G8 Must Act Now As 'World Enters A Danger Zone'

[SEE ALSO: G8 LEADERS SUMMIT 2008 - SCOOP FULL COVERAGE]

World Bank President to G8: 'World Entering a Danger Zone'

Washington, July 2, 2008 - World Bank Group President Robert B. Zoellick has called on leaders of the G8 as well as the major oil producers to act now to deal with surging food and energy prices, warning that the world is now "entering a danger zone."

Mr. Zoellick's call is contained in a letter to the head of the upcoming G8 summit in Japan, in which the Bank, World Food Program (WFP) and International Monetary Fund estimate that about $10 billion is needed to meet short term needs of people hit hardest by the crisis.

"What we are witnessing is not a natural disaster -- a silent tsunami or a perfect storm: It is a man-made catastrophe, and as such must be fixed by people," Mr. Zoellick said.

"I urge the Group of Eight countries, in concert with major oil producers, to act now to address this crisis. This is a test of the global system to help the most vulnerable, and it cannot afford to fail."

Mr. Zoellick said the G8 made a commitment at the Gleneagles Summit in 2005 to boost overall development aid, to Africa in particular, by 2010. He said such aid was needed now, more than ever, as Africa accounted for two thirds of the countries most under stress by the food and fuel crisis.

"For 41 countries, the combined impact of high food, fuel and other commodity prices since January 2007 represents a negative shock to GDP of between 3 and 10 percent, "he said. "These numbers translate into broken lives, and stunted potential. For the most vulnerable, especially poor children, they mean malnutrition, reduced resistance to disease, and too often death. "

"Record oil prices and high and rising food costs threaten a growing number of countries with rising poverty and social instability. Already we have seen food riots in over 30 countries, and unrest over high fuel prices is spreading. The urban poor are especially affected by the double hit of food and fuel."

Mr. Zoellick said the crisis was so widespread that the Bank has already provided funding for 12 countries from a $200 million grant fund, which is part of an overall $1.2 billion rapid financing facility to offer prompt assistance.

But he said the Bank currently has almost $400 million of additional new requests from 31 countries. "These calls for help outstrip our available grant resources. The rapid financing facility includes, however, a multi-donor trust fund that is up-and-running, ready to be of immediate help. Donors should use this as a vehicle to provide help fast. "

Mr. Zoellick said another pressing need was to get seed and fertilizers to small farmers, especially in Africa and for countries to ease export bans and restrictions which he said have contributed to higher world food prices. He said some 26 net food exporting countries have maintained or introduced such measures. Mr. Zoellick said the Group of Eight should work with the UN to call on governments around the world to ensure access to local purchases for the WFP and for humanitarian purposes. He said he hoped the UN would take up this call during its September meetings. In his letter, Mr. Zoellick urged the G8 to consider two new measures to "improve the world's ability to cope with an on-going food crisis."

The first was a UN assessment on guaranteeing a portion of funding for the World Food Program. The second was to study the merits of an internationally coordinated "virtual" humanitarian strategic reserve system for food emergencies.

"The international community is facing an unprecedented test in this new era of globalization: the question is whether we can act swiftly to help those most in need, "he said "For globalization to work successfully and achieve its promise, it must be inclusive and sustainable. This means acting now in the interests of the poor who are most affected by this double jeopardy of food and fuel crisis, and who are least able to help themselves. "

ENDS

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