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Press Briefing with World Bank President James D. Wolfensohn


Washington,  D.C., September 30, 2004

PROCEEDINGS

MR. WOLFENSOHN:  Good morning, everyone.  Let me thank you for coming.

The purpose of this meeting is to give you a quick brief on the World Bank involvement in these meetings and in particular the meetings of the Development Committee and then be available for questions.

I think you know the Provisional Agenda for the Development Committee covers a number of matters.  The first is on aid and financing modalities.  Two elements will be involved--how one uses aid effectively, and the other subject for discussion is going to be on the possible methods of incremental financing, including the International Finance Facility and taxes.  It is also likely that the issue of grants will come up in that context.

The second item on the agenda is the issue of strengthening the foundation of growth in the private sector and investment climate.  And for those of you who haven't seen the books, I would strongly recommend that you take a look at this, which came out a few weeks ago, which is "Doing Business in 2005" and which created quite a stir because it is a country-by-country analysis of conditions for doing business.

And then yesterday, another document which builds on that, which is as a consequence of tens of thousands of meetings around the world with corporate players and governments and civil society, which deals with "A Bettering Climate for Everybody" and comes up with the conclusion that if you have the appropriate framework for investment and can create jobs, that is good for GDP, it is good for stability, it is good for growth.  And I would recommend those two documents to you if you haven't had a chance to look at them.

The third item on the agenda is Voice and Participation which, as you know, had been raised previously and which is under ongoing consideration by our shareholders, and I'm sure Mr. de Rato indicated that the same issue applies to our colleagues in the Fund.  And we'll also be talking probably at dinner about debt and debt sustainability and some of the issues relating to debt forgiveness and issues relating to the sustainability of debt.

Also included, and I should have mentioned earlier, is the question of the Infrastructure Action Plan of the Bank.  You will recall that in 2003, there was a suggestion made to us by the Board that we should boost our lending again in infrastructure, and we are able to report that we are up to $6.5 billion in commitments this year in 75 different projects in infrastructure.  That is a very fast-growing operation with us, and I think you all know that the needs are enormous.  They cannot just be met by public sector, but we are also looking at public-private partnerships.

And finally, overriding it all so far as we are concerned is the issue of IDA14 Replenishment, where we are shooting for a significant increase, a significant increase based on the fact that it is generally agreed that IDA lending is well done, is effective, and is measurable in terms of results and is much needed.  This last year, we had a record year of $9.1 billion of commitments in IDA, about half of which went to Africa.  So our hope is that we can convince the shareholders that an increase in IDA is in everybody's interests, but as you know, those negotiations go on separately than here, and the IDA Deputies will continue to do that, and we hope that that can be wrapped up in the coming few months.

But clearly predictable and available IDA financing is important.  I think you know also that there is an issue there of how much IDA financing should be done in grants; last year, approximately 18 to 20 percent was done in grants, a total of $1.7 billion out of the $9 billion.   So this is a very important subject for us.

I suppose the final and overriding issue that we want to try and get through--I hope we have succeeded--is that despite the fact that the press and all of us are so deeply concerned about current crises, that it is really important that we keep our eye on the question of development, and the question of equity and the question of poverty if we are to stick to what is going to make us a sustainable and stable world in years to come, but also if we are to remove some of the causes of instability and terror.  And it is quite difficult, of course, to keep the balance; it is absolutely essential to respond to the immediate threats--of that I have no doubt--but it is equally important to keep your eye on the work that we are doing in terms of trying to improve the planet.  So that will be an important thrust of what we are seeking to assert during these meetings.

So I would be very happy to answer questions.  They usually elicit the best thing.

Yes, sir--and you should announce your name and where you come from.

QUESTION:  Umit Enginsoy, with Turkish NTV Television.

Turkey is close to launching accession talks with the European Union.  If this happens, how would this affect Turkey's economy?  And any comments on your programs with Turkey at this point?

MR. WOLFENSOHN:  Well, we are extremely supportive of what the Government is doing.  As you know, we have been in very close touch right through the process that your Government has gone through to lead to the commencement of negotiations, and we will continue to be very supportive.  We support your Government's efforts completely to commence negotiations, and we hope very much that the European Union will decide that those negotiations can be commenced, and we have assured the Government of our continuing support in what they are doing.  Your country is doing very well economically, as I'm sure you know, building its reserves, but we are ready to help them wherever they need help.

