Millions In, Billions Out.

E-Atlas.

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1. Larry Summers and N.K. Singh:

The world is facing the worst five-year span in three decades. Higher interest rates have left developing countries crushed by debt, and half of the poorest economies haven’t recovered to where they were before the pandemic. Growth is weak across large swaths of the world, and inflation remains persistently high. And behind it all, the thermometer keeps inching up. Last year was the warmest on record, as is true of nearly every month.

For the last several years, world leaders have made big promises and laid out bold plans to mitigate the climate crisis and help poor countries adapt. They pledged that the World Bank would transform itself to work on climate change, and that the multilateral system would get new money and lend more aggressively with the resources it has, including to meet concessional needs. An agreement between creditors would provide debt relief to countries that most needed it. And where public money was insufficient, the multilateral system would be able to catalyze private investment in developing countries.

Despite the bold rhetoric, 2023 was a disaster in terms of support for the developing world. The private sector collected $68 billion more in interest and principal repayments than it lent to the developing world. Amazingly, international financial institutions and assistance agencies withdrew another $40 billion, and net concessional assistance from international financial institutions was only $2 billion, even as famine spread. “Billions to trillions,” the catchphrase for the World Bank’s plan to mobilize private-sector money for development, has become “millions in, billions out.” (Sources: larrysummers.com, web.nksingh.com, project-syndicate.org, worldbank.org, noaa.gov, climate.copernicus.eu, italics mine)

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2. Russia is pressing ahead with construction of two new transport corridors linking Asia and Europe, seeking to weaken sanctions over its war in Ukraine at the same time as Middle East turmoil is disrupting global trade. The shipping and rail networks via Iran and an Arctic sea passage could strengthen Moscow’s pivot toward Asian powerhouses China and India and away from Europe. They have potential to embed Russia at the heart of much of international trade even as the US and its allies are trying to isolate President Vladimir Putin over the war. The routes could cut 30%-50% off transit times compared to the Suez Canal and avoid security problems plaguing the Red Sea as Houthi rebels attack international shipping over Israel’s war against Hamas in Gaza. Iran’s missile and drone strikes aimed at Israel have added to the regional turbulence. (Source: bloomberg.com)

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