World Bank Earmarks $500M for Bird Flu

"If you had that kind of pandemic, I don't think there is any question it could happen, the costs both in human life and in disruption of world economic activity would be very high," Wolfowitz said in an interview with The Associated Press.

The worrisome strain of flu called H5N1 is spreading through wild birds and poultry in numerous countries _ and raising fears of a global epidemic if it mutates to become easily spread among people.

The World Bank, an international lending institution, has set up a $500 million pool to help poor countries combat the bird flu. Kyrgyzstan was the first nation to draw from the pool.

Wolfowitz's comments came as finance officials from the world's richest countries planned to meet in Washington on Friday to talk about pressing global economic matters, which probably will include lofty energy prices. Risks posed by the bird flu also could surface in those discussions, which will carry over into the weekend meetings of the World Bank and the International Monetary Fund.

Given the potential risks posed by a worldwide outbreak of the flu, "common sense would say it's worth a reasonable investment at the front end, if you can prevent that from happening," Wolfowitz said.

Rich countries are in a position to bankroll their own prevention plans, but poorer countries aren't, he noted.

"When you are in a poor country that is challenged just to meet kind of basic needs, compensating farmers adequately and having a framework for doing that gets to be an expensive proposition," Wolfowitz said.

President Bush is expected to approve soon a detailed action plan for how the United States would deal with any major spread of the disease in this country.

The World Bank is working with various world health groups on the bird flu matter.

Wolfowitz, the former No. 2 at the Defense Department and an architect of the Iraq war, took the helm of the World Bank last June. Its stated mission is to fight poverty and improve the living standards of people in developing countries, and it lends about $20 billion a year for various projects.

On other matters, Wolfowitz said he is continuing to explore the possibility of putting staff members back in Iraq _ three years after a deadly bombing led the institution to pull them out.

"The real issue is should we have a bank presence in Baghdad in the green zone. We look at that periodically, and we are taking another look at it now," he said. "It is a case where you have to weigh the benefits that they bring in terms of a more effective ability to assist the Iraqi reconstruction efforts, versus the security challenges and risks to staff."

Asked whether new aid should flow to the Hamas-controlled Palestinian Authority, Wolfowitz said that is something that would be a matter for the World Bank's board. "We are not an independent actor," he said.

The Palestinian government's financial situation is dire. Sanctions by Israel and the West have dried up the Palestinian treasury.

Wolfowitz also talked about the importance of the bank to keep working on ways to make sure that money provided to poor countries isn't siphoned off for other things by corrupt government officials or others.

Corruption is an obstacle to development not only because resources can be wasted but also because it poses a "huge disincentive" to private-sector investment, which is so crucial to creating jobs and other economic opportunities, he said.

"One African anti-corruption fighter said to me _ and I agree with him 100 percent _ that punishing corruption is much less important, much less valuable, than creating mechanisms that prevent it in the first place."

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