Washington, D.C., April 14, 2005
MR. WOLFENSOHN: Good morning, everybody.
Welcome to my 20th press conference, and last, as President of the World Bank. I'm going to miss all of you when I wake up feeling bereft of press questions every six months.
But I appreciate you coming and want to introduce the agenda for the Spring Meetings, which I believe has already been distributed to you, make a few comments on it, and then be glad to answer any questions.
I think you know that this meeting is part of a series of meetings that are being held this year. It is really the year, and indeed the next six months, of development in which conferences will be held both by the G-8 and by the UN in relation to financing and in relation to the specific issues of the G-8 Meeting on Africa and on global warming.
The end of the year sees the termination of the Doha Round, which is as you know the development round.
So this is a year in which a lot of the issues that we have now discussed here many, many times need to be brought to conclusion. So it is a year on which it is my hope that the analysis is completed many times and that the actions now need to be taken. And these meetings I think are a step along the way to that, and that is why the meetings are structured in the way they are.
The first is a stock-taking, because the finance and development Ministers need to be on the same plane in relation to where we stand--and for those of you who haven't seen it, I would recommend that you take a look at the Global Monitoring Report which is available to you, which is a joint report by us and by the Fund and which speaks to a five-point agenda starting with anchoring the development prospects in the Millennium Development Goals, improving the environment for private sector growth, scaling up the human development services, dismantling the barriers for trade, and of course, dealing with the question of the increase in effectiveness of aid.
Those are the same points that we have discussed many times before, but I have a real sense this time that there is a purposefulness about these meetings, and there is certainly a lot of creativity, which is discussed in the second issue that we will discuss at the Development Committee Meeting, which is the issue of financing for development--how is it that the additional financing is to be put together; what are we going to do about debt; and how indeed can we ensure that financing is focused on the things that matter and provided effectively to the countries that need it.
I think that that is likely to be a pretty vigorous discussion. I think it is no secret that there are a number of suggestions in relation to both financing and to programs for debt. On the financing, I think you know that there are several proposals.
The first and the easiest proposal for financing is to increase the contributions, to move from the 0.26 up to 0.5 and beyond, and hopefully to 0.7. That jump from two-five to five is between $50 and $60 billion, and that is the number around which I think a consensus is developing that there is a need for support for developing countries.
It would be my expectation that we'll get some signals from these meetings as to where the participants are in relation to progressive increases of development assistance. And we are happy to go into the meetings with the conclusion yesterday of the IDA round of negotiations which, as you know, had between a 25 and 30 percent increase.
So I think that on the first issue, which is the really number one issue, which is countries deciding to write checks, that that is likely to have some greater movement forward and for me has always been the number one place to find money.
The other alternatives of finding money in terms of front-loading are still with momentum, I am happy to say. There is the Gordon Brown initiative. There is the initiative by France and other countries in terms of taxation. And I believe those are likely to be debated by the Ministers while they are here.
On the question of debt, I think you also know that there are a number of different proposals ranging from immediate write-off to assumption of repayment responsibilities for a period of ten years, and then mixtures of those; and they also, I think, are likely to be debated by the Ministers.
It would be my expectation, although I am in no sense certain of this, that what we are likely to get on these issues is greater clarity about the alternatives and a lot of negotiation going on between the Ministers as to how this thing is going to be resolved.
The very positive thing about this meeting for me is that in all my years, I have never sensed a greater seriousness about actually coming to action. My own personal view is that we are likely to see it emerge over the coming few months and that the more likely thing would be that this is a head-of-state announcement rather than a finance minister announcement, and if my supposition is correct, then my guess is we'll get some signals from these meetings but that the actual announcements are likely to be later.
Given my musical background, I have said that this is like an overture, in which you will hear the themes that are going to come out in the subsequent acts, but the actual arias are likely to be sung by the stars at a different time.
So my expectation is that you'll hear a good overture or prelude this time; you'll get the themes, but the likely arias are to come at another time.
I think everybody knows that the Millennium Development Goals are at the center of this. I think we will also have special considerations this time about the issue of education and the Fast Track Initiative as an example of a really concrete case that is there, ready to be financed, absolutely pristine in terms of effectiveness, and where there is a need now to move forward and guarantee support to countries for education that is not just a one-year shot but which has to be a ten-year shot, because you cannot get kids into school on the basis of an increased budget and then, a year or two later, tell them that there is no money, that they have to leave, or the next round of kids doesn't come in.
