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Annual Meetings 2005 Opening Press Conference with Paul Wolfowitz

Available in: Français, Español, русский, العربية

with

Paul Wolfowitz
President, World Bank Group
Washington, D.C. September 22, 2005

PROCEEDINGS

MR. MILVERTON:  Good morning, everyone.

Welcome to the opening press conference for this year's Annual Meetings.

I am Damian Milverton, and I work with the Bank's communications team.

Mr. Wolfowitz will make some very brief opening remarks which will be available to you at the conclusion of the press conference, and then we'll take your questions.

If you could all just do us a favor by switching off any fortunate cell phones that actually have coverage down here and any pagers, et cetera.

So, without further ado, Mr. Wolfowitz.

MR. WOLFOWITZ:  If they don't have coverage, they can leave the phones on?  Don't test it.

[Laughter.]

MR. WOLFOWITZ:  Well, good morning.

I am very pleased to welcome you all to the Annual Meetings of the World Bank and the International Monetary Fund.

As you all know, these are the first Annual Meetings for me as President of the World Bank.  I know it's a very big deal, and I am very much looking forward to it.

I think this year, this moment, is a particularly important moment in the history of the fight to eradicate poverty and create opportunity for the world's poorest people.  We have had some very impressive commitments recently by developing countries, including in some of the poorest countries of Africa, commitments to deliver on performance and accountability.  And we have had some similarly impressive commitments by the developed countries--at the Gleneagles Summit and at the recent Millennium Summit in New York--to deliver more assistance and a little less, certainly, to deliver on trade opportunities.

As Prime Minister Blair said, it is a deal for a deal.  You can't separate performance from assistance; they are mutually reinforcing.

But it has been a year of real momentum, with the potential, I think, to be a turning point.  Our task now is to translate the promises and the plans into action and results--for the world's poor, and not only in the poorest countries of the world, but also in some of the successful developing countries where there are still hundreds of millions of people living in extreme poverty.

Of course, the development community is also responsible to those in the developed countries who are providing the funds to help.  There is an enormous responsibility on the entire development community, including the World Bank Group, to help deliver results, and it starts with measuring and evaluating what we are doing.

In that respect, the Millennium Development Goals make an important contribution because they give us an important set of benchmarks for accountability--helping us to see where we are, see where we are succeeding, see where we need to lift our game and improve performance.  As I said in New York last week, we all stand accountable; and it is time to deliver.

Obviously, one of the regions where we most need to succeed is Africa, because it is the one huge area of the world that has been falling behind in an era where other areas of the developing world have been making some stunning progress, in many small countries, and of course, in the two great, big ones--China and India.

But in Sub-Saharan Africa, which has slipped backwards, roughly half of the 600 million people live on less than one dollar a day, not just poverty--extreme poverty.

In its discussion on financing issues, members of the Development Committee are placing a special emphasis on Africa and to support these discussions, the Bank has prepared an Africa Action Plan aimed at using as effectively as possible the resources available for development in Africa over the next three-year period.  What is different about this plan is that it focuses on tangible impact and measurable results, with more than 20 concrete actions.  It emphasizes broad issues of governance and growth, including the vital role of the private sector in creating jobs and poverty reduction and opportunities for the poor.

But it also gets down to specifics on supporting free primary school education, funding for much-needed infrastructure, defeating diseases such as HIV/AIDS and, importantly, malaria, and doing more to support women, who play such a crucial role in achieving development progress but who are too often ignored by development planners.

Having visited Africa in June, I am acutely aware of the challenges that that region faces.  But I believe that Africa may be entering a new era; that Africa can become a Continent of Hope.

That is in no small measure because people in Sub-Saharan Africa are holding their leaders accountable, and their leaders are holding themselves accountable.

That means, among other things but not exclusively, fighting corruption.  On corruption, standards of enforcement and administrative action are not just the responsibility of developing countries, or the leaders in developing countries.  For every bribe taker in a developing country, there is a bribe giver--often from a developed country--and they need to be held to account. 

The bottom line is that now we are hearing talk, and seeing real action, on combatting corruption.

