
transfer. …” [Reuters (05/18)/Factiva]

Dow Jones adds that “…Developing countries, including heavy polluters such
as China, argue that most of the carbon dioxide emissions believed to
cause global warming came from the richer industrialized countries in past
years and that they shouldn't bear the burden for that.
De Boer said that stance meant that financial assistance and incentives
for investment in cleaner technology in developing countries would be of
crucial importance. …” [Dow Jones (05/18)/Factiva]

In climate change related news, Reuters reports that “The EU must adapt
now to global warming by targeting subsidies for affected farmers and
preparing to relocate some ports and coastal settlements, a draft EU
report says. The paper, drawn up by the European Commission and obtained
by Reuters, lays out a series of strategies to deal with rising
temperatures…. [and] says concrete EU action could include low-cost ‘soft’
options such as changing crop rotations and sowing dates, as well as
insulating houses against heat waves…

It said climate change should be integrated into the bloc's agriculture
subsidies program… [and that it] will require changes in land use,
production methods, and farm structures… Investments in infrastructure
such as bridges, ports and motorways should also take into account how
climate conditions will change by the end of the century… The report
emphasizes that cutting emissions is key because adjusting to climate
change can only go so far. …” [Reuters (05/18)/Factiva]

Briefly Noted

Burundi's economic growth is seen slipping below 5 percent this year due
to a slump in coffee output, the International Monetary Fund country
representative Lars Engstrom told Reuters in an interview on Friday,
citing a projected 50 percent fall in 2007/2008 coffee output. [Reuters

The Netherlands and the World Bank have given the Zambia Wildlife
Authorities (ZAWA) $550,000 to buy construction equipment to improve
access roads in the country's prime tourist destinations, Zambia Daily
Mail reported Saturday. [Xinhua (China, 05/19)/Factiva]

The Hanoi city government said Monday it has approved a $452 million
investment to build new roads and upgrade public transportation systems by
2010. Of the total funds, $134 million will come from World Bank loans and
the remaining will come from state sources, it said. [Dow Jones

China's latest move to raise interest rates and allow the yuan to trade
more freely is a positive step, but its economy may overheat if further
steps do not follow, the International Monetary Fund said on Saturday.
[Reuters (05/19)/Factiva]

China will fully open domestic tourism to foreign companies from July 1,
an official newspaper reported on Saturday, promising expanded competition
in the country's fast-growing travel market. [Reuters (05/19)/Factiva]

Lax monetary policy in countries such as China and Japan is fuelling the
boom in private equity buy-outs that is worrying regulators and unions
across the world, according to a report published today by the
Organization for Economic Cooperation and Development. [The Financial
Times (UK, 05/21)]

UN Secretary-General Ban Ki- moon urged Iraqi leaders on Friday to
compromise on the constitution in the interests of the country as a whole.
The statement came as Iraq's Constitutional Review Committee prepares to
submit the results of its deliberations to the full parliament. [Xinhua

The International Monetary Fund on Friday said it had granted Turkey
waivers for missing some budget targets in its economic agreement, and
released a $1.1 billion loan installment. First Deputy Managing Director
John Lipsky praised Turkey for management of the economy but said the
government must take care to maintain investor confidence. [Dow Jones

Moscow will not renegotiate a key co-operation agreement with the EU until
Russia secures entry to the World Trade Organization, Russian Economic
Development and Trade Minister German Gref said Sunday in a rebuff to
Brussels. [Agence France Presse (05/20)/Factiva]

The EU, the US, India and Brazil said Friday that two days of talks to try
to unblock stalled global trade negotiations had been productive and they
still hoped to strike a deal by the end of the year. But the four key
members of the World Trade Organization announced no details on any
progress beyond saying they would meet again next month. [Associated Press

Japan will host the 2008 summit of leaders from the G8 nations on the
banks of the Lake Toya on July 7-9, Japanese Prime Minister Shinzo Abe
said Saturday. [Associated Press (05/19)/Factiva]

This summary is prepared by the External Affairs Department of the World
Bank. All material is taken directly from published and copyright wire
service stories and newspaper articles. The daily summary and other news
can be found on the World Bank's external website at For inquiries call 202 473-7660 or send a
written request to the News Bureau.

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