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Japan Disaster, Mideast Unrest Are Topics for World Bank / IMF Meeting

Egyptians shout as they wave a giant flag during a demonstration at Tahrir Square, Cairo, April 1, 2011
Egyptians shout as they wave a giant flag during a demonstration at Tahrir Square, Cairo, April 1, 2011

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Conflict, unsustainable government debt and the need for new ways to tackle global challenges in a post-crisis era are among the key issues as the World Bank and International Monetary Fund gear up for the groups' Spring meeting in Washington next week. Complicating prospects for the uneven global economic recovery is the turmoil in the Middle East and quake devastation to the world's third largest economy.  

Unforeseen events, including the massive quake and tsunami in Japan that triggered a man-made nuclear disaster - and the political unrest that has roiled the Middle East and North Africa are expected to loom large as members of the World Bank and IMF gather in Washington.  

"I think they'll be an important focus, precisely because the developments there are not only critical for people of the region but they have the possibility of having enormous global implications as well," said Marcus Noland, deputy director at the Peterson Institute for International Economics.

Among the implications is the rapid spike in oil prices and its potential to trigger another global economic slowdown. Although the world economy is projected to grow at a moderate pace this year, IMF chief Dominique Strauss-Kahn, said the recovery remains lopsided, with China and other emerging economies growing faster than Western economies.   

"Beyond Japan and more for a longer term, the question of European countries is certainly an important one," he said. "Some of these countries are at crossroads because of sovereign debt problems, because of financial sector problems."

Ahead of the meeting, Portugal, one of the poorest countries in the eurozone, is now the third EU country to ask for a bailout to deal with its crippling debt. Economists say other countries could follow.

Strauss-Kahn said the challenges will require even greater cooperation among member countries.

"The momentum, the willingness to work together - still there, but not as strong as it has been two years ago and that's a big worry for me because cooperation is obviously something that we need, he said.

World Bank President Robert Zoellick proposes a new social contract - one that considers the impact of global policies on the lives of individual citizens.

"Our message to our clients, whatever their political system, is that you cannot have successful development without good governance and without the participation of your citizens," he said.

"They have to do a couple of things," said Marcus Noland of the Peterson Institute. "The IMF in particular needs to continue on the agenda that was laid out at the Seoul G20 summit and then will be continuing on to the Cannes Summit later this year of internal reforms in their own governance as well as strengthening the global financial system and particularly how it relates to developing countries responding to financial crises."

Zoellick said inaction poses as great a risk as taking the wrong actions. He's urging governments in the Middle East to deliver quick reforms that will increase employment while longer term strategies are developed. The IMF is expected to stress the importance of regulatory reforms to improve global financial stability and narrow the gap between rich and poor.

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