Yes, sir?

QUESTION:  My name is Harold [?] in the Netherlands.

I have a question on the debt sustainability program.  Could you tell me what the exact status is?  I understood that it is on the agenda for this weekend, but will there be any decision, will any decision be taken, or is this just discussing the progress and the way you are going to organize that?

Could you elaborate on that?

MR. WOLFENSOHN:  I think the issue on debt sustainability is a very important one, to try to get an agreed approach to debt sustainability.  And as to the levels of debt that countries can be guided to assume depending on their performance--the better-performing countries can have more debt; the less well-performing countries should take less debt because it is unlikely that they will repay them.  And the object of a debt analysis is to allow countries to have a level of debt which they are likely to repay.  So the first element is to get a structure of the analysis, how do you agree on levels of debt--is it 100 or 150 or 200 percent of GDP or more--and then, even more significantly than that for me than the financial analysis, is to ensure that a country and its supporters maintain the promises that they have made in terms of strengthening governance, in terms of transparency, in terms of fighting corruption.

Debt sustainability is not just a number.  Debt sustainability is something that is a result of actions that you take.  And I think what we will agree this time is that there is a decent structure suggested, and it is my hope that we'll get some guidance from the Ministers of what sort of levels they are talking about.

QUESTION:  Levels?

MR. WOLFENSOHN;  Levels of debt that can be assumed by a country.  That, by the way, is something that is done by rating agencies in terms of debt of developed countries as well; it is not an unfamiliar concept.  But what we are talking about here is debt sustainability levels in developing countries, so we are looking at how that might be done.

Yes, sir?

QUESTION:  I am from Insight in Ghana.

Two questions.  Given the fact that in spite of HIPC and the benefits which have accrued from there, the debt burden is a major problem in Africa.  What is your attitude to the Gordon Brown proposal?

Then, secondly, the World Bank is supporting water privatization in Ghana.  It is expected that this will come a long way to increase tariffs and deny the poor access to potable water.  Why won't the World Bank consider other alternatives such as community involvement and ownership?

Thank you.

MR. WOLFENSOHN:  Well, first of all, on the debt relief programs, we actually started debt relief, so I have continuously been in favor of debt relief on an equitable basis.  And what we are looking at now is an issue of increasing debt relief, or taking it from the levels that we have had already, which is roughly two-thirds debt relief, to 100-percent debt relief and to do it beyond just the HIPC countries.

That is for me a very good step, but the single point that I have been making is that insofar as IDA is concerned and insofar as the African Development Bank is concerned particularly, these institutions have up to now been seen as revolving funds.  They weren't grant-making institutions; they were revolving funds.  So, as one looked to the future, one was thinking of the amount that was going to be repaid.

In the case of IDA, I know very specifically the numbers.  It was building from 20 percent of new lending would come from repayments, then 30 percent, then 50 percent.  So we were saying it is a great idea to forgive debt, but if you do, then let's make sure that the amount that you forgive is made up by someone else putting money into IDA, or otherwise, you are not going to be able to lend the money.

Now, Gordon Brown's proposal meets this exactly. Gordon has said there is the gap with the UK.  We'll pay 10 percent of that gap to IDA and to the African Development Bank.

So I think it's an enormously constructive suggestion and would support it wholeheartedly.

On water privatization, I think there is a lot of misunderstanding.  We do, in many cases, community-owned water projects.  And indeed, water privatization is not intended to increase cost--I could give you a dozen examples where in fact it reduces cost because the most expensive thing for many poor people, both in terms of time and cost, is water.  If your women are spending four or five hours a day going and getting water, that has a real cost, and also, buying from water carriers out of bottles, as you know if you live in the rural areas of Ghana or even in slum areas in Ghana.

So the idea is not privatization just to privatize as a religion.  The idea is to give effective delivery.  And where there can be effective community ownership, we are very much in favor of it.  We don't have a religious belief that it has to go to international water companies.

The person in the back there.

Can we stop the cameras in a minute because my eyes are getting flashed out?

QUESTION:  Larry Elliott of The Guardian.