So the Education For All initiative is a very good example of the sort of support that you need to get for development, which is continuing support--it is not a one-shot fireworks display. It has to be something which is reliable and continuous, and in that context, of course, IDA plays a very important role.
So those are the things that I think are likely to come out. I'll be glad to answer questions.
QUESTION: Good morning. Thank you.
Harry Dunphy, AP.
In reading through the World Economic Outlook, there are continuing references to the volatile oil market and what effect that could have on global economic growth. There has been some talk in the futures market about oil at $100 a barrel.
I wondered what your view of this was in relation to the global economy.
MR. WOLFENSOHN: Well, there is no doubt that oil and energy is a huge issue for the economy. It is less of an issue for the developing countries that have oil; quite obviously, it is a big issue for those that do not. And one of the problems that the developing countries have is that unlike the very wealthy countries that can go into a savings of energy and economic use of energy which is being used in a profligate way, for many of the developing countries, the provision of basic energy services, the provision of basic power, is not something that can be done more economically--it's something you just need and on which the initial investments have to be made.
So as we look at almost every aspect of development in terms of job creation, in terms of competitiveness, the issue of power becomes central, and there is no way of denying that this is a substantial worry for many countries and something that we have to deal with. And up to now, what we have been able to do is to deal with it by additional lending and additional support, but at a price of $100 barrel, were that to be a sustainable price, the impact, you would just have to say, will be very substantial on the non-oil-producing developing countries. There is no way of hiding it, and I hope that we don't get to it.
QUESTION: Cristiana Urli [phonetic], German Press Agency.
Mr. Wolfensohn, how realistic do you think the discussions are on the global taxation, like proposals from France, also mentioned in Germany.
MR. WOLFENSOHN: Absolutely.
QUESTION: Is there a time frame that makes it realistic that this might at all be used to reach the development goals?
MR. WOLFENSOHN: Well, I think you know that this is one of the alternatives that I spoke of in terms of raising money, the first being increasing the contribution; the second one that has been running is of course the financing facility; and the third one is the taxation--the very excellent report by France and very good analysis by Germany.
I think this is a matter for negotiation between at least the finance ministers and, very possibly, heads of state. But a number of countries including the United States have said immediately that this is not an acceptable path to follow on the basis that it replaces domestic taxation and that the proper methodology is to use national bases for collecting income and then, through your national governments, dispense that income, and that something extraterritorial like this for the United States is not acceptable. The Treasury is very clear on that, and some other countries are very clear.
So I think this is a case where France and Germany are interested in it, and some other countries have said they are not interested in it. I don't know where it will go. I think it is a question now for discussion. It is one of the alternatives that is on the table. It is a viable--I mean, practically, it could be implemented. But you have to think about how you can implement it unless the world comes in--how do you apply it if large segments of the world are places where you can run without being taxed? And that is something that I think will need negotiation.
QUESTION: Paul Blustein, The Washington Post.
Since this will be the last meeting of this sort that you will be presiding over, I'd like to ask you to reflect for a bit about what you are proudest of accomplishing during your ten years that you have been running the Bank and any particular regrets that you have about things you wish you had done differently.
MR. WOLFENSOHN: I think there have been many achievements in the last ten years which are not solo achievements; they are achievements that I think all of us have made, and some of them are very particular in terms of the approach to development and reaching out and working with others.
Despite the criticism which is sometimes given, I think it has been very healthy to engage civil society, the private sector, and other members of the international community. But most importantly in terms of our approach, I think the Bank now listens a lot more and recognizes that the development process is not run by the Bank--it is run by the countries. So country ownership is, I think, something that is a major change in terms of the way in which we approach the development paradigm.
I think that the institution is far more concerned at a human level than just at an economic, monetary, statistical level, and I think that by reaching out into the field, with nearly 60 percent of our decisionmaking now in the field, 2,500 people in the field, this is an institution that both physically is more in touch with our clients and using technology in which we are one of the world leaders running as a global institution. So I am very proud of that.
