We are witnessing fundamental changes in the Middle East and North Africa that provide a historic opportunity to expand the circle of democratic societies. Alongside our partners in the Middle East and Europe, the United States stands ready to support the transitions in Egypt and Tunisia through a renewed multilateralism.
The World Bank and other multilateral development banks (MDBs) will be essential, just as they were in support of Eastern and Central Europe’s transition two decades ago. In 1989, after the fall of the Berlin Wall and as Central and Eastern European countries left communism behind, the world turned to the MDBs to assist with these transitions. Financial and technical assistance from the MDBs helped roughly two dozen countries in Central and Eastern Europe transition from command economies to markets built on the strength of innovative entrepreneurs and active communities.
Over the last two decades, Egypt and Tunisia have moved towards market economies and privatization. Corruption and weak institutions, however, created an uneven playing field, with the benefits of growth not widely shared. Where reforms occurred, implementation was often inconsistent. Today, the change that is underway in the Middle East calls for re-thinking and re-orienting the international community’s engagement. These transitions are ultimately about people: unleashing their opportunities and expanding their freedoms. We can unlock sustained and shared growth by tapping the potential of a young generation, expanding the private sector, and creating accountable institutions.
The IBRD and the IFC, in particular, have a central role to play on behalf of the international community, both in bringing their substantial financial resources to bear and in providing the smart and targeted investments that can best support these new transitions. Working with the African Development Bank, and in collaboration with other relevant institutions, the World Bank Group should help to lay the groundwork for more inclusive, sustainable growth and private sector-led job creation. And in direct support of democratization in these countries, the MDBs should, as President Zoellick has articulated, do more to promote a robust civil society, as well as good, accountable, and transparent governance. I want to commend President Zoellick for the strong intellectual leadership reflected in his April 6th speech on this agenda.
We are also depending on the MDBs to help the international community tackle other profound global challenges. For example, in some countries, the recurrence of rising food and commodity prices threatens to slow economic recovery, increase poverty, and undermine social stability.
The Bank and other multilateral institutions, working with low-income countries, have an important role to play in mitigating the impact of food price volatility on the poorest. For instance, the Bank’s Global Food Crisis Response Program (GFRP) provided critical rapid-response financing to countries during the last food price spike. This valuable program allowed governments to fund safety nets for the most vulnerable and stimulate short-term food production to avoid further problems in the next harvest cycle.
In addition to these rapid response programs, it is critical that the international community pursue longer-term actions to improve resilience to supply shocks, particularly as global food supplies will have to increase by an estimated 50 percent over the next 20 years to meet projected demand. The United States was a leader in establishing the Global Agriculture and Food Security Program (GAFSP) in the wake of the last food price crisis. We remain strongly committed to meeting our pledge to GAFSP, which provides long-term financing for country-owned agricultural development strategies in the poorest countries. As a demonstration of this commitment, GAFSP will receive a $100 million appropriation in this fiscal year, bringing the United States' total contribution to the fund to $167 million. Since its launch in April 2010, GAFSP has moved rapidly to award $337 million to eight poor countries with strong commitments to agricultural development. But many more countries have robust proposals that are ready for financing, and I encourage others to consider contributions to GAFSP.
Climate change is another global challenge that requires multilateral solutions. U.S. leadership and investments in two trust funds implemented through the MDBs, the Climate Investment Funds and the Global Environment Facility, are reducing the threats brought about by changing environmental conditions by helping developing countries to address their causes and better prepare for and respond to their impacts. These international investments strengthen our global posture, help to build a more stable clean energy world that is less exposed and more resilient to climate and environmental dangers, and protect the welfare of future generations.
These investments also present a large economic opportunity for U.S. businesses. Investment in energy infrastructure in developing countries is expected to total more than $20 trillion over the next 25 years, including a $10 trillion global market for clean energy. U.S. support for these multilateral programs helps foster open, fair, and functioning markets in which American businesses can compete and win. These investments also spur local economic opportunities for our partners, including solar power initiatives in Egypt and Tunisia, and geothermal energy in Indonesia and Kenya. This, in turn, leads to local job creation and economic growth.
Finally, this year's World Development Report rightly reminds us of the vital role played by the MDBs in addressing the longstanding challenges associated with the world's most fragile countries. This includes frontline states vital to U.S. national security, such as Afghanistan and Pakistan, where multilateral institutions are creating the conditions for development and buttressing our troops’ courageous efforts to bolster security. For example, IDA—Afghanistan's second biggest donor after the United States—is improving the lives of millions through projects that provide better access to roads, clean water and sanitation, power and irrigation.
I want to welcome the strong conclusion of the sixteenth replenishment of IDA, which coincides with IDA’s fiftieth year in operation. IDA remains one of the most effective vehicles for our development dollars. This view was confirmed by a recent study by the Brookings Institution and Center for Global Development, which ranked IDA among the very top in development effectiveness. In this vein, I also want to commend the World Bank for its commitment to maintain transfers to IDA while the IBRD rebuilds its capital base through the General Capital Increase. This agreement ensures that the GCI will support all members of the World Bank, including the poorest.
The MDBs’ vital role in multiple and varied circumstances—from fragile states to the global financial crisis; from food security to climate change; and now to support historic transformations in the Middle East and North Africa—underscore why these development banks are worthy of our strong support.
These organizations are vital for addressing the challenges of today and those that lie beyond the horizon. The World Bank and the regional development banks have demonstrated time and again that our investment provides unparalleled returns, stretching the impact of our dollars around the world. With domestic resources constrained, no other institutions so effectively leverage our limited resources and provide such a positive impact on the ground in service of our national and global interests.