Washington:World Bank President Robert Zoellick said on Wednesday the world had entered a new economic danger zone and Europe, Japan and the United States all needed to make hard decisions to avoid dragging down the global economy.
"Unless Europe, Japan, and the United states can also face up to responsibilities they will drag down not only themselves, but the global economy," Zoellick said in speech at George Washington University.
"They have procrastinated for too long on taking the difficult decisions, narrowing what choices are now left to a painful few," he said ahead of meetings of the World Bank and International Monetary Fund next week.
His bluntly-worded speech highlighted mounting fears among global policymakers about an escalating sovereign debt crisis in Europe, which has for now overshadowed investor concerns about public finances and reforms in the United States and Japan.
Just as those very countries had called on China to be a responsible global stakeholder as a rising economic power, so too must they act responsibly and face up to their economic problems, Zoellick added.
Chinese Premier Wen Jiabao weighed in earlier and called on developed countries to take responsibility for fiscal and monetary policies to avoid the European crisis from spreading.
Meetings of global finance and development leaders in Washington next week will focus on Europe's debt woes and the risk of a Greek debt default, which has fed growing alarm in financial markets.Mixed signals from European leaders have escalated concerns the 17-member euro zone may be unable to unite behind a common approach to tackle the crisis.
Zoellick said European countries were resisting difficult truths about their common responsibilities, Japan had held off on needed economic and social reforms, and political differences in the United States were overshadowing efforts to cut record budget deficits.
"The time for muddling through is over," Zoellick said. "If we do not get ahead of events; if we do not adapt to change; if we do not rise above short-term political tactics or recognise that with power comes responsibility, then we will drift in dangerous currents."
Zoellick's speech focused on the shifting global landscape in which emerging market economies are playing a greater role in the world economy - and increasingly in development.
He said developed countries had yet to fully recognize these global shifts were underway and still operated under a "do what I say, not what I do" policy. They preached fiscal discipline but failed to rein in their own budgets, and advocated debt sustainability yet their own debts were at record highs, he said.
Zoellick also said it was time to rethink foreign aid, saying that while aid remains a life or death issue for millions of people around the world, it had also become a vehicle for helping poorer countries develop and grow, he said.
"In a world 'Beyond Aid,' assistance would be integrated with - and connected to - global growth strategies, fundamentally driven by private investment and entrepreneurship," he said. "The goal would not be charity, but a mutual interest in building more poles of growth."
He said development also meant tapping the power of women by eliminating gender inequality."We will not release the full potential of half of the world's population until globally we address the issue of equality; until countries, communities, and households around the world acknowledge women's rights and change the rules of inequality," Zoellick said.
Updated Date: Dec 20, 2014 05:39:44 IST