By Scott Hartmann, UN Wire

WASHINGTON -- Billionaire executive and philanthropist George Soros and Colombia University Professor Joseph Stiglitz called yesterday on U.S. President George W. Bush to announce at next month's International Conference on Financing for Development his support for a special one-time issue of 21.43 billion in Special Drawing Rights (SDRs) at the International Monetary Fund, currently equivalent to $27 billion, which could immediately help to fund major global development goals.

Soros, who was speaking yesterday at a roundtable on new proposals on financing for development organized by the Institute of International Economics and the Center for Global Development, said that the United States is proportionately one of the least generous donor nations, spending less than 0.1 percent of its gross national product on development aid and that simultaneously, foreign aid has a "terrible" reputation inside the country.  U.S. policymakers and the public are reluctant to support increased foreign aid because of the mistaken perception that the country spends massive amounts on development assistance and the perception that such funds are poorly spent, Soros said.

According to Soros, the answer to U.S. concerns lies with the special issue of SDRs already authorized by the IMF's Board of Governors in 1997 and subsequently approved by 72 percent of the organization's membership as of August 2001.  The special issue could be passed and implemented almost immediately if the United States, with 17 percent of the votes at the IMF, gave its approval to the measure. Although that would fall short of the annual $50 billion goal for additional development assistance cited by many in the international community, it could show how money could be well spent and lead later to larger contributions.  The special allocation would also help correct an imbalance at the IMF, where over 20 percent of members have never received an SDR allocation.

Soros proposes that Bush support the 1997 special issue "on the condition that the rich countries agree to donate their SDRs to a trust fund that would be used for the provision of public goods on a global scale," such as public health, education and stronger legal systems, citing as examples the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Global Plan to Stop TB, with which Soros is involved.  In addition to addressing the need for the global provision of public goods, the allocation would also help boost developing countries' foreign currency reserves, Soros said, linking the SDR allocation issue to the Monterrey conference.

Soros also said that the special SDR allocation could pave the way for an increase in the use of grants instead of loans at the International Development Association of the World Bank, an issue the United States supports and raised last week in a briefing to the Congressional Joint Economic Committee but Europe at present opposes because it is afraid this is the first step in reducing the role of the bank.  By supporting the special allocation, Soros said, those European fears will dissipate.

Soros said the special SDR allocation would be beneficial because it would take the form of grants and would not have to go through governmental channels.  This would allow for the strengthening of public-private partnerships.  The SDRs could also be channeled through local governments and nongovernmental organizations, thereby making the system useful in dealing with "countries with repressive, corrupt or inept" governments, according to Soros.  

According to Soros, the system could be augmented by setting up an independent "jury" of experts to recommend which projects to fund, but said the ultimate decision on whether to fund a project or not would rest with donors.  Comparing the system to a marketplace, Soros added that the system would allow for transparency, accountability and "interaction between donors and projects with checks and balances and quality control."

"This would give President Bush a powerful message to deliver when he goes to Monterrey and it would make the Monterrey conference a resounding success," he said.  "Without it, the conference is likely to be a disappointment," he added. "We cannot be successful in fighting terrorism unless we also attack the other axis of evil -- poverty, disease and ignorance."

According to Soros and the co-chairs of the two-day event, Institute for International Economics Director Fred Bergsten and Center for Global Development President Nancy Birdsall, the Bush administration should be praised for its commitment to Monterrey but it is crucial that the United States arrive at the conference with something concrete in order to avoid embarrassing itself, particularly since many world leaders, including Bush himself, will attend the event.

"The U.S. government has been looking at this conference on financing development without wanting to upgrade financing," Soros said. "And I think a conference on financing without any financing is a flop." 

Senior representatives and experts from multilateral lending institutions, academic institutions and nongovernmental associations, as well as senior government officials and ministers from over 11 countries attended the event, which concluded yesterday and included a special appearance by U.S. Secretary of the Treasury Paul O'Neil.  In the conference's opening session Tuesday, the roles and challenges facing regional development banks were discussed, followed by a keynote speech delivered by former IMF head and special U.N. envoy to the Monterrey conference Michel Camdessus, who called on donor countries to fulfill their development pledges and for a new system that increases "mutual accountability" between donors and the recipients of their aid.