The most important thing I am proud of is that I think it is a cohesive organization now. As you probably know, the staff surveys have indicated that a huge majority of the people believe now in the direction in which we are going. When I came, I remember, to my sadness, that you were getting 20, 30 letters a week saying what a terrible fellow I was and how awful the institution was, and you all had a lot of fun in those days.
I think those letters have stopped, at least for the moment, and as I leave, I feel that we have an institution that is cohesive, that cares, and that is conscious of the fact that it is not just money that drives the institution--it is knowledge, it is experience, it is caring. And I think the true character of my colleagues has come out a lot more.
What do I regret? I guess I regret I couldn't do it quicker; and I probably could have been nicer at some times, according to some observers. I might simply say that there were a few frustrations in the job, but in the broad, I think that it has been an extraordinary experience and that the Bank is now positioned not only as a financial institution but as, I would dare to say, the leading development institution in the world today--not in terms of finance, but in terms of analysis, in terms of both moral and economic leadership.
The big challenge which remains is scaling up. How do you take the many projects that we have done that have been good, and how do you benefit from the many projects we have done that have been bad and not do the same thing again--but how do you take the things which I call "feel good" projects, that make you feel terrific about the institution and about how we are going about things, and take them to scale?
We have hundreds of projects where we can say we have done this, that, or the other and helped 50,000 people, or 500,000 school kids, or a million people with AIDS or something--and you feel terrific about it, but then you discover that there are 40 million people with AIDS or that the real challenge is 1.2 billion people on under $1 a day, or 2 billion more people coming onto the planet in the next 25 years in developing countries. How do you take whatever money and process you have and make sure that you can keep up with the monumental challenge of numbers?
And I think we are getting some way to that in terms of engaging people in poverty and understanding that the poor are not the object of charity, but they are part of the solution, and that you have to come up with methodologies that allow you to replicate things and make them sustainable.
But I think this jump between feeling good about a project and taking it to scale and making it sustainable is really the cutting edge of where we're at.
You'll remember last year we had a conference in Shanghai. It was the most exciting conference we have ever had. Seven hundred people came, and we studied in advance scaling up. We did it in Shanghai because the Chinese understand scale better than anybody. But I think that the issue for us now is--we learned a lot about methodology, we learned a lot about how to do things, and we'll continue to improve it--but how do you address the question that you have 5 billion people on the planet out of 6 billion in developing countries, which in 2030 will be 7 billion out of 8, and in 2050 will be 8 billion out of 9? How do you address that question in the scale that is necessary?
I think that is the--I'm sure that Paul Wolfowitz will have the answer, and I look forward to learning it from him--but it is certainly his big challenge, and I wish I could have done more on that.
QUESTION: Larry Elliot [phonetic] of The Guardian.
You didn't mention in your list of regrets there the signs that the MDGs are not going to be met on current trends by 2015. I just wonder whether you think there is any chance of those targets actually being met, and if so, how will they be met, and what is the Bank's role in that?
MR. WOLFENSOHN: Well, I didn't deal with it specifically because I was alluding to it at the beginning when I talked about the Millennium Goals and the problems. But if you ask for measurement and yardsticks, then you would have to say that the MDGs--and the first part of our stock-taking is exactly that; and if you read the Global Monitoring Report, you will find in there a joint view of the Bank and the Fund that unless we change a lot, we are not going to meet those goals.
I think it is widely known that we might meet the poverty goals because of China and India, but if you look at Africa and you look at some of the areas of the world that are most problematic, far from reaching the poverty goal, we are getting worse. And on issues of education and health and literacy and environment, I have to say that it is very unlikely, as you will see in the report, that we are going to reach those goals.
My hope is that at the meetings of the UN at the heads-of-state level, they will recognize that what they said in the year 2000 was right. They weren't forced to say in 2000 that for the world to live in peace, we have to meet these goals. They all said it. If you went to the meetings, they were tremendously boring because everybody said the same thing in different words, in six minutes or four minutes each.
But the powerful thing about it was that there was a huge global consensus, and the global consensus was that unless we get equity in the world, unless we deal with poverty, unless we deal with the planet, there will be no peace and there will be no security for our kids.
