Joint Press Conference
Hamburg, Germany
June 1, 2006 Moderator Good afternoon, ladies and gentlemen. I would like to welcome you to the Hamburg Town Hall at the Eighth German World Bank Forum. I would like to introduce our speakers: Paul Wolfowitz, the President of the World Bank, Mrs Wieczorek‑Zeul and Jens-Peter Breitengross, who is the Vice‑President of the Chamber of Commerce. Mrs Biastro the second mayor will address us first. Mrs Birgit Schnieber-Jastram, Second Mayor of Hamburg Thank you very much, Madam Minister, Dr Breitengross, President of the World Bank. First of all, I would like to express my pleasure about the fact that the World Bank is holding its Eighth Forum in Hamburg. The World Bank Group is one of the biggest in development aid. It is an organisation which is very committed worldwide to development aid and we are proud that we can offer a platform for this commitment. At the same time, we are convinced that Hamburg is a very worthy location for such an event. It is very open and in favour of understanding between peoples, and these are factors which have characterised Hamburg historically and also now. The topic of the forum this year, dealing with the MENA countries, the MENA group, is very important and is of global significance. In Hamburg this region is particularly close to our hearts. Since the middle of the 19th century, Hamburg has had excellent commercial and cultural ties to the Arab world, and apart from Asia and the Baltic area, the Middle East and North Africa area is the third region that the Hamburg Senate concentrates on. There are many contacts to this area in Hamburg and there are going to be a greater number of cooperations and ventures in the field of trade, logistics and culture. I would like to name a few. There is an agreement between Hamburg, Jordan, Tunisia and Oman on the training of doctors and nurses in Hamburg, and also medical technology and other such fields. The Hamburg company ECE has the biggest shopping gallery in the Middle East in Doha, in Qatar. It has 364 shops and it is the biggest shopping mall worldwide. The Emirates Airline is the biggest consumer of the Airbus 380, or they have placed the most orders, which has the final assembly line in Hamburg. We also have a direct flight between Hamburg and Dubai, which is maintained by this airline. These economic ties raise our sensitivity for other cultures. They increase our understanding of problems and they also lead to a different awareness of this area and the people and lead to a greater closeness. The World Bank Group is one of the organisations which is most committed and involved in development. We in politics and in industry can only benefit from the fact that time and again in the framework of the World Bank Forums, topics are discussed that are of global significance. I am sure that events such as these make an excellent contribution to better understanding and promotion of the Middle East, the Far East and also the area of North Africa. This is why it is a great pleasure for me to have the World Bank Forum in Hamburg. I hope that we will all be able to benefit from the results and clean new knowledge. I would now like to hand over to Dr Breitengross. Dr Jens-Peter Breitengross, Vice President of the Hamburg Chamber of Commerce Thank you very much, Madame Mayor. I represent the Chamber of Commerce, the co‑host and the venue for this important Eighth German World Bank Forum. It is a great pleasure for us that the centre of foreign trade in Hamburg hosts this meeting because it belongs here. Traditionally Hamburg is the most important German venue for exchanges and trade with developing countries and emerging countries. The MENA group, of course, is amongst these and they are the centre of this meeting. In Hamburg and its surroundings, there are a large number of companies that have specialised in these countries, either in the field of consultancy or the delivery of machinery and plant, or which are involved in import from these countries. Many firms from Hamburg are also participating in World Bank activities in this region. The participants in the conference are going to discuss how one can facilitate trade and investment and thus generate jobs and income. Hamburg industry counts on a partnership between private projects and development aid because they feel that these two have to work hand‑in‑hand. Development aid can prepare basic infrastructure, whereas the companies are involved in trade and economic activity. In spite of this, private investment, foreign direct investment, FDI, are the driving force in developing and emerging countries for social and economic progress. Without private investment ‑ and this is a generally recognised fact today ‑ it will not be possible for many young people to get jobs. The German government has made use of this synergy effect through its public/private partnership programmes and these projects are promoted because they have economic development spin‑off effects. We are going to discuss these programmes in the framework of this conference. There are a number of companies that are involved in this programme and we think that the approach is excellent. However, we would hope that this very meaningful cooperation not only involves technical aid, GTZ, but that it also becomes involved in larger projects related to capital aid and infrastructure. For example, if a big dam is being built on development aid and a private company builds water supplies or takes care of energy provision, these would be examples of good cooperation between development aid and private investment. As far as the Chamber of Commerce is concerned, the philosophy ‘Aid