Remarks at Georgetown University

Well, President DeGioia, Mr. Hogan, my friend Cas Yost, Ambassador Smith, and Your Excellencies and ladies and gentlemen, I am, of course, deeply honored to accept this award on behalf of the World Bank, and I'm very happy that the Dean of our Board, Yahya Alyahya, is here; Ad Melkert, one of our Directors, the Director from Holland; and our Vice President, Paatii Ofosu-Amaah.  So we are all here to thank you and to say that we're deeply honored at this choice and this recognition.

I am particularly pleased, actually, to come here and hear these wonderful introductions, because yesterday I spoke at a gathering at a university in New York, when someone opened the proceedings by saying:  What is it like to be President of the most hated institution in the world?

[Laughter.]

And I took the first ten minutes to tell him that that introduction was less than descriptive of our institution.  But it's so nice for you, President DeGioia, to be gentle and kind in the introduction, which I can tell you, after yesterday, I appreciate enormously.  It speaks volumes for the taste and sensitivity of Georgetown University.

[Laughter.]

And this Institute, particularly that which deals with diplomacy.  So I'm very grateful.

I was asked to say a few words in relation to a subject which is called achieving a new balance, and let me tell you what I mean by that and let me give you a little description of the thought behind it.

We live in a world that is of six billion people, in which one billion in the rich world control 80 percent of the income, and five billion, more than 80 percent of the world, in the developing world have 20 percent of the income.  And within this world, we have large inequities that you are familiar with, to the point that nearly half the world lives on under $2 a day and one-fifth of the world, a billion two hundred million people, live under $1 a day.  And within countries, including, by the way, our own, there are significant differences between the rich and the poor which appear not to be diminishing but which appear very often to be expanding.

Now, the role of the Bank is to seek to deal with the issues facing the five billion people in the developing countries.  And it's a role into which the Bank evolved since our founding at the time of Bretton Woods, evolved because we started with post-war reconstruction, making loans to countries like France, and when we ran out of a need in those countries, we mutated into an institution which focused on the questions of development and poverty.

And as the President said, we have a number of institutions within the Bank that deal at different levels with the provision of funding and resources.  We have an institution also, IFC, which deals with private sector; and another one which deals with insurance; an institution called IDA which deals with the issues of the very poorest countries; and the Bank itself, which deals with middle-income countries.

So we have an array of institutions that over the years have done something like $350 billion worth of support, and even today have outstanding, between the Bank and IDA and IFC, something close to $250 billion of commitments and loans.  So it is a decent size institution--decent size but inadequate to solve all the problems of the world, which are often laid at our feet as being the cause of these problems.

Our preoccupation at the moment is to try and deal with the question of this imbalance--this imbalance of equity between rich and poor people, not just a matter of moral and ethical imperative, for which it would be enough, really, to do it, but because we now live in a world which, as this institution knows full well, is more interdependent than it ever was.  For those people who thought that the rich and the poor world were divided, September the 11th probably provided a moment in time when the image of a wall between us collapsed.  And for me the image of that World Trade Center collapsing was an image forever of the disabuse of the thought that rich and poor countries were separated by a wall.

I was just in my own home country, Australia, where we were talking--I was talking to the leadership, and the country leaders were talking to me about Australia in 25 years' time.  And they talked of an increase in the population from 19.7 million people to 22 million people.  And they talked a population distribution which would then have 35 percent of the people over the age of 65.  And I mentioned in whatever way I could so that I could leave the country, some of the other statistics in which Australia was living, like in the next 25 years the world will grow by two billion people, and that we'll be in the year 2030 a world not of six billion but of eight billion.  And all the growth but 50 million will go to developing countries, so that in the Trainor Award of 25 years from now, if you ask someone who speaks about these issues, they will tell you that it's a world of seven billion people in developing countries out of eight in the world, and that the old rich world is now much older and smaller than it was 25 years previously, and that the centers of power and influence in terms of growth and in terms of people has shifted to China and India and other parts of the developing world, and I hope by that time a resurgent Africa, which today has some 600 million people in Sub-Saharan Africa, and will double by that time, even with the incidence of AIDS as it now is.

And it will be a world in which our children hopefully will have had a different education than the one that I had, which was an education, as I was commenting in Australia, about learning the kings and queens of England and learning about what my parents still referred to as "home," which was England, to an education which deals with the realities of modern life, which deals with an understanding of China, with an understanding of India, with an understanding of Africa, and may I say in the presence of the Jordanian Ambassador, an understanding of Islam, in which today, as we know, you have a billion two hundred million people in the fastest growing religion in the world, in which--a subject about which most of my contemporaries and all too many people have no idea and identify Islam, incorrectly, with all sorts of aspects of anti-social behavior, when Islam is a great religion, as are the issues of Christianity, Judaism, and many other religions, and where the issue is an issue not of religion but of hope, an issue of economic development, an issue of what are the opportunities that exist in the world.

And the other cut on the world as we are today is a world where half the population of the developing countries is under the age of 21, and globally we have 2.8 billion under 25, where we have today a billion and a half people under the age of 15, inadequately addressed, I think, by policymakers.

In fact, recently, when I was in Paris meeting with heads of youth organizations, which we had pulled together to discuss the future, I said to them, as I see young people here, I said, you know, we are really now interested in you and we are trying to work with you on the future because the future is the thing that we should work on together.  And the leader of one of these young youth organizations stood up and said, "Mr. President, we are not the future.  We are the now."

