March 20, 2007  Paul Wolfowitz: I think we can say today clearly that the Board of Directors today unanimously endorsed the Bank’s new Governance and Anti-Corruption Strategy. This revised strategy is the product now of a lot of work within the Bank but also the feedback we got from consultations in 47 countries that reached out to more than 3,200 stakeholders, including not only government officials but also other donors, representatives of civil society, members of parliament, and the private sector.  I think the result is a greatly improved paper and a very, very good paper and I think it’s been a very good collaboration between, if I can speak for myself at least and for management, a very good collaboration between the Board and the management throughout, and a lot of excellent suggestions from the Directors. This issue of governance is a critical issue for development; it’s also a very complicated and difficult issue which is perhaps why it was largely ignored for decades but increasingly in the last 10 or 15 years has come to be recognized as a key piece of the overall development architecture and I think we now have the framework that will help the Bank achieve the main objective of a governance strategy - which is strengthening the ability to help the poor escape poverty.  The next steps are - the Board will send this paper as background to the Development Committee - as they have requested a report on the strategy process for the next meeting here on April 15th and Bank Management has also begun working on an Implementation Plan which will go into much more detail in this strategy. The strategy is focused on broad principles to be applied in a consistent manner while remaining also flexible to the needs of specific countries and a group of field-based staff are working closely with staff in Washington to develop the work program for implementation, which we should have ready before the start of the Fiscal Year on July 1st. I think with that, let me ask Eckhard if you want to add or subtract.  Eckhard Deutscher: Yes, in my capacity as the German ED let me confirm we had a very good discussion, a broad discussion. We raised a lot of issues, there was not a controversy between Part 1 and Part 2 countries – this means in our language, between industrialized and the poor countries and the rich countries; we pulled everybody on the same line and the Board knows and this was confirmed that we wanted to deliver a good, high-quality paper to the Development Committee, and let me underscore I think the good relation between the Management’s work in the process to elaborate this; and the Board this was one of the very good steps we made and now a lot of work still lies before our business implementation and I must say I am happy that we came to such a broad common conclusion that this is important.  Paul Wolfowitz: Questions?  KrishnaGuha: If I may, two things. First of all, we have been through several stages in this process where it looked as if we finally have, obviously, we are glad that we have basically reached an agreement on this. You obviously seem now confident that this really is a full agreement. Can you just sort of elaborate a little bit us to why this is now done [inaudible] as an issue. And secondly, could you talk to us a little bit about what the significant changes are, that have been made to the strategy in the light of the, sort of, process from the original paper that was put forward?  Paul Wolfowitz: Well, on the first point I just would say we had a -- you know we have had several engagements with the Board on this paper; they have had lots of time to look at it, we had a lot of discussions today on final points and we had clear unanimity - there is no question about it. I think the major differences and some of it is difference of emphasis, but at a certain point quantity becomes quality.  First of all, I think most importantly, if I could, at least in my view is, emphasizing the importance of staying engaged even in the most poorly governed settings and you know that means concretely for example Congo or the Democratic Republic of Congo where I just visited or Liberia where we have been working quite intensely for the last year or more; we are not talking about saying a county is -- I mean both of those countries and they acknowledge it, have serious governance problems. We are not saying therefore the Bank isn’t going to get involved in the country; the needs are enormous, we have to get involved but in ‘getting involved’ we bring money but we also need to work with the governments to improve governance and that is a -- I think a major theme to emphasize in the strategy now.  Secondly, the strong emphasis on scaling up our engagement with what we call multi-stakeholders meaning particularly civil society but also parliamentarians, the private sector, media; but doing it within the framework of existing practice which includes recognizing the government as our principle counterpart and that our Articles of Agreement keep us on the development track. We are not a political entity.  Third is, emphasizing quite a bit more than I think we did before the role of the private sector as what some would call a supply side of corruption and putting more stress on the obligation of the developed countries particularly in things like asset recovery.  And then fourth and finally, I am just thinking my list of differences, emphasizing the fact that different donors have different comparative advantages and we need to work with other donors in a harmonized way. I don’t know Eckhard if that’s your impression also or...?  Eckhard Deutscher: My impression is that we are consistent with the Paris Agenda with the harmonization issue. I think this is very important that we are underlining that this is important, the donor cooperation also on that and like Mr. Wolfowitz said there are a lot of bilateral and multilateral donors working already on that and we need to look how we can be engaged in a common way. I think we should not de-link what the Bank did here with the international agreements, in this case the Paris Agenda.  Paul Wolfowitz: Let me go to the phones and ask Mr. Dunphy if you had a question?  Harry Dunphy: Yes. Does the unanimous, to put it in context, does the unanimous vote means Mr. Wolfowitz that you have put behind you the differences that you had with Britain and other Board member over what they thought was too much emphasis on Anti-Corruption Strategy?  Paul Wolfowitz: Well, I think we’ve had a frankly consistent support from UK on the importance of governance. As a matter of fact, if you go back and look at the ‘Commission for Africa Report’ that was led by the UK back in 2005, it identified governance as a key ingredient for development in Africa and I guess you could say more broadly and I think it is probably true but you have to let them speak for themselves and I think the point I stressed about strengthening our engagement in high-risk countries is, I think something that they feel particularly strongly about. But I don’t disagree with them on it as I said, with the cases of Congo and Liberia’s illustration I think it’s absolutely right. Lesley.  