World entering ‘danger zone’ on prices, WB warns G-8

July 3rd, 2008 - 10:37 am ICT by IANS  

By Arun Kumar
Washington, July 3 (IANS) 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.” Zoellick’s call is contained in a letter to the head of the upcoming G8 summit in Japan, in which the Bank, World Food Programme (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,” 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.”

Zoellick said: “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.”

He 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. ”

In his letter, 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 Programme. 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 globalisation: the question is whether we can act swiftly to help those most in need,” he said.

“For globalisation 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.”

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