The financial crisis and the role of the World Bank

The world economy is facing two crises; the financial crisis and the climate crisis. These are the two biggest crises since the second world war. The only way to get out of them, is to see the two as a combined crisis and device measures to fight both of them at the same time. That is why we should pay attention to device green measures to come out of the financial crisis, whether it is the greening of the industries, renewable energy, or lower carbon growth in general, we must device green answers to fight the financial crisis.  

I think we should take as our role model the generation of politicians that fought the crisis in the 1930s, led by President Franklin D. Roosevelt. They did not re-establish the old capitalism. Out of the crisis came a much more social capitalism with clever market devices, pension schemes and welfare states in many parts of the world. They simply did not re-establish the pre-crisis capitalism, but established a social one. Now the challenge is to establish a green capitalism out of this present crisis and whatever we do should have this perspective. We must also link the debate here and in the G20 with the Copenhagen-process because ultimately one of the main issues in Copenhagen will be financing. Climate adaptation and development can not be separate. It is simply one issue.

I would also like to add that of course we in the Nordic-Baltic group will stick to our aid promises. We favour what the German development minister Heidi-Marie Wieczorek-Zeul said, that the poorer part of the world should be able to follow up on counter cycle-policies. But in order to do that they must have resources. There must be generosity at this time of crisis and we will do our part in that aspect.

As well as there is need for generosity, there is also a need to put a stop to the illicit capital flows of the world. It is simply impossible to have a world where more money are illicitly taken out of some developing countries than is coming into the countries in the form of foreign investment and aid. No one knows exactly, but maybe as much as one fourth of the world economy is passing through tax havens. This is simply unacceptable. It is opposed to the general principle of transparency. It makes it much more difficult to mobilize domestic resources through taxation, and also it is much more difficult to present the case for aid to our people if this is allowed to continue. I applaud the case of the OECD. The fight against tax havens was also an important part of the G20-meeting, but stricter measures are needed to fight this problem.

The World Bank and The International Monetary Fund must reflect the modern world. Developing countries must be given increased representation in the Bretton Woods institutions. We welcome the important progress last year when Africa was given a third chair in the Board of the World Bank. The heads of the World Bank and IMF should be elected in open, competitive and merit-based processes, without geographical preferences.

The Swedish Minister of Finance, Mr. Anders Borg, said in the IMF yesterday that there can be no taxation without representation in the Board. He represents the political right, while I represent the left, but here we have a common view.

The Nordic-Baltic countries combined have the ninth largest economy in the world. We are one of the largest in development finance after the USA. In order to justify future large contributions to the World Bank Group to out tax-payers and parliaments, adequate representation is required. There can be no taxation without representation. It is as simple as that.