Two questions.  One on Iraq--the Board of the Fund last night made a loan to Iraq.  I just wondered what the state of World Bank operations was now in Iraq because I know you haven't actually been in the country--you have been operating out of Jordan--and I just wondered (a) what you're doing on the ground, or what plans you have on the ground, and what the status of Iraq debt relief is at the moment.

And secondly, just following on from the gentleman from Ghana, there has been a concern raised about the number and the onerous nature of World Bank and IMF conditions in developing countries, and I just wonder whether there are any proposals to streamline or amend or make the conditions better suited to the poor countries concerned.

MR. WOLFENSOHN:  Let me deal with the Iraq thing first.  You know that we have committed $5 billion to Iraq over the next five years, but immediately, we have a trust fund available between us and the United Nations of which we have $400 million that is available for grant financing.  Of that, $380 million will either be in process of being implemented or have been approved by the end of this year.  We are already operating in projects that have been approved on textbooks and on health, and we are working really remarkably effectively with five representatives in Iraq who are Iraqis and one Australian who is there, and we have an operation in Amman, and we are linking with the Iraqis by having put three videoconference facilities in the Green Zone.  We have found that it is very helpful, actually, to have them because we can communicate to them either from--because it is video conference--we can do it from Amman, or we can do it from here.

I met with the Prime Minister this week, and he made a real point of saying how well we are doing in Iraq, and I believe that he would confirm that to you if you were to ask him.

Obviously, it would be much better for everybody in Iraq if it were peaceful and if we could have people on the ground; then we would be able to do it much quicker.  But at the moment, we do not believe that we are able to send people in.

I might remind you that our people are very frequently in dangerous areas.  We are in Afghanistan, we are in Gaza, we are in Bosnia, we are in Kosovo, we are in East Timor.  There have been many of my colleagues who have  spent their lives in tough areas.  But the problem that we have in Iraq is that we are not just incidental people that could be affected by danger--we are targets.  And the same is true of Kofi Annan in relation to the UN. 

So that the thing that we find difficult at the moment, given the current level of violence, is to send people in who may next week be on the front page of a paper as being kidnapped, with the whole of the program for development finance being affected.

So the answer is we don't have people in there other than the Iraqis who are living there at this moment, but that we are doing extremely well in terms of the projects that we are doing.  We have trained over 600 Iraqis in Jordan, and we continue programs on videoconferencing.

So it is not perfect--it would be better to be there--but I think that the Iraqi Government is certainly very pleased with us at the moment, and that's what the Prime Minister told me last week.

On the question of conditionality, it is a question I would be sorry if I didn't get at every press conference, but the answer is that we have long since dealt with conditionality on a national basis, individually, and I think a lot of the old claims have really fallen away.  I can't remember the last time a head of state started to talk to me about conditionality.  What we do now is we work on the ground with countries, and work out the basis on which lending can be done that is acceptable to both of us.

Harry Dunphy?

QUESTION:  Harry Dunphy, AP.

Reference was already made to Gordon Brown's proposal this morning, and U.S. Treasury Secretary Snow said this morning on debt relief, and I quote, "Grants and debt relief must be significantly increased.  We are considering more options to do so, including those that would provide up to 100-percent debt relief in grants."

I wondered if you could provide more details on that, on what specifically you expect to happen, and you might be interested in knowing that one of the first handouts that was available on the IMF table this morning dealt with the IMF position on gold and the fact that its sales have been used to finance debt relief before.

MR. WOLFENSOHN:  Well, I can't comment on the IMF, and I don't know what the new proposal is from the U.S. Treasury.  One thing I do know is that it is much more acceptable to countries that are in financial difficulty to receive grants, and it would be much more comfortable for us to give grants, so long as someone gives us the money to grant.  But I will wait to see the proposals of the Secretary of the Treasury.  I respect him very much and look forward to hearing what he has to say.

There is a lady here.  Yes, yes?

QUESTION:  Sir, [?].  I'd like to know what is your opinion on delocalization that is--

MR. WOLFENSOHN:  On what, sorry?

QUESTION:  Delocalization, that jobs are moving from the countries where their labor costs are very high to the countries where the labor doesn't cost so much.  And many countries are accused that they are stealing jobs, especially from the EU countries.  Thank you.

MR. WOLFENSOHN:  Well, my belief is that historically, a free market is the most effective market, and certainly, in my working lifetime, there have been waves of this.  It was first sending cheap jobs to Singapore or to some of the countries that are now the Asian "Tigers."  And in Europe, from where you come, there is now some concern about some of the new countries that are entering the Common Market being places that might themselves attract jobs.

