World Bank president Robert Zoellick on Tuesday proposed that the Group of Seven (G7) needed to be turned into a steering group that would empower “rising economic states”, such as China and South Africa.

This would be one new measure in which the world could try to solve its economic problems.

“The G7 is not working. We need a better group for a different time," Zoellick said in a speech to the Peterson Institute for International Economics in Washington DC, in the US, ahead of the yearly World Bank meetings.

He explained that the proposed steering group should comprise Brazil, China, India, Mexico, Russia, Saudi Arabia, South Africa and the current G7, but could not just replace the G7 with a G14, as this would only be using “old world methods to remake the new.”

Zoellick noted that the steering group would also have to evolve to fit changing circumstances, such as including new emerging economies.

Zoellick emphasised that economic multilateralism had to be redefined to include, finance and trade, but also energy, climate change and the stabilisation of fragile, post-conflict states, as these were economic issues.

He described the world energy markets as a “mess” and called for a “global bargain” between energy producers and consumers to share plans for expanding supplies, improving efficiency and reducing demand.

“There could be a common interest in managing a price range that reconciles interests while transitioning toward lower carbon growth strategies, a broader portfolio of supplies, and greater international security,” explained Zoellick said.

Further, he stated that the World Bank was developing an ‘energy for the poor’ initiative with other donors to assist the poorest countries in the world to meet their energy needs in efficient and sustainable ways.

Zoellick noted that the new multilateralism had to give an equal value to development and to international finance, otherwise the world would remain an unstable place.

He added that the aid system was not working well enough and had to move more quickly and effectively to help those who were the most vulnerable when a crisis hits.

Zoellick warned that the effects of the financial crisis could be a “tipping point” for a number of developing countries, as a drop in exports and capital inflow would trigger a falloff in investments.

“Deceleration of growth and deteriorating financing conditions, combined with monetary tightening, will trigger business failures and possibly banking emergencies. Some countries will slip toward balance of payments crises,” said Zoellick.

Meanwhile, the World Bank also needed to reform, with Zoellick announcing the creation of a high-level commission, to be led by former Mexican President Ernesto Zedillo, to “modernise” the governance of the World Bank.

Zoellick also noted that in light of the Doha trade talks collapsing, countries could use trade facilitation as a way of cutting trade costs.

“There are opportunities to cut costs of trade far in excess of those imposed by tariffs and other trade barriers,” he commented.