It's a very simple message, and it remains true, and we are five years into the period that we had hoped to really make some progress. I remind you that the progress was not to wipe out poverty by 2015--it was to halve the percentage of poverty by 2015. So it was an interim goal. So it wasn't that we could declare victory in 2015--it was to say this is reasonable, this is what we'll get done.
You know, I hope that at the meetings in the UN there is going to be a sense of both distress and of coming together to say, Listen, guys, we know what to do; if we really believe still what we believed in 2000, we have got to readjust things.
We spend a thousand billion dollars a year on military expenditure--a thousand billion dollars a year on military expenditure--and we spend maybe $50 to $60 billion a year on development. Anything more nonsensical, you cannot imagine. And we spend $300 billion a year on protecting trade in one form or another, either by subsidies or tariffs, which inhibits the growth of developing countries.
Well, you have to be nuts to think that that's going to solve the problem. It's not that we lack resources, it's that we lack commitment. And it is my hope that before it's too late, people will understand that they have got to do something.
I think the issue now is urgency.
Let's go to this side, and then we'll come back. Yes, sir?
QUESTION: Peter Thompson, from World Press Center.
You mentioned the issue of scaling up and of the Bank being a leader in IT and in the difficulty of communicating so that we get the political will and the commitment that delivers the MDGs.
One of the things that is not being done is using the IT that produces the information to put it together for the UNGA review conference in September. Would the Bank be interested in taking a lead in that?
MR. WOLFENSOHN: Well, I think--I'm not familiar with the particular September conference--
QUESTION: It's the Ministerial Review.
MR. WOLFENSOHN: Oh, the Ministerial Review, yes, of course. To start with, both the Gateway that we have established and the research pages that we have in the Bank I think pull together not just our information but the information of OECD, of the IMF, and it now is available in very comprehensible and easy form.
I think today the issue of availability of data and even commentary on the data is an issue that is pretty well solved. The problem is to get people to read it and to think about it. And I think if there is anything--the answer to your question very simply is if there is anything that you can think of or anyone can think of that can be helpful, the Bank is ready to do it. If you have some ideas, let us know; we'll be glad to work with you. We'll talk afterward, but the answer is yes.
In the back, please.
QUESTION: [Inaudible] from La Nacion Argentina.
After dealing with several crises and challenges in Latin America and other developing regions in the last ten years, what have you learned, and what would you recommend, for example, in the case of Argentina, a middle-income country that can't take off, not to mention, for example, Bolivia also in Latin America?
MR. WOLFENSOHN: Well, I wish there was a single solution to crises. They come in different forms. And since you are from Argentina, you would know that the Argentine crisis and resolution is different from any other crisis and resolution, and I don't have a menu for Argentina at this moment. I'm leaving that to my colleagues at the Fund to try to develop.
My hope would be that we could have Argentina willing to be and anxious to be part of the ongoing international financial system and that recognition of its both potentialities and problems is something that we can get a negotiated answer on.
You know that it is the Fund that is discussing this with Argentina, not the Bank, and so I would defer that question to Rodrigo Rato when you have a chance to ask him; and I can only say that the Bank is ready to work on social issues, on the issues of utilities, on the issues of investment programs in Argentina, when we know what the rules are and what the arrangements are.
QUESTION: Herb Chapman, Bloomberg Radio.
What gives you confidence that development aid is being used more efficiently and less corruptly than might have been the case ten years ago when you started?
MR. WOLFENSOHN: Well, first of all, ten years ago, we were not talking about corruption, and we were not talking about effectiveness. So the first thing is that I think on the front line of the agenda now, and agreed in Monterrey after the Millennium Summit, was a recognition on the part of developing countries that development is not just a question of more money--development is a question of responsibility on the part of developing countries. And that is why when I started, I said that the assumption of responsibility, the leadership in developing countries to own the development programs, is the first thing. But they agreed in Monterrey and also agreed in the NEPAD, the program for Africa, that they had a responsibility to build capacity, to deal with legal and judicial reform to protect rights, and that they had to have financial systems which served the whole of the public, from micro credit through to industrial investment and financial services, and that they needed to fight corruption.
That was not the agenda ten years ago. Corruption had never been mentioned in a World Bank meeting until nine years ago. And now, we see more and more countries addressing the questions in an orderly way.