I don't think in today's world, unless you're trying to build barriers, you should try and stop the conduct of business in the way in which the economics drive it.  I think you should have ILO conditions so that you're not having child labor, and you're not going over excessive attempts to compete beyond what is fair competition in the labor markets.

I do think it presents problems in particular areas where people are affected because jobs have moved.  And there, I think it's the responsibility of governments and in some case corporations to retrain and find other jobs.  And that is what we're seeking to do in many countries.  But I think the world would be a lot worse off if you were to set up barriers to work.  It is a very small fraction of the job market, but it affects very much the people that are affected.

So the place that you need to work, in my opinion, is to focus on the people that are affected and quickly get underneath them with social safety nets and retraining, and I think if that happens, we're all better off.

I'll come back to you in a minute.  Over here, the lady in the end.  I'm trying to equal out men and women.

QUESTION:  Thank you.  Alicia Sergado [ph] from El Financier in Mexico.

What could you tell us about the middle-income countries like Mexico and Latin American countries?  Because all those are just in the middle of their development, but they need reforms, and they are confronting political controversies to push them.  What could they do, but especially linked to the World Bank development and financial to the private sector?

MR. WOLFENSOHN:  Well, we have--I would strongly recommend that you take a look at this book on "Doing Business 2005" because it deals with exactly that issue without being prescriptive.  We can give advice, but we can't govern, thank God.  So what we have done is to say these are the elements that you need to have in terms of attracting investment and setting a basis for growth.  You want to make it easy for people to start businesses.  You want to have an honest legal system.  You want to have a financial system that's transparent.  You want to fight corruption.  You want to reduce the cost of buying customs licenses or getting your goods through regulatory procedures.

These are all the things that you need to do in terms of reform, and very often they present political difficulties.  But what we're trying to do, since I think the issue is rather straightforward, is to set a framework for countries that if they have the political will, they can follow.  And by making transparent the elements of attracting investment and growth, hopefully, and you say a country is Ranking No. 68 or something on the list, we have had them coming back and saying countries that are ranking low on the list, and it's publicized, come back to us and say at their request, can you help us become No. 38 or 35.

So by making these things transparent, I think we can be helpful.  And then, by providing the services that will allow them to bring about change, which is what we do, I think we have a good service to provide, and we're working very closely with your government.  And by the way, in some areas, your government is leading very much, in the social areas particularly, in which, frankly, we were able to take Mexican experience and expose it in Brazil so that our Brazilian friends could, in fact, benefit from Mexican advances.  So it's an ongoing dialogue with your government, but in the end, change is a political matter.

You were very early.

QUESTION:  Fernando [?] from [?] de Sao Paolo, Brazil.

Last week in New York, President Lula, with Mr. Lagos, Chirac, and Mr. Zapatero, they launched a proposal to tax financial movements around the world to finance poverty programs.  And they got a very sharp negative response from the U.S.  I'd like to know if you think that this proposal is already dead with--not with the U.S. on it or if there is another chance for that.  Thank you.

MR. WOLFENSOHN:  Well, I was at that meeting, and the United States was not in favor of taxation.  But I think the meeting was much broader than just the taxation recommendation.  President Lula, I think, referred to that as one of the elements, but I took him and President Chirac and the Presidents of Peru and Spain as really pushing much more the issue of poverty, of development, and how one could finance but not limit the discussions just to finance but to better governance. 

Now, on the question of, to answer directly your question, you would have to ask the Treasury how fixed they are in their position, but certainly it sounded as though they were quite fixed on the question of international taxes.  But I think there are some others, particularly the French, who are very anxious to try and see if there's some way that a form of international taxation could come about.

I think the important element of that meeting was that there was a statement by 30 or 40 heads of state that despite what's going on in the world today, the issue of poverty and development is central.  And one of the elements in that is increased financing.  But I didn't take it that that was a financing session alone.  I thought President Lula did a very good service in convening that meeting myself, and while he may have been rebuffed by the U.S. on the issue of taxes thus far, I thought the meeting was very positive myself.

Yes, sir?

QUESTION:  Ernesto Kaiser from El Pais, Madrid, Spain.