by trade’ is the best and most sustainable way to arrive at increasing prosperity in the world. There is no contradiction for us between trade and investment. Trade is always the beginning. Trade creates contacts, you get to know a region, you find potential partners for business and investment is then the logical following step. Investment follows trade. The World Bank has set a goal to combat poverty worldwide, a world without poverty, where people can live in a dignified manner. These are aims that are difficult to reach. The World Bank is the most important organisation in development aid and it is the most influential. Its standards are taken up by many organisations involved in multilateral and bilateral development aid. Whatever the World Bank does sets an example that others follow. However, these aims are set very high and include the abolishing of poverty. The World Bank and all the others involved in this are still far away from this aim. One‑fifth of mankind today has to live on less than USD1 a day. This is a shameful figure and in spite of great efforts, we still have not been able to make great inroads in this field. However, the World Bank in its new progress report has come up with encouraging news. In 10 years, so the forecast goes, the ratio of humanity living on less than USD1 a day will decrease from 20% to 13%. We only hope that the dollar does not have a much lower purchasing power than today. This progress is based on differing standards of development in different regions. The biggest step forward in the last 10 years has been made by East Asian and Pacific states and will continue to be made by them, and also the MENA region. Based on very high prices for raw materials, income from oil and gas, etc., it is going to be most difficult. Unfortunately we must repeat this ‑ it is going to be most difficult for Africa, especially sub‑Saharan Africa. This region seems to have great difficulties in making the grade. Why is this the case? Of course, there cannot be any unilateral reasons, but there are many reasons. I think that many countries in this region cannot move out of poverty because their governments are still very far removed from what we call ‘good governance’ ‑ that is the efficient use of state funds and corruption‑free decisions. The World Bank, together with the IMF, were leaders in setting standards for this area and making them a prerequisite for the granting of aid. I think the international donor community must continue to insist on no aid without guarantees for a serious and transparent use of funds. In this connection, we as practitioners are rather critical of a decision by the World Bank to become less involved in tenders. It is important to keep these countries independent, but we are concerned that in the MENA region and other parts of the world, the transparency of these tenders may suffer tremendously and that local political pressure on the decisions will increase. Here I think we have to have a very sensitive policy in order to find the correct middle of the road between the responsibility of these countries and the responsibility of the donors. Thank you very much. I would now like to hand the floor to Madame Minister, Mrs Vitoritch Toyer. Mrs WIECZOREK‑ZEUL, Minister for Development Thank you very much. Ladies and gentlemen, the federal government regards the World Bank as the central global development bank. I am the governor of the World Bank for the German government, responsible for the World Bank and the federal government, and also our ministry. We support the work of the World Bank in its aims of combating poverty, reaching millennium goals and combating corruption. I want to talk about the facts: after the United States and Japan, we are the third largest shareholder of the World Bank, with ownership of about 5% in capital shares and as far as voting rights are concerned. After having heard the previous speaker and what he said, I would like to say that in order to achieve goals of combating poverty worldwide, we need all partners in the alliance. We need the global commitment of the World Bank, we need bilateral donors, we need the developing countries to take responsibility and we also need NGOs. We need industrial circles and business because if we do not do this all together, shoulder‑to‑shoulder, we will not be able to reach these aims by the year 2015. The federal government is convinced that we need to enhance cooperation to reach the goals that have been set to combat poverty. These millennium goals are 10 goals for just globalisation. We feel very committed to them and maybe I should repeat once again that we are discussing mutual linking of interests here. Of the orders that are passed by the World Bank, the largest number go to companies, including developing countries, but the share of German companies amounts to about USD350‑400 million. This emphasises the fact that we all benefit from joint initiatives. It is a pleasure for us to be in Hamburg today and I would like once again to point to the fact that all federal states are responsible for support in the field of economic cooperation and that all federal states have to be committed and march in one direction. I am delighted to have the opportunity to have a further exchange of views. Paul Wolfowitz and I have already met on three occasions this year ‑ in January in Berlin, and then at the World Bank spring meeting in Washington, and today is the third time. It is his birthday today because exactly one year ago on June 1, he was appointed President of the World Bank. In my work, I have become used to assessing people as to how they do their actual job and I must say