Lesley Wroughton: Lesley Wroughton from Reuters here. I would like to find out how this is going to all be implemented? Mr. Wolfowitz, in the beginning about a year ago what you did was you halted the loans, like for example to India, and then so on. And then you made sure that those changes happened. What I’m hearing now is a complete different shift, right? Saying it needs to continue, the loans need to continue working with the countries. How do you work with those countries to make sure -- I mean should there be conditions of the loans...?  Paul Wolfowitz: Let’s be clear. I mean, last year we had record levels of lending. Record levels of IDA lending and the highest levels on IBRD side in seven years. So, we weren’t in a ‘let’s stop lending’ mode. We had a couple of difficult cases but I think it is a mistake to overemphasize the fact that you may find a problem loan and you have to take some remedial action.  One of the reasons is the complicated, difficult proposition is the real thing is how do you help a Government like Liberia with very good will but very limited capacity to build up the institutions that will enable them to do procurement in a clean and honest way, will enable them to get roads built that people need instead of having the money disappear into someone’s Bank account.  It’s how to operationalize these mechanisms of Governance. When you have to suspend something, that’s the negative side of the agenda but you really accomplish things on the positive side.  Lesley Wroughton: So, would the loans come with conditions so that the government’s need to -- as you are loaning they do focus on…..  Paul Wolfowitz: There isn’t a simple recipe. But if we take let’s say, in say, the road-building programs that we have in Liberia. I think we’re trying to move quickly but we’re also trying to do it in a way that does track where the money is and does provide transparency, but this is the most important thing I think that reinforces the larger efforts of the government to strengthen governance structures overall and in fact there is a – I’ve said this before, it’s hard to have effective development without good governance because the money gets wasted but if you have good governance with no money you’re also don’t accomplish much. The two really have to go hand-in-hand and support one another. Bill , and then we’ll go back to the phone.  Bill Mcquillen : In light of trying to find ways to improve governance, you know with the new policy in place where you are going to speed up lending to countries that are in crisis. How do they agree with each other? Are there any areas where, perhaps the governance of or a loan is made, I think some of it will get lost in the shuffle; is there a...?  Paul Wolfowitz: It’s a good question; I mean the question refers to the fact that we not so long ago were briefing you on the new ‘Rapid Response Policy’ which does attempt to compress the time it takes to do procedural approvals around here but it’s not meant to short-circuit those procedures. It is meant to do things simultaneously and instead of one after the other which you can afford to do in a more leisurely situation. And it is done out of recognition that if you have a government, again I’ll sight my two current cases Liberia and Congo but there are many others, where there are in a difficult situation, they are committed to reform but in order to sustain the support for reform they’ve got to show their people that there are results are on the ground. And so we can’t sit around and wait three or five years for the governance situation to be perfect. We have to produce some results and do it in a way that keeps track of where the money is going. Is it difficult, yes. Is it impossible, I don’t think so and is it important, absolutely. One from the phone now.  Teresa Bouza: Hello.  Paul Wolfowitz: Yes.  Teresa Bouza: Hi, Teresa Bouza from EFE. My question is, now that you have an agreement with the Board, are you planning to increase the resources inside the Bank to fight corruption?  Paul Wolfowitz: I think a part of what the Board wants to see in the implementation strategy is what kind of resources are we going to apply to these efforts. To give you an example, we worked with the Government of Ethiopia to come up with what we called the ‘Protection of Basic Services Program’, about a year ago. That took quite a bit of time and attention from Bank staff. I think it was well worth the effort that was put into it, but understandably the Board wants to see how much effort is going into those things and how much is going to go into let’s say traditional road-building projects. There is a balance that has to be struck in all of this, and the short answer is we’ll have a better sense of those resource issues as we get to the beginning in the next Fiscal Year and have our budget for the next Fiscal Year.   Amy Stilwell: We probably have time for one more question…  Krishna: I just wanted to ask what are the outstanding issues, and what you need to do then, to bring them forward in the implementation phase. You said you got agreement on broad principles, one is resources obviously and you have just discussed that. What are the other things that we are going to have to figure out in order to actually take this from a policy or sort of strategy statement to an actual impact on the ground?  Paul Wolfowitz: Well, I think the biggest point is that, you’re saying its issues. I mean there are issues but the more important point is there are a lot of very positive instruction given to staffs to energies what is already a great deal of -- I mean it is important to be clear because it usually means an awful lot of Bank staff are applying a lot of great thought and energy to figuring out how to work in the context from Liberia to Indonesia to the Philippines to Mexico and then every single one of these countries is very, very different.  So, I think the most important thing is not the issues that are outstanding but the energy and support that’s given to staff to do this kind of work. So, I think I am going to stop there. We are going to find issues, asset recoveries is a good example. Asset recovery is identified now as something very important to do but there are a lot of issues that occur in terms of banking secrecy and so forth. So, I wouldn’t say we are close to implementation there but on things like community driven development and so forth it’s mostly a matter of moving forward now.  Moderator: Thank you everyone. |
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