Two questions.  I'm trying to understand your nuanced position about terrorism and instability.  On the one hand, you say that the potential source of instability, terrorism, is poverty.  But at the other hand, you say that between 1980 and 2001, there is a very dramatic decrease of poverty.  How do you relate your position about terrorism and instability with poverty?

And second, I would like to know if what the people, your people, in Iraq, the people that travel from the World Bank to Iraq are saying to you about the situation there and the prospects.

MR. WOLFENSOHN:  Well, on the first question, I wasn't attempting to be nuanced.  I was commenting on the fact that poverty has been brought down and that we have made some real progress on poverty.  Having said that, I don't think it's enough, and you still have a billion plus people living under a dollar a day, including many in your own country, and half the world under two dollars a day.  These are very different figures, of course, when you adjust for purchasing power parity, but you still have significant poverty, I think, on any measure.

The thing that worries me and what I believe to be true just to be very clear is that I don't think every poor person is a potential terrorist.  In fact, I think that people in poverty are very much like all of us:  they have desires; they would like to have hope; they would like to have voice; they would like to protect themselves; they would like to adhere to their cultures, and they want their kids to grow up in a better life than they did.  I mean, our study on Voices of the Poor just proved that.  It didn't prove, Voices of the Poor, that the 60,000 people we interviewed, that there were 60,000 potential terrorists.  That is not what we're saying.

But I think it is fair to say that if you have young people without hope, and I remind you that there are 2.8 billion people on the planet today under the age of 24 out of a planet of 6 billion, and 1.8 billion under the age of 14, and 2.5 billion to be born in the next 25 years, almost all in developing countries, that if you don't have hope for those people, if you don't have a movement out of poverty, they become a tremendously fertile ground for people of ill will to come in and use either as a base or as a recruitment place, and that's just been proven.  It's very clear.

So I believe that if you want--the other thing is that you don't have to have terrorism; you can have other forms of instability.  You can have local wars; you can have disruptions; you can have all sorts of things, and we've seen that over the last years in Africa and in other places.  So stability and terrorism are different things, although at times, they can be the same.

And so, I think that the crucial issue for us, in addition to fighting immediately terror, is to deal with the question long-term of poverty.  And by the way, it's not an original idea.  It was an idea that everybody had at the Millennium Assembly.  That's why they came out with Millennium Development Goals.  And recently, I went back, and I read the Pearson Commission Report, the Brundtland Commission Report, the Brandt Report, and they all said the same thing.

So this is not some--I had hoped it would be a personal insight, but in fact, it isn't.  It's been around for 40 or 50 years.  And I think it's proven.  I think everybody believes that, that if you have people that are satisfied and have hope, they're a lot less likely to go out and shoot you than somebody who is at their wit's end.  So that is the position that we take, and I don't think it's nuanced; I think it's very straightforward.

And on the question of what my people are saying in Iraq, I am as confused as the next person, and I have no special insight as a result of our five people there.

Yes, ma'am?

QUESTION:  Lauren McGuinness [ph] from Reuters.

Again on Iraq, I was just wondering if you could be a bit more specific about the possible time line for a return of the World Bank on the ground there.  Is it sort of looking at the result of an election or--if you could explain on the criteria you are looking at in making that decision.

MR. WOLFENSOHN:  Look, I'm in the same position that any one of you would be in.  You see people being killed every day.  You are doing your best to help the country.  You do not have an army to protect your people, and you know that there is a very high chance if you send someone in that they are going to get into trouble and may appear on the front page of a newspaper pleading with me and someone else to stop all finance; otherwise, they'll have their head cut off.  This is not a whimsical idea.  This is reality.

And I ask you to think about when you would make the decision to send people in if you were in my position, and I think you would say you would do it when it is safer.  I don't know how much safer, but it has to be safer.  And I stick by that position whatever anybody says, because I have a responsibility to my people.

We already had one person killed and three injured when the terrible bombing of Mr. de Mello took place.  I had been there myself 10 days earlier.

So, you know, there is no lack of guts in this institution, but as someone who leads this institution, I have to take appropriate risks with the lives of people who work for me, and I will make that decision when I think that it is safe to send people in--safer--it's never fully safe.

Yes, sir, at the back.

QUESTION:  Thank you, Mr. President.