that we go very well together and he has kept the continuity of the former President. We have a very good basis for cooperation in the framework of the aims that I have just outlined. I would like to say briefly that we must not do a blanket assessment of Africa. It is as different as Europe is between Andorra and Norway. There are good governance countries and there are other countries where it is a little more difficult. However, we have to keep going in order to reach our aims. We have just taken a decision on the Congo in the German parliament today in order to make sure that we do not have failing states. We support the World Bank, but also we give bilateral support as far as special focus on Africa is concerned. We have worked on this and the World Bank has insisted that more activity is undertaken in the field of renewable energies. The World Bank has said in 2004 that they would increase their portfolio in this field. They did it in 2004 and they are continuing to increase their portfolio. In the autumn, a paper is going to be drawn up for investment in this field by the World Bank and we will develop this paper together with them and we will support them in this endeavour. As far as combating corruption is concerned, we as a federal government are also very much in favour of this and we give support to all initiatives in this field. We also want to make sure that all countries will have to meet the same criteria in combating corruption and that all move in the same direction. I feel that corruption is stealing from the poor and those who are in favour of combating poverty must definitely combat corruption. This applies to bilateral cooperation in development, but also our international work in various institutions. I would like to say a few words about the region which we are discussing today ‑ the Middle East and North Africa, the MENA group. We, as the federal government of Germany and my ministry, work in the countries in this region, which do not have resources. We provide development aid in all these countries and we contribute towards supporting politically‑driven changes. All parties have provided ample support in this arena. We help in the reform of state and economic systems in the field of water management and also in the field of education. One last point, which I feel is particularly important and which I hold dear to my heart: we would like the World Bank, as well as other institutions such as the Global Health Fund, to continue to work and remain active in combating AIDS. This is also a point which we discussed today because in view of the figures that we hear and that have become apparent after the big UN conference in New York, we must not desist. This is an enormous task which we must achieve as one of the millennium goals ‑ that is, to stop this pandemic and save human life. We are glad to be here and looking forward to the conference. Moderator Thank you very much, Madame Minister, and now I would like to pass the floor to Dr Wolfowitz, President of the World Bank. Paul WOLFOWITZ, World Bank President Thank you very much, guests from the press, ladies and gentlemen. It is a great pleasure to be in Hamburg today. I would like to thank our hosts, the city of Hamburg and the Hamburg Chamber of Commerce for their generosity and support in hosting this year’s World Bank Forum. As some of you may know, this forum is the eighth of what has now become a tradition between Germany and the World Bank, ever since the first conference in Bonn in 1995. This is my first visit as World Bank President to Hamburg though I have had the opportunity to visit Germany several times this year and am happy to be back. Your country is a global leader on many development issues, in such areas as debt reduction, climate change and renewable energy. It is also a major financial contributor. I think it has already been mentioned that Germany is the third largest shareholder in the Bank. You should be proud of that and we are grateful for it. Next year, Germany will hold the presidencies of both the G8 and the EU and as such, has an opportunity to advance the global agenda even further. Development will be once again at the top of that agenda and I am looking forward to a continuation of our strong partnership and to step up what has been constantly on the minister’s mind and on my mind as well for a very long time: that is the fight against poverty and helping the poor people in the developing world have the opportunities they deserve to have a better future for themselves and for their children. I think it is important to note that there has been some enormous progress in the last 20 years in the fight against poverty, probably more than in any previous time in history. Some 500 million people by our estimate have escaped poverty in that timeframe. That is the good news. The bad news is that there are still 1.2 billion people in the world, as has been mentioned, living in extreme poverty, defined as USD1 a day or less. That is USD365 or less. It is not just poverty ‑ it is extreme poverty. That has to change. We have done interviews with poor people around the world and the message is consistent and clear. Most of all, they do not want handouts ‑ they want a hand up. They want opportunities, they want jobs. One 18‑year‑old young person from Ecuador when interviewed said, ‘I just like work of any kind’. The challenge is creating jobs and it is a complex issue for many countries, particularly for poor developing ones. Many of them often lack the necessary political and economic conditions to create a climate conducive to fostering employment. We do know that jobs will thrive and businesses