Give grants to poor countries, US tells WB

washington: the united states has made a fundamental shift in its approach to the problem of poverty in the world's poorer nations by proposing the world bank should begin giving grants - which need not be paid back - to needy countries, instead of loans. president george bush suggested this far-reaching policy change in an address at the world bank headquarters here during which he argued that "conquering poverty creates new customers" for america's firms."having strong and stable nations as neighbours in the world is in our own best interests. strong partners export their products, not their problems," bush said in remarks that could have some resonance in the sub-continent. bush's change of heart, which follows treasury secretary paul o'neill's proposals to this effect last month, could result in a drastic reorientation of bank policies with direct consequences for countries such as india, and more so for the most impoverished countries of africa. as of now, poor countries of the world mostly get loans on easy terms from the bank. although the terms are generous to the point of being a giveaway - very low interest rates with up to 40 years for repayment - many countries are staggering under the accumulated debt burden of even such borrowing. countries also take other loans from the bank that invite interest closer to commercial rates. the implications of the bush proposal for india are yet unclear. new delhi is one of the bank's biggest borrowers, now taking more than a $1 billion a year for an accumulated loan of more than $ 50 billion since its independence. but india has also been a timely and circumspect repayer of loans. the latest us proposal appears to be aimed primarily at african countries than developing countries such as india and china. however, bush said "we have, today, the opportunity to include all the world's poor in an expanding circle of development throughout all the americas, all of asia, and all of africa." in any case, the bush proposal goes counter to the outlook of the european nations that believe concessional lending is the way to go because it imposes responsibility and accountability in poorly-run countries. besides, bush is yet to put money where his mouth is. the united states contributes about 25 per cent of the world bank kitty, followed by japan at ten per cent and other eu countries. one explanation for the bush administrations change of tack is that it is trying to deflect attention from the flak he is getting over issues such as missile defence and the kyoto protocol, ahead of trip to europe later this week. he reportedly intends to make economic issues, poverty alleviation, and the aids problem the centerpiece of his foray at the summit meeting of the group of eight industrial nations that will meet in italy this week.