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Discuss this article (5 Comments)'The worst is yet to come'
by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 14 June 2009
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"There has been no significant progress [since 2006], but you have a new game now with president Obama, secretary [Hillary] Clinton, and [US special envoy to the Middle East] George Mitchell," Wolfensohn says. "At least the Americans are making very clear their position: there has to be a solution, it needs to be commenced quickly, and it needs to be on the well-known lines that have been out there for a while, but have still to be agreed to by Israel.
"You have a significantly complicating factor in that the Palestinians are now divided between Fatah and Hamas, and Hamas does not recognise Israel, and wants to see it finished," he admits. "But [the new administration] has started it exactly right, and they now need to negotiate from that position, and keep moving."
Today, Wolfensohn's main priority is the Wolfensohn Center for Development at the Brookings Institution, Washington DC. Founded in July 2006, the institution aims to bridge the gap between development theory and practice, to turn analysis into effective action.
But doesn't a part of him still wish he was heading the World Bank; bringing its tremendous resources to bear on probably the most tumultuous economic climate in a lifetime?
"I think ten years at the World Bank was just about the right time," he chuckles. "There are going to be challenges for whoever's heading the World Bank: I had my set of challenges, which I don't think were trivial, and I think [the current World Bank president] Bob Zoelick's got his now. And when he leaves, someone else will have their challenges.
"The World Bank is an extraordinarily important institution, dealing with cutting edge issues, because it is addressing this enormous change between the developed and the developing worlds - the changing balance," Wolfensohn continues. "There are still three billion people living on under $2 a day. I'm afraid I didn't solve that, and I don't think Bob will solve it either. But we've made some contribution."
Wolfensohn is still contributing: an audience with Sheikha Mozah awaits, at which the two will discuss the future of Silatech and a string of initiatives intended to stimulate small business, as well as offer young Arabs training in vocational skills. The septuagenarian financier pulls himself slowly but firmly to his feet.
"I hope sincerely that I'm just an old guy who doesn't understand, and that I've got it wrong," he offers, gathering himself. "But my judgment is that we're in for a rather difficult time here. And it's not old people like me who have to face it. It's our kids, and their kids."
The shape of the planet is changing
The development issues facing Middle East countries are replicated perhaps most acutely in Africa, the Earth's second most populous continent. On present estimates Africa will boast an average per capita of $1,700 in 2050.
By contrast, China and India will each have an average of $40,000.
"There is a human timebomb building up in the developing world and while we're anticipating that it will be met adequately in China and India, you have 51 countries in sub-Saharan Africa which will have a population of over two billion people by 2050," notes Wolfensohn. "That is both a moral issue and a very serious political stability issue, and if you have 25 percent of the world living under those conditions, you should at least take notice of the fact that's likely to happen."
He argues that China and India are changing the game on the continent.
"We've up to now regarded Africa as a place which had colonial powers from Europe," Wolfensohn says. "Now there is an infusion of very large numbers of Chinese, and you already have resident Indian populations on the continent.
"Simultaneously there is a move in terms of economic power eastwards, as you will get probably 40 percent of the global GDP in the hands of India and China, as against seven or eight percent today," he continues.
"The shape of the planet is changing very dramatically: you'll be left with a billion people in the so-called rich world, and you'll have eight billion people in what is now the developing world. Of course, that developing world is no longer going to be the poor world because it will have 65 percent of the global GDP."
The development issues facing Middle East countries are replicated perhaps most acutely in Africa, the Earth's second most populous continent. On present estimates Africa will boast an average per capita of $1,700 in 2050.
By contrast, China and India will each have an average of $40,000.
"There is a human timebomb building up in the developing world and while we're anticipating that it will be met adequately in China and India, you have 51 countries in sub-Saharan Africa which will have a population of over two billion people by 2050," notes Wolfensohn. "That is both a moral issue and a very serious political stability issue, and if you have 25 percent of the world living under those conditions, you should at least take notice of the fact that's likely to happen."
He argues that China and India are changing the game on the continent.
"We've up to now regarded Africa as a place which had colonial powers from Europe," Wolfensohn says. "Now there is an infusion of very large numbers of Chinese, and you already have resident Indian populations on the continent.