I am Nestor Ecada [ph] with Associated Press.

As you know, the election time is coming to the World Bank very soon.  My question is if you are running for a new term.

MR. WOLFENSOHN:  The answer--it's nice of you to ask that question--the answer is I'm not running for anything.  I have been 10 years in the job, and I will stay if I am asked and if it looks to me at that time--if I am asked--that I can really add something.  I'd like to see what happens politically between now and December, and I would like to make up my mind in December, which I have said repeatedly.

The end date is the 30th of May, so I think I've got plenty of time to decide in December.  And honestly, at this moment, I do not know.  If you'd like to ask members of my family, they will give you very clear views on what I should do, but why don't I leave it until December, which is what I have said, and by then, we'll know a lot more, whether I even have an option if I have an option--and I'm not--contrary to any ideas--I am not mobilizing forces to get that option.  I just want to see what's going to happen in December.

Yes, sir, at the front.

QUESTION:  Parasuram with the Press Trust of India.

You have said that you want a substantial increase in IDA.  I was wondering whether it is time to give some figures on how much you want.  Secondly, can you give some idea of the International Financing Facility and how big it is?  And thirdly, you are giving money for education to countries.  It has been suggested that certain types of education produce terrorists.  Are you doing--

MR. WOLFENSOHN:  Produce what--sorry.

QUESTION:  Terrorists.

MR. WOLFENSOHN:  Yes.

QUESTION:  Are you making sure that when you give money for education, that money is spent on producing productive students, and not somebody who will take a gun?

MR. WOLFENSOHN:  Well, on IDA, the suggestion that is being discussed at the moment is an increase of from 18 billion SDRs over three years to 23.5 billion SDRs, and that is currently being discussed.  It is in the hands of the IDA Deputies.  So that's the answer to that question.

On IFF, I have no idea what the number will be.  I look forward to hearing from Chancellor Brown when he comes over here how his work is going.  I do know that there is an initiative planned as a sort of forerunner of the IFF, which would be the Global Vaccine Initiative's attempt with WHO and with the Gates Foundation, the Bill and Melinda Gates Foundation, to put forth an offering to get some up-front money at a fairly small level, but which would test it, and I think that is currently before the SEC.  So you may have some idea of how this is going to work quite soon.

And on education, we try and be as vigilant as we can.  We are constantly--constantly--asserting that education is not just getting kids to school, and it is not just--well, our view is very clear.  Early childhood education is pivotal, which is between zero and seven or eight, and the values that are inculcated at that time are very hard to move by the time you get the kids to primary school.  So you have to work on early childhood education. Whether the kid goes to school or not, what happens at home in those early years is determining in most cases.

But when they go to school, the reinforcement that you want is a reinforcement for global living, for tolerance, respect, and for understanding--and that applies in rich countries and in poor countries.  In rich countries, we know very little--or, in many rich countries--we are not educated about Islam or China or India or Africa.  Most of us grew up without that education.  Now kids have to have that education.  And kids in developing countries have to know something good about what is happening in the rich countries and be educated on the moral and ethical and other values there.

This is an absolutely consistent approach at the Bank, but you cannot always cover every aspect of a national view.  You come from India.  I don't know what your textbooks say about Pakistan.  So maybe when you clear that up, you can come back and tell me how we do it.  And the reverse may be true in Pakistan; I don't know.  But certainly, one needs to address it, but it is quite hard for us to do.

The lady over there.

QUESTION:  Mara [inaudible], Argentina.

I have a question about Argentina, the actual relations between the World Bank and Argentina.  I mean, there is a $500 million disbursement that is pending on the result of the IMF revision, and I wonder if there is any possibility that Argentina could get that money before that.

And the second question will be about the new Argentine law proposal of the utility sector.  What is the opinion of the Bank about that, and if they think that law will diminish the framed events that are held in the World Bank Tribunal.

MR. WOLFENSOHN:  On the $500 million, that is very much tied to the negotiations with the IMF, but we are continuing on other lending on existing projects with Argentina.  So our business has not stopped, but we are significantly dependent on that financing on the agreement with Mr. de Rato and with the Fund.