will grow in the right political and economic climate. When economic growth is accompanied by political and business transparency and accountability in order to reduce opportunities for corruption and to make sure that public money goes to support the people. On that note, I would like to stress that corruption is not just a problem for developing countries to deal with. If you stop and think about it, it is obvious that every corrupt transaction has at least two parties, sometimes more. Very often the bribe‑givers are from developed countries. Developed countries, and that includes Germany, as well as my own country, the United States, have a responsibility to police such actions with greater vigour and hold private firms accountable if they export corruption to emerging economies. As has been mentioned, the conference this time is focused on a very important part of the world ‑ the Middle East. As important as that is, since the mandate of the World Bank is and will remain for the foreseeable future the fight against global poverty, sub‑Saharan Africa has to be our first priority. Sub‑Saharan Africa poses the biggest development challenge for the international community. We cannot achieve real progress in fighting global poverty unless we can make some progress in Africa. Let me give you a few numbers to illustrate the challenge ‑ during that same period, when 500 million people, the bulk of them in East Asia and South Asia have been able to escape poverty, poverty has gotten significantly worse in sub‑Saharan Africa. In the last two decades of the last century, the number of people living in extreme poverty, that is to say less than USD1 a day in sub‑Saharan Africa nearly doubled from 150 million to 300 million. Roughly half the population of sub‑Saharan Africa now lives on less than USD1 a day. It is estimated that Africa would have to grow at 7% per year in order to achieve the Millennium Development Goal of cutting poverty in half by 2015. The challenge is daunting. It is compounded by the epidemic of HIV/AIDS that the minister referred to and by the plague of malaria, which is every bit as bad and in some countries worse. But there is good news also from Africa, good news that I think is important to focus on because the situation is not hopeless, and it is important to counter the notion that it is. Since 1995, in the last 10 years, some 15 African countries, the best performers among the non‑oil‑producing countries, have achieved minimum annual growth rates of 5.3%. These countries represent 35% of Africa’s population. They have growth rates ranging from the bottom, a still respectable 4.3% for Ghana and Burkina Faso, to a truly spectacular 8% for Mozambique and 10% for Rwanda. Someone may quickly point out that Mozambique and Rwanda are countries that were ravaged by civil war, and in the case of Rwanda, actually genocide. Nearly 1 million people were killed in that country 11 or 12 years ago. So they started from the bottom, but they have been making amazing progress coming up. And it underscores something else, which I think is a signal of hope in Africa. And that is that the number of active wars and civil wars in the subcontinent has declined from about 16 five years ago to five today. Five is still too many, but it is great progress but this is still great progress and we see in a country like Liberia, or, let me be specific, in Liberia, a country that was nearly destroyed by civil war and by corrupt leadership has now elected the first woman president anywhere in Africa. We are proud of Ellen Johnson‑Sirleaf, who, by the way, used to work in the World Bank, as the minister is pointing out. She ran on a platform of good government and anti‑corruption against a soccer star and she won. It tells you a lot about what the people of Liberia want, what the African peacekeeping forces have accomplished in that country and I think that it is a signal of hope. A country that still has enormous challenges to surmount but now has a chance. All of this produced, even for me, who is a bit of an optimist at least relatively speaking about Africa, a surprising Gallop poll at the end of last year that surveyed some 50,000 people around the world and asked them if 2006 would be better than 2005. That poll showed Africans to be the most optimistic people in the world, with 57% of Africans thinking that this year would be better than last. East Asians were close behind at 54% but that is an impressive result. I think it is a combination of things but I think its most of all because Africans are seeing that their own leaders are taking responsibility in an unprecedented way. Some are even stepping down from office when they lose elections or, in the case of President Obasanjo of Nigeria, accepting the verdict of the senate that he cannot run for another term. It is a different era in many of those countries, an era of accountable and transparent government and, hopefully, of real progress. If you will forgive my German, I would just like to conclude by saying that more and more Africans today are going to take their future into their own hands and they need our help in order to continue this magnificent process. Questions and AnswersModerator Thank you President Wolfowitz. Irene HILL, Independent on Sunday Professor Wolfowitz, congratulations on your first birthday as president of the World Bank. What are your wishes for your fifth birthday? What is on the top of your list of priorities? What would you like to achieve with the German government or world governments in the next four years? Secondly, you have a dissertation in water desalination and water is one of the biggest problems in the Middle