"Simultaneously there is a move in terms of economic power eastwards, as you will get probably 40 percent of the global GDP in the hands of India and China, as against seven or eight percent today," he continues.
"The shape of the planet is changing very dramatically: you'll be left with a billion people in the so-called rich world, and you'll have eight billion people in what is now the developing world. Of course, that developing world is no longer going to be the poor world because it will have 65 percent of the global GDP."
READERS' COMMENTS
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Interesting pragmatic observations
Posted by Nuts on Monday 22 June 2009 at 08:34 UAE time
A very interesting and insightful article. All the pieces falling together in logical manner. The view on creation of adequate employment for the locals and change in their attitude to jobs is very pragmatic, In most of the cases, where wealth is abundant and meaningful outlets are not available for the youth to engage their creative energy results in the generation going down the wrong path and it does take a few generations to get the society back in track. The rulers here have done everything possible to generate adequate employment opportunity for the local population, however, the latter part of the comment, i.e. the willingness to take on challenging jobs and put in the effort to building a career from ground up is lacking. It need not be only jobs, there are funds set up to support new businesses, but given the easy earnings with sponsorship, very small percentage of youth really take the risk of setting out on their own. Surprisingly, those who do take the risk have invariably been successful in a very short time.
Posted by Nuts on Monday 22 June 2009 at 08:34 UAE time
A very interesting and insightful article. All the pieces falling together in logical manner. The view on creation of adequate employment for the locals and change in their attitude to jobs is very pragmatic, In most of the cases, where wealth is abundant and meaningful outlets are not available for the youth to engage their creative energy results in the generation going down the wrong path and it does take a few generations to get the society back in track. The rulers here have done everything possible to generate adequate employment opportunity for the local population, however, the latter part of the comment, i.e. the willingness to take on challenging jobs and put in the effort to building a career from ground up is lacking. It need not be only jobs, there are funds set up to support new businesses, but given the easy earnings with sponsorship, very small percentage of youth really take the risk of setting out on their own. Surprisingly, those who do take the risk have invariably been successful in a very short time.
FRUGAL LIVING
Posted by David Fields, Abu Dhabi, UAE on Friday 19 June 2009 at 14:06 UAE time
I do save and I save to save myself and my family not any economy. I believe in protecting my future and childrens future not local or regional economies. I believe in frugal living and have inculcated the same to my teenagers.
Posted by David Fields, Abu Dhabi, UAE on Friday 19 June 2009 at 14:06 UAE time
I do save and I save to save myself and my family not any economy. I believe in protecting my future and childrens future not local or regional economies. I believe in frugal living and have inculcated the same to my teenagers.
Oxymoron
Posted by Sutter Kane, Dubai on Thursday 18 June 2009 at 14:28 UAE time
So people are losing their jobs, because they don't spend enough money to support liquidity. And they don't spend money, because they don't have a job or they're afraid that they'll lose their job.
They save money for the worst, which is yet to come (inevitably) because we can't stop saving money, cus we're afraid of the worst to come. There's no way out of this and it sounds retarded. This crisis is virtual, and the information is man made.
Posted by Sutter Kane, Dubai on Thursday 18 June 2009 at 14:28 UAE time
So people are losing their jobs, because they don't spend enough money to support liquidity. And they don't spend money, because they don't have a job or they're afraid that they'll lose their job.
They save money for the worst, which is yet to come (inevitably) because we can't stop saving money, cus we're afraid of the worst to come. There's no way out of this and it sounds retarded. This crisis is virtual, and the information is man made.
I truly agree
Posted by donjuan, AUH, uae on Monday 15 June 2009 at 17:23 UAE time
I agree whole heartedly with his predictions.
There are no Green shoots, Guys prepare for the worst.
Things will get really difficult in days to come.
The recovery in US and Europe will be really slow, same is the case with UAE.
Posted by donjuan, AUH, uae on Monday 15 June 2009 at 17:23 UAE time
I agree whole heartedly with his predictions.
There are no Green shoots, Guys prepare for the worst.
Things will get really difficult in days to come.
The recovery in US and Europe will be really slow, same is the case with UAE.
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