Five days later, President of the World Bank James Wolfensohn kicked off the Dubai 2003 World Bank/IMF Annual General Meetings and was immediately asked who was at fault for the fallout at the WTO meetings. "I don’t think there is any blame to be attached to either side of this," Wolfensohn said. "I think this is in the midst of an attempt to get a new equilibrium between rich countries and the more numerous countries."

Unlike UN and WTO meetings of late, Dubai 2003 was not a platform for mud-slinging or protest. A range of global and regional issues were discussed at hundreds of seminars, press conferences, Development Committee Meetings, International Monetary and Financial Committee (IMFC) meetings and in the Annual Sessions themselves.

As the Meetings were being held for the first time ever in the Middle East, both the World Bank and the IMF took the opportunity to highlight issues affecting the region, not least the reconstruction of Iraq and the ongoing problems of Gaza and the West Bank.

James Wolfensohn, World Bank President, Kaspar Villiger, Annual Meetings Chairman and Horst Köhler, IMF Managing Director.

The World Bank distributed four publications that its economists, working with Arab experts in the region, had developed. These reports (which can be found at www.worldbank.org) are on employment, Unlocking the Employment Potential in the Middle East and North Africa: Toward A New Social Contract; gender, Gender Development in the Middle East and North Africa; governance, Better Governance for Development in the Middle East and North Africa; and trade, Engaging with the World: Trade, Investment and Development in MENA.

Wolfensohn noted that these publications "are intended not as prescriptive documents, but documents that might assist in the discussion of these issues within the Middle East".

In the Development Committee meetings, a number of global issues were up for discussion. The Development Committee is a forum of the World Bank and the IMF that facilitates intergovernmental consensus-building on development issues. The Committee’s mandate is to advise the Boards of Governors of the Bank and Fund on critical development in developing countries. Over the years, the Committee has interpreted this mandate to include trade and global environmental issues in addition to traditional development matters.

In addition to these three key issues, there were some written reports on monitoring the attainment of the Millennial Goals, on the progress of poverty reduction strategies, on Highly Indebted Poor Countries (HIPC), and the World Bank’s renewed moves in infrastructure in its published Action Plan.

Led by managing director Horst Kohler, the IMF’s agenda at Dubai 2003 focused on three central topics. First, using its recently published World Economic Outlook publication as a basis, the body discussed the outlook and risk for the global economy and financial markets, with a special emphasis on the large global current account imbalances, the persistent high levels of public debt in many countries, add to the critical importance of bringing the Doha Trade Round back on track.

Secondly there were discussions on strengthening IMF surveillance and promoting international financial stability, focusing on financial sectors, international capital markets and crisis prevention. "We are strengthening the frameworks of rules for the global economy in collaboration with the public and private sector institutions by developing and implementing international standards and codes of best practices," Kohler said. "And the quantum leap in transparency both at the IMF and in our members is providing more information to help markets function better."

Thirdly, governors discussed the progress of the IMF’s work with low-income members. "With the Millennium Development Goals and the two-pillar approach of mutual responsibility agreed at meetings last year, we have a shared policy framework, and with the Poverty Reduction Strategy Papers [PRSP], and the HIPC initiative, we have the vehicles to take us to our agreed goals," said Kohler, adding that now was the time for ‘steadfast implementation’ rather than looking for new development strategies.

In addition to these topics, the IMF also took the opportunity to highlight economic developments and prospects in the Middle East.

The latest GEP projects anaemic growth of 1.5% in 2003 in the industrialized world is well below potential. It foresees better performance next year, as industrial countries’ growth rises to 2.5%. Developing countries are somewhat more buoyant than industrial countries, growing at 4.0% in 2003, and, if the recovery stays on track, it will grow at 4.9% in 2004. World trade is projected to grow by 4.6%, slightly more than last year, but still less than half the rate in 2000.

GEP 2004 dwells heavily on last month’s WTO meetings and the responsibility of rich countries to take the lead in negotiating a fair outcome to the Cancun negotiations. "They are the dominant players and account for two-thirds of the global market," said World Bank chief economist Nicholas Stern. "They could show leadership by reducing agricultural protection, cutting high tariffs, and ensuring that the poorest countries have access to affordable medicines on the same terms as bigger developing countries."

GEP 2004 presents a simple scenario that shows how lower trade barriers in agriculture and smaller tariff peaks could promote growth and poverty reduction. Under this scenario, rich countries cut tariffs to 10% in agriculture, and to 5% in manufacturing; developing countries reciprocate with tariff cuts to 15% and 10% in agriculture and manufacturing respectively; all countries eliminate agricultural export subsidies, ‘decouple’ domestic subsidies to minimize the trade distortions, and eliminate specific tariffs, quotas, and anti-dumping duties.

This formula generates gains that amount to about three quarters of those that might be possible through full trade liberalization. If the reforms outlined above were implemented progressively through five years to 2010, and accompanied by a realistic productivity response, developing countries would gain nearly $350 billion in additional income by 2015. Rich countries would benefit too, with gains in the order of $170 billion.