East. What should we do to solve the water issue and what can be done to boost the Palestinian economy to stop suicide bombings? Paul WOLFOWITZ That is a lot to answer. I will feel best if at the end of my five years as president of this institution if we can say that Africa really turned the corner in the first part of this century and we in the World Bank and the international development community did everything that we could to help Africans help themselves. There are various ways of measuring that: through progress in health and education, economic growth rates, improvements in governance and the fight against corruption. In fact the Commission on Africa that was organised by Prime Minister Blair of the United Kingdom for last year’s ‘Year of Africa’ emphasised that governance is the single biggest challenge for development in Africa. However, it has to be a broad effort. We are a global institution and Africa is not our only concern. We are concerned about poor countries everywhere. We are also concerned about what we call the middle‑income countries, increasingly successful developing countries. The greatest majority of those 1.2 billion poor people live in two big countries, India and China. They have the advantage that they are growing economically but there is still a big challenge of poverty that needs to be worked on. Thirdly, we have important functions to perform as one of the most dependable managers of global financial resources. We have seen it in the effort to put economic funds together to deal with a possible avian flu epidemic. To some extent, I think that we play this role in the development of carbon funds to reduce climate change. In the future, when we get to the world that we dream of without poverty, there will still be a need for an institution to perform that function. Specifically, with respect to the West Bank and Gaza, we are in active discussion with the EU, its member countries and others on how to relieve the plight of poor people in Palestine and particularly to deal with basic issues such as health and education. It was a challenge before the election and is even more so after the Hamas election but I think that it is an important part of trying to bring peace to that troubled region. Stephen PAUL, Deutschlandfunk The Vice‑Mayor mentioned the word ‘culture’ in her introductory remarks. I wonder if there is anything in this direction, be it in art or music, to encourage young people, is that something that the World Bank sponsors or does this come more from other foundations? Paul WOLFOWITZ This is an interesting question. We do not really do it systematically but I can tell you two anecdotes that have made an impression on me. I was the American Ambassador to Indonesia for three years. This country has some extraordinary cultures, many going back thousands of years. For example, they have traditions of producing textiles that have been developed over centuries, including mothers teaching daughters complicated weaving patterns. I saw the same thing when I visited a co‑op in Guatemala that is reviving indigenous Mayan weaving. I am happy to say that our private sector arm, the IFC, has opened a small shop, which I hope will become a big shop, to provide a marketing outlet for that kind of traditional handicraft. In reality, they are more cultural achievements than handicrafts. They are produced by poor people but unless rich people pay what they should to keep those arts alive, there is a danger of enormous cultural loss. One thing that continues to impress me in Africa is the enormous vitality and energy in the various cultural expressions that I have seen. I saw a most remarkable one in Washington DC about three weeks ago, called the ‘Children of Uganda.’ These 24 children, whose leader was 25 years old and originally a member of the group, all of them were orphans from AIDS or war. One young girl had lost both her parents and four or five siblings. These children live through enormous tragedy yet they get on the stage and their performances are so full of joy and life that it gives them something to live for. I think each one of those will contribute enormously to Uganda’s future. It would be a mistake to say that culture has nothing to do with development. I think that it has a lot to do with development but it is a complex and subtle connection. Thank you for asking this question. By the way, you can go to their website, childrenofuganda.org, and give them some money, which I encourage you to do. From the floor I have two questions for Dr Wolfowitz and one for Mrs Wieczorek‑Zeul. The United States and Iran wish to take up discussions on the atomic program. Are there possibilities for the World Bank to promote these discussions and to bring them to a satisfactory end? Mr Breitengross said some clear words on corruption. He said that there could be no aid without the guarantee of the serious use of funds. Would you also go so far? You said that money would be stopped as soon as a serious use of funds cannot be guaranteed. Finally, for Mrs Wieczorek Zeul, what is the view of the federal government on this? Paul WOLFOWITZ We have a very modest Bank programme with Iran. Given their high level of income, this is quite appropriate. I do not see how we have much connection to the nuclear negotiations but am always open to our shareholders giving us guidance on what they would like us to do. Regarding the question raised by Dr Breitengross, we are doing all that we can to ensure that there is no corruption in World Bank projects. That does not mean that we are perfect. If we tried to be perfect, we would not operate at all and that would be a mistake. Where