And on the question of utilities, to be honest with you, I'm not fully familiar with the new legislation.  I have heard something about it.  The principle that I think is important is that attention be given to getting the investors a return so that they will want to reinvest.  And I have not seen whether the new legislation does that, but my concern before was that you could keep control of tariffs at a certain level, and the return to investors if you want to, but the result of that is that you get no new investment; and if that happens, then you get no power.

So I have not looked at the particular legislation--I will take a look at it--but it would be my hope that whatever the Argentine authorities come up with, they will come up with something that allows for a satisfactory return so that investment can take place, and that has not been the case up to now.

Okay.  There is a gentleman at the back.

QUESTION:  Sergei Lisakov from Prime TASS News Agency in Russia.

Mr. Wolfensohn, we all know that you were for a long time sort of an advocate for a business society of Russia, and in the last interview with the Wall Street Journal, you said you are supporting President Putin's move in the political sense, as I understand.  Have you changed in your mind at this time?

And I have a second question on the Kyoto Protocol.  Today, the Russian Government has approved the ratification of the Kyoto Protocol, and it will now move to the Parliament.  Do you think this is a move in the right direction, so the Kyoto Protocol can be in place in the whole world?

MR. WOLFENSOHN:  On the second question, my answer would be unequivocally yes.  I think the Kyoto Protocol is extremely important, and I am aware that the United States has different but also constructive views on global warming; but I do think that the Kyoto Protocol personally is a very important milestone, and personally and institutionally, I think we are very pleased that that support has been forthcoming.

On President Putin, my comments on President Putin if you read them expressed concerns about the Yukos issues and the resultant fears that have come into the minds of some investors--principally, as it looks, domestic investors--in terms of the current climate in Russia.  And I also expressed concerns about freedom of the press and television.

What I was trying to say was that I don't think you should rush to judgment on President Putin for taking firm action in relation to the governors after the affairs in Beslan or Northern Ossetia.  And my reason for that is that I am very well aware of the heightened sense of anger in Ossetia, and I am also very well aware that the existing system is not perfect in terms of being a democratic system.  And I think President Putin had to do something, and he had to do it quickly, and as you know, even the replacement of the governors will only take place when their terms expire.

So I just thought it was an overreaction on that particular issue to immediately say that this is yet another example of concentration of power by President Putin.  I think he is in a tough situation.  I think he needs to do something to keep peace in the country--and I am not in his job, but I think he felt more comfortable saying that he would be better-off doing it since he was lumbered with the responsibility.

I am not fully in favor of everything President Putin does, but I actually think he is a decent fellow.

How much time--one more question.  We'll take this gentleman here.

QUESTION:  Anthony Rowley, Emerging Markets.

Whoever is President of the World Bank after the middle of next year, do you think they could face pressure for any strategic reordering of its priorities, possibly, for instance, in the direction of even more infrastructure lending or possibly even a diminution of some of its existing activities?

MR. WOLFENSOHN:  Well, I think that a lot of people have a lot of ideas about the Bank, and I think there will be continuing pressure to do everything.

I don't know what it is they want us to stop, frankly, but I think any President of the Bank will always be subject to pressures from different interest groups, and part of the job of being President of the Bank is to try to keep everybody happy, which is an impossible job--but it is the job of being President of the institution.

I think we're doing a pretty decent job, but I'm sure there are those who do not, and I'll find that out in December, probably.

Last question--there was a gentleman--yes, sir.

QUESTION:  Good morning.  Jaime Rios from El Noticero Economico of Colombia.

Earlier this year, a new discussion began on the way the investment infrastructure is taken account of in the fiscal accounts in these countries.  Given that the World Bank is one of the main financiers in infrastructure, is the Bank supporting a new way to take into account these investments in case of the IMF pressure?  Could you elaborate on that, please?

MR. WOLFENSOHN:  Yes, I met this morning with Mr. de Rato at breakfast, and the principal line of analysis on this is going to be at the Fund, and he told me that there are five current cases which are being examined, five separate country cases, so that we can get some experience on just what it means.  And we are working with the Fund supportively on that.  I think there are good arguments in favor of having below-the-line considerations of some infrastructure projects, but the limits of that and how it can be set up are obviously very important, and the Fund is taking the lead, and we are trying to work with them.

But the matter is very much under attention and will, I am sure, be brought up again in either the IMFC meetings or the Development Committee meetings this time.

Thank you all very much.

[Whereupon, at 11:19 a.m., the press briefing was concluded.]





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