I am very grateful to my predecessor, Jim Wolfensohn, for many things he has done for this institution--among other things, having put the issue of corruption on the development agenda.

As he said, it should have been on the agenda long before he correctly described it as a cancer.  But it is a very tough problem to solve, and it will take time to work on it, but it is a high priority for this institution, and I think it needs to be a high priority for the entire development community, developed countries and developing countries alike.

Among the issues on our agenda this weekend will be debt relief, trade, aid, health, education, infrastructure, agriculture, and women's empowerment--among others.  There is no way to talk about development without talking about a lot of things.

We will be working to advance the debt relief agreement that was reached by the G-8 in Gleneagles to ensure that that debt cancellation is accompanied by real additional resources so that developed countries as a whole benefit from this deal.  We have been working with all the parties to move this forward.  We are committed to getting it done, and we expect real progress at these meetings.

We will continue to work to ensure that aid reaches the people who most desperately need it.  We will be measuring and evaluating progress and encouraging more effective coordination among donors, because development is a team sport--people have to play all the positions on the field.

The Development Committee will also focus on trade--looking toward the pivotal Hong Kong Round--excuse me, the pivotal Doha Round--meeting in Hong Kong in December.  Trade barriers are one of the biggest obstacles to creating jobs in the poorest countries and opportunities for the poor.  So removing barriers and subsidies that hurt small farmers and small businessmen is an urgent priority for development.

Trade is at least as important as aid, because it offers the chance for sustainable, shared growth--so it is no exaggeration to say that the future of millions of poor people around the world depends on achieving real results in these trade negotiations.

Let me just perhaps conclude with a fundamental point.  Africa is our first priority, but it is certainly not our only priority.  This is a global institution.  In fact 70 percent of the people living in extreme poverty in the world live in other parts of the developing world, including some of the countries that we have put on the list of successful developing countries.

I was just in India recently and spoke with the Indian Government, which after all has done some impressive success in their own development efforts, about how the World Bank can help that Government address the problems of the urban and rural poor in India.  That's just one example of many.

We need, as we focus on first priorities, to also keep the balance as a global institution. One of those global issues, by the way--and we will be meeting later today with President Clinton, who is coordinating the tsunami reconstruction effort for the UN Agencies--is the effort of helping the tsunami-affected countries rebuild after that devastation and to review where we stand on making good on the extraordinary generosity of both governments and private sector to assist the victims of that catastrophe.

It is just one of the many examples where the World Bank Group, and in fact our partner institution the IMF, play a very important role, I think, in helping this very complex effort of development support.

Thank you very much.

MR. MILVERTON:  Thanks.

We'll open it up to questions.

Again, please wait for the microphone to reach you and give us your name and organization.

Anna?

QUESTION:  Yes, I am Ana Barone from Clarin, Argentina.

As you probably know, there are a lot of American and other foreign companies that have presented demands against Argentina in ICSID arbitration, an organization of the World Bank.  And the governments said that they don't have really from the juridical point of view to comply if there is sentencing.  I would like to know what is your opinion about that.

MR. WOLFOWITZ:  ICSID, of course, is one of the four elements in the World Bank Group, and I think it plays a very important role in providing an arbitration forum in which these commercial disputes can be settled, and I think it is critical that it perform that function in an objective way, and I hope that people will recognize those decisions as having that status.

I realize Argentina has a lot of challenges.  The World Bank has committed about a billion dollars in new lending to Argentina per year over the last two years, a trend that we hope will continue in the future.  But the real key, I think, to making progress here is to conclude an agreement with the IMF which would make it possible for the Bank itself to disburse more in Argentina.

We realize Argentina has big problems, big challenges.  We would very much like to see Argentina get back on a successful growth path, because I think it is important not just for Argentina but for the whole Hemisphere.

MR. MILVERTON:  Yes, sir.  The man in the yellow shirt, third row.

QUESTION:  Greg Venkle [ph] Amsterdam. 

I heard you say that you expected real progress on a debt relief deal.  What exactly is holding up a deal and how serious is it if you don't reach a deal this weekend?

MR. WOLFOWITZ:  I guess the simplest way to say it is I think everyone agