* Zoellick warns world economy in new danger zone
* Zoellick says Europe, Japan, US must make hard decisions
* Speech comes before World Bank, IMF meetings next week
(Adds details, quotes)
By Lesley Wroughton
WASHINGTON, Sept 14 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
"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
"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
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.
For details, see [ID:nnL3E7KE070]
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
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 recognize
that with power comes responsibility, then we will drift in
Reuters Insider link to Zoellick speech:
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
"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.
(Reporting by Lesley Wroughton, Editing by Gary Crosse)