And I came to realize--and thank God we have been working on it for some time--that the issue of children and the issue of youth is an issue that we have inadequately addressed in terms of our policy and our expectations, but which happily now the Bank is giving more serious attention to--all within the framework of the main theme of our institution, which is fundamentally that if you do not provide people with opportunity and hope, you cannot have global stability.  This is not a question of the niceties of diplomacy or the effectiveness of foreign service.  But if you have young people without opportunity and without hope, if you have people in poverty without hope, it is impossible to have stability.

And, indeed, for us at the Bank, as one talks of the question of the security of our world, we don't start thinking about military expenditures; we start thinking about poverty and hope.  And we regard ourselves as being not the only one but being a leading factor in dealing with this question of the disequilibrium that's on our planet, which ultimately is the thing that is going to make a difference to our kids and that will make a difference to the "now" young people that are here today.  Because, for us, as we look at the challenge before us, we see very promising indications from all our leaders established at the Millennial Summit.  You'll remember that nearly 200 heads of government came together in the year 2000 to meet at the United Nations in New York, and virtually every one of them made an emotional and very similar speech, which was that we have to think about the future, we have to think about the global equity.

And they came up with a series of Millennial Goals to which everybody signed up.  By 2015, we would need to halve the proportion of people in poverty; that we would need to address the questions of infant mortality and maternal mortality and halve the rates; that we would need to deal with the issues of the environment in which we all live, with questions of water and sanitation to improve the lot of people who need that, with 1.5 billion people not having access to clean water and two billion not having access to sewerage.

These numbers are just off the charts in terms of what we can absorb or even think of in Washington.  But they're not off the charts to the people that endure lives under conditions of lack of service and lack of hope.

And so it was that the leaders of the world came together and said these are our Millennial Goals.  And then subsequently, in Monterrey and Johannesburg, the leaders of the rich and the developing countries came together to do a deal, and the deal was expressed by the leaders of developing countries not as a matter of being forced by the World Bank or by anybody else.  They said if there is to be development, we must improve the capacity of our governments; we must deal with questions of legal and judicial reform; we must protect rights; we must have a financial system which addresses the needs of everybody; and we've got to fight corruption.  We cannot have effective development if our societies are corrupt.

And, in fact, I was nearly late here today because I was meeting with the new President of Georgia, 36-year-old Saakashvili, who I knew first four years ago when we were trying to, under his leadership and the leadership of his Prime Minister, replace the judicial system.  Why replace the judicial system?  Because in Georgia they discovered that the wealthiest people in the country were the judges, and that didn't seem logical.  And so they ran a rather marvelous thing.  They decided that they would give them all a test on a Saturday morning, and they brought them in to have this test, and they discovered, the judges, that they were on television in a large conference room.  Most of them had not prepared, and 90 percent of them failed.  And so they were ready to replace the judges with new judges of a higher quality, and largely women, may I say, and then sought to give them better salaries.

But the President of Georgia today was in our office talking about the arrests that they've made and how they're now moving forward to try and deal with the issues of governance, of legal and judicial reform, financial sector reform, and corruption.  And more and more leaders in developing countries are anxious to do this, and there is a core group in Africa that is trying to do this and supporting a program called NEPAD, which is the new program for development in Africa.

And there is some hope in these countries, but on the side of the rich countries, at the same meetings in Monterrey and in Johannesburg, rich countries undertook to do three things, broadly:  one was to assist in building capacity; the second was to increase aid; and the third was to open markets for trade.

And what we're finding today is that there is some disappointment because most of us in the developed world have been suffering from lack of growth, have been focusing on crises, whether it be terror or whether it be Iraq or Afghanistan, or the Middle East in general, and where the focus has been taken off this longer-term issue of poverty, an issue which is going to hit us, which is not theoretical, which is not a thesis subject.  It is real.

But what we're finding is that the attention of the developed world is not on the question of aid, and it is not on the question of trade, as we've seen in the Cancun meetings.  And so there is a level of disappointment at the arresting of the balance between the contributions of the developed and the developing world.

I was recently, when Mars was close to the Earth, commenting somewhat flippantly in a speech that if a Martian came to the Earth to do a report on us and started with the Millennial Goals and then read what we're doing, he would have come back with the following conclusions.  He would have said, you know, these people are interesting.  Their planet is growing by two billion in the next 30 years.  They have established these objectives.  And look what they're doing.  They're spending $900-plus billion a year on military expenditures.  They're spending $350 billion a year on agricultural subsidies and tariff protections.  And they're spending $56 billion a year on the thing that they said they wanted to do.  And of the $56 billion, maybe only 30 gets there in cash.

So I thought that the Martian would get back into his spaceship and say there's really no worry about the Earth.  They don't even do what they say they're going to do.  They've analyzed it right.  But to spend 20 times as much on military expenditures as spent on development and to spend 7 times as much on the protection of trade as is needed to open trade, as we're doing in terms of development, there is a level of imbalance in our planet which needs to be addressed.

And so the basic theme that we're addressing in our institution is trying to get people to recognize that this issue of poverty is not a theoretical idea, that the issue of interdependence is real.  We're linked by trade and finance and environment, crime, health, drugs, and terror, and that there is no way of escaping from the results of poverty in one area and its impact in other areas.

This is what we are looking at in our institution, and when we talk about achieving a new balance, it is addressing the question of the relationship between the developing world and the developed world, and trying to establish in terms of priorities a sense of direction and a sense of the importance of the issue of poverty and a sense of the absolute essential connection between poverty and peace.

So this is what the Bank is about.  I don't believe we're a hated institution.  I think we're an extraordinarily constructive institution, and it's my hope that, as a consequence of this lecture, some of you may go out and advocate that the issue of poverty needs priority and that the issue of peace is dependent on global equity.

Thank you very much.