My sense of optimism comes from the fact that ten years ago, you could not go to a country and talk about corruption, or not very easily. In fact, my first trip was to Indonesia, where President Suharto told me that corruption was not what I thought it was in Indonesia, that in Indonesia, corruption was "family values." And I found that to be both amusing and terrifying.
It was not the World Bank that dealt with President Suharto, it was the people of Indonesia, and I am seeing in more and more countries now, most recently in the former East Bloc, that people are getting up and saying we want a different environment.
The same is true in many countries in Africa. You are seeing much better teams of people coming in. You are seeing, for example, in Nigeria, which has a reputation over the years for not being the most honest place in the world, President Obasanjo and the Finance Minister and a team of people really confronting corruption, being transparent, putting out on the line the budget, putting out how much money is going to the provinces. This is not victory, but it is a huge step forward on what they have done before.
So I don't think we can declare victory on governance, but what I passionately feel is that you have more and more people now talking about the subject and seeking to influence it.
The second thing is that on the part of donors, they are being more demanding and are awarding those countries that are meeting these yardsticks.
My personal worry at the minute is not the best performers which will get the money; my personal worry is what about the countries that are not the best performers but which you cannot ignore in order to bring them along to become good performers. What do you do to help the countries that are not doing it, that need support in capacity building and need encouragement, who don't meet the yardsticks of the best performers? You can't leave those behind. And part of my worry is that they're going to leave all that to the World Bank and to international institutions, while bilaterals say we're only going to spend money on the good guys.
That could leave billions of people behind. So I think we have to work out some methodology to know that the world is not perfect and work toward a better performance.
But I truly believe that we are much better off today than we were ten years ago, but I also truly believe that we've got a long way to go. But I think that was true in the early days of the United States, it was true in the early days of Europe, and it has been true all over the place.
QUESTION: Kathy Shultz, National Public Radio.
People liken the World Bank often to an ocean liner that is very hard to turn around. And people speculated when you came to this job that it was going to be a big challenge. What were some of the hardest things about the culture of the Bank and the way it does business--what were some of the hardest things to change; and also, how important were NGOs and their influence here, and how do you characterize your relationship with those groups now?
MR. WOLFENSOHN: Well, I think--that's a very long question, and I have to give you a quick answer--but I think there was a--my own personal view is that the Bank has always had the best group of people in it. We have an amazing talented staff. But my own view was when I came in that it was too bureaucratic and too inward-looking. So the first thing I had to do was to try to make it less bureaucratic and more outward-looking and loosen it up so that people could express their views and not feel that they were in boxes.
That was tough--very tough. But in the end, I think people started to get more confidence and felt more secure, and they started to change, and that was a very hard cultural shift. It was also a hard cultural shift to give over leadership to countries and also to think that we were not the only place in the world that had standards, that we were not the only place in the world that could do projects or could study something. That was pretty tough. I mean, there are still people who probably don't think anyone can do it as well as we can, but at least today we have fabulous working relationships with the other regional banks, much better relationships with the Fund, and there is a real dialogue going on now.
So I think at the institutional level, we had some problems, but I think we have done pretty well on that, and I think the issue of putting people out in the field was absolutely pivotal to build up the field offices.
So those are some of the things that occurred. You asked about civil society. My own opinion is that civil society is absolutely at the core of development. Civil society will always criticize the Bank, and I think it probably should, and I have no problem with vigorous dialogue. In fact, I find it--now I find it--stimulating. So long as I am not being burned in effigy or someone is throwing a pie in my face, I think it's okay--and I have had all those things happen to me. But I think now we have a civilized dialogue. We don't always agree, but we need civil society, and frankly, they need us.
In the Poverty Reduction Strategy approach, we engage civil society; we have given voice to civil society in a way that they have not had it before. And my relations now with NGOs are really very strong.
I do not believe what some commentators think, that working with civil society is weakening the institution. My personal view is that it strengthens the institution. And I am also, by working with civil society, not trying to win a beauty contest. I think you need to hear what civil society over the years has talked about. They have talked about gender, they have talked about kids, they have talked about environment, they have talked about debt. They have talked about lots of things. Some of them, we started to talk about before they did, or simultaneously. But you need the dialogue because you need civil society to operate both in delivery of services and in donor countries to create an environment where people know that the people care.