we have found problems we have taken firm action, which marks a change. Until 10 years ago, this was not a subject that was taken very seriously. My predecessor, in 1996, was the first president of the World Bank to talk about this subject. However, there have been great changes since then and companies that have been found guilty of paying bribes on our projects are sanctioned and you can go to our website and get the name of the companies and the individuals. Usually, the sanction consists of being suspended from further participation in our projects for differing periods of time, depending on the offence. We are now co‑ordinating with the other multi‑lateral development banks; there are four or five regional banks, that have similar issues to make sure that companies found guilty with one bank do not then go to another one to repeat the practice. The specific issue that Dr Breitengross was referring to was that we would like, where possible, to rely on country’s own systems for protecting against corruption. There are several reasons for considering that a preferred way of doing business. Honestly, there are still relatively few countries where we can depend on that. However, it is a desirable goal and we would like not only to get to the point where there is not corruption in our projects but where the countries in which we are operating can deal with it themselves. Mrs WIECZOREK‑ZEUL As far as the first question is concerned, we are all very much interested in reaching a solution in the conflict with Iran. Honestly speaking, if you were to ask me if there was a concrete role for the World Bank, I would have to say no, at least, not at this juncture. As far as combating corruption is concerned, we make sure, through bi‑lateral development co‑operation, where sums are granted to finance projects according to progress, to have our own controls. In addition, linking the words of Paul Wolfowitz, in our partner countries we try to strengthen instruments to combat corruption within the countries. Control from the outside is different to control from inside. For example, we encourage transparent budget structures and checks on expenditure. Moreover, we support the establishment of control units to control budget expenditure. No debt relief is granted without certain strings attached. Sometimes, the attached strings can be related to corruption. Above all, we support initiatives, and Paul Wolfowitz mentioned in saying that it takes two to tango, such as the Extractive Industries Transparency Initiative, which is jointly run by the British government and the Federal Republic. We would like the secretariat of this initiative to come to Germany and be based in Bonn. The aim of this initiative is, in mining and the use of raw materials, to make companies commit themselves to make transparent what they pay to developing countries and commit the developing countries to make the use of these funds more transparent. This could be extended to healthcare, farm supplies, medications and infrastructure. Many instruments could be included in this and we want to use these instruments for this purpose. From the floor – Unknown speaker I have a question for Mr Wolfowitz. As far as I know, the implementation of the national procurement system has been making slow progress. Could you comment on this? Paul WOLFOWITZ I think that you are asking about the same thing that Dr Breitengross was talking about: the use of country systems for procurement. It is going to be a slow business because we want to rely on country systems for procurement and to give us adequate safeguards against corruption. Frankly, we have had a lot of concern from some of our major shareholders that if they are to continue providing funds for our projects, they need a high level of confidence in how the money is spent. It is a very important initiative but will not move ahead at a high speed. Deutsche Welle TV Where do you see the main challenges? We spoke about more private investment in the Middle East North Africa (MENA) area. What do we have to change here in order to achieve this? Finally, and this question has already been raised, will there be substantial funding for Palestine? Paul WOLFOWITZ On the latter question, I do not have much to add to what I said before. I think the question of how much funding will depend on the donors, principally the EU. There needs to be a framework in which this takes place and we are actively discussing this. The Minister and I talked about this in our meeting today and I will probably be discussing it tomorrow with the EU Commission representative, Mrs Ferrero‑Waldner. Returning to your first question, to which I will return this afternoon, I would say that people from the Middle East are extremely capable commercial and business people and the evidence of that is apparent all around the world. Too often, in their own countries, they operate in regulatory environments that make business creation difficult. Given the barriers to entry in some Arab countries, it is amazing that business can survive at all. I think this is a major area in which work could be done. In the last few years, the Egyptian government has made some important strides in that direction demonstrating that it can be done. I remember hearing the Finance Minister Boutros Gali when he spoke at our annual meeting last fall saying – and that is an approximate quote -- he did not want to hear about any specific Arab culture but that Arabs could be successful playing by the same roles as Americans and Europeans and I think that they have demonstrated that they can be. Thank you. ### |
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