All this would mean that by 2015 there will only be 144 million people living below $2 per day.

Regarding the tentative global recovery, GEP 2004 states that for the third year in a row, the global economy is growing well below its potential, at an expected rate of 2% in 2003. The pace of activity faltered at the end of 2002 and early 2003 in response to events that undermined confidence, including the build up to war in Iraq, trans-Atlantic tensions, and concerns about SARS.

"The world economy is still not firing on all cylinders," says Hans Timmer, head of the Bank’s global trends team, "but current trends point to a better 2004."

Activity in much of South Asian is holding up well. Countries in East Asia and the Pacific lost some growth momentum due to SARS, but its apparent containment has opened the way to continued rapid growth. Africa continues to struggle, however. Although the region’s commodity prices have improved, they are still well below long-term trends.

War has affected regional performance in the Middle East and North Africa, while many countries in Europe and Central Asia are undergoing sluggish growth tied to lackluster conditions in Western Europe, especially in Germany. Latin America is beginning to recover from a severe recession, as growth in Argentina has picked up, pre-election jitters in Brazil have largely passed, and Mexico is recovering.

Global growth is projected to accelerate to 3% in 2004. Early signs of renewed economic activity are appearing in the United States—including an upturn in orders, production and exports, as well as stronger equity markets. Japanese output increased at 2.3% during the second quarter of the year, which is stronger than expected, yet conditions in Europe continue to be extremely slack. Improvement in confidence across OECD centers will prove the key to a revival in capital spending and more robust growth.

Growth in developing countries is likely to accelerate to 4.9% in 2004, spurred by a revival of world trade, the fading of global tensions, and the rekindling of domestic demand. Latin America is expected to see the most substantial gain.

A return to stronger growth in India should power the South Asian region, while more moderate gains are expected in Europe and Central Asia, tracking the slower pace of revival in EU activity. The pick-up in growth will be lower in the Middle East and North Africa, where uncertainty regarding the regional political and economic situation is likely to persist, and in Sub-Sahara Africa, where only moderate gains in commodity prices and sluggish European growth play a role. In 2005, growth rates could ease modestly to about 4.8%, in line with previous peaks in 2000 and 1996-97.

"The much-improved underlying policy fundamentals in most regions—progress on budget deficits, contained inflation, and greater trader openness—are a solid foundation for realizing productivity growth in 2004," says Timmer. "But persistent structural problems in rich countries—such as the twin deficits in the United States and weaker performance of Japanese and European banks—risk precipitating a disruptive fall in the US dollar or other unexpected confidence shocks that cut off investment recovery. If these risks materialize, all bets are off."

He said this month’s WTO meeting in Cancun had been a wake-up call because poor nations—representing more than three billion people—had refused to accept the trade proposals put forward by the rich countries. Wolfensohn described ‘forces of imbalance’ in the world, where one billion people own 80% of the GDP and where another billion, by contrast, struggle to survive on a $1 a day. He urged developing country leaders to move more aggressively to fight corruption, improve governance and spur reform, and he urged developed country leaders to explain to their electorates why aid and trade are issues vital to them and their children’s well-being.

"It is time to take a cold, hard look at the future," Wolfensohn said in the conclusion of his speech. "Our planet is not balanced. Too few control too much, and too many have too little to hope for. Too much turmoil, too many wars. Too much suffering."

"The demographics of the future speak to a growing imbalance of people, resources, and the environment. If we act together now, we can change the world for the better…You are the global leaders to make it happen. Delay is reckless. This is a time for courage and action, for a new vision of the future".

"We all share one planet. It is time to restore balance to the way we use it. Let us move forward to fight poverty, to establish equity, and assure peace for the next generation."

Managing director of the IMF Hurst Kohler reiterated these sentiments in his opening speech to the delegates of the Dubai Meetings: "The breakdown of trade talks in Cancun must be a wake-up call for the international community. We all know that trade is the most powerful force for global growth and poverty alleviation. And this force works best when applied in a multilateral, rules-based context."

In clear reference to the United States, the chief rule-breaker and unilateral operator, Kohler closed the Meetings with some sharp words for governments that play with exchange rates for domestic political reasons. "We need to see the fundamentals of economies, and we need to see the recognition that we all sit in the same boat," Kohler said, reverting to the recurring theme at the Meetings that we live in a highly interdependent world and there multilateral cooperation is essential. "My vision for the IMF is to work for a better globalization. And this requires long-term social and political balance."

So besides the talking, handshaking and state-of-the-world posturing, did anything actually come out of this year’s Annual Meetings in Dubai? In their closing statements of the Meetings, Wolfensohn, Kohler and Kasper Villiger, Swiss Finance Minister and Chairman of this year’s Meetings, gave their backing to the campaign for increased representation of the developing world in the World Bank and IMF, commonly referred as the Bretton Woods institutions. "I do think that a consensus is possible for all of us, including an increase in basic voting rights for developing countries," Kohler said, with Wolfensohn agreeing.