So I leave the job with a great respect for civil society in general, and I include in that parliamentary bodies. We are reaching out much more to parliamentary bodies.
And just for the record, since I get criticized for it, too, I also think it is crucially important that we develop a better understanding with the faiths. People thought that was a wild idea. And we have had, as you know, meetings on faith and development, a number of them now, with religious leaders. My intent is not to make the Bank a religious organization, but I think we have to recognize that faith-based organizations in some parts of the world--in Africa, for example--deliver--deliver--half the education and half the health services. If you don't talk to them and you don't know what they're doing, it's impossible to have a cohesive approach.
So treating each other like lepers is not something that I think makes any sense.
The other thing is that religious bodies, as we have learned, can be both a constructive force and a destructive force. To ignore them is ridiculous, ridiculous. You have to confront these issues in a modern world.
So I think, in answer to your question, that it may not--this is a personal view--my own view is that institutions like ours need to keep broad links with other donor bodies, with civil society in general, with parliamentary bodies, hugely importantly, the private sector, which has not been mentioned this morning but which is central to what we are doing, and I think one of the achievements of the last ten years is that we have reached out in IFC and the Bank toward them. And I think it is only by coming together with the countries concerned, within a framework of protection of rights, financial systems, fighting corruption--I think if you do that, you have a way in which you can approach development.
I think it is nonsense to suggest that you should not talk to civil society. I think it is nonsense to suggest that it is weakness or that it is weakening the Bank. I think it is strengthening the Bank. This does not mean that civil society should run the Bank. It means that you should have a dialogue with them.
I feel very strongly about that--and since I cannot be kicked around on this for more than another six weeks, as a famous President once said, I want to reaffirm it.
Yes--I have time for one more question, apparently--yes, sir?
QUESTION: Barry Wood, Voice of America.
Mr. Wolfensohn, concerning your successor and this transition, given the perception that he is identified with a unilateralist American approach, I wonder what you are doing to allay fears that he will redirect the Bank away from some of the priorities that you have so eloquently spoken about over the last 30 minutes.
And secondly, I wonder if you see the practice of an American running the Bank as a tradition that in future could cause problems for management, whether it is for attracting funds or for dispensing development assistance.
MR. WOLFENSOHN: Well, on the latter point, it's beyond my pay grade to decide who runs the Bank, who runs the Fund, who runs the international institutions. There is a sort of cosmic--well, there is some space out there in which the international community decides, one way or another, how and who should run institutions, and frankly, I think if you change one, you change a lot.
I think there is a good case that could be made for retention of an American. I think many would say there is a good case that would not. But frankly, that is something that the global leaders need to deal with, and I think it should be an open process, and the Board should be involved, and I think there are a number of things that could usefully be done, but I have no problem with the fact that, for the Bank, an American should take the job.
I might remind you that I was not always an American. I may look like an American, but I don't sound like an American, and I don't walk like an American, but I am an American. So I guess there are ways around a lot of things.
But let me get back to the Wolfowitz issue. I am categorical on this. I think Paul Wolfowitz is going to do a very good job. I do not believe that he is coming in with an agenda that is unilateral. I think he wants to do this job well. I have had hours of discussion with him. I do not think he is trying to kid me. He would be crazy if he took this job with anything but good motives, and I believe he has those motives, and I think he has the capacity to learn. And I think that it is true that there are fears, but I'd give him six months, and I'd listen to him, and I'd work with him, and I think he will be an excellent leader for the Bank. And I say that--I am not getting paid by him, and I am not getting paid off by the U.S. Government. I believe that he is a person of intellect, and I think he cares. I should say I haven't agreed with him on many things in the past, but on this issue, I think he is a good choice. And you'll all have a chance to talk to him at the next meetings of the Annual Meetings, and maybe I'll come and sit in the back and see what you do to him.
But I don't want to close without thanking you all very much for ten years of partnership. I have enjoyed it, and I think all of you can take some credit from the fact that we are better off today than we were ten years ago, and I want to thank you.
[Whereupon, at 9:45 a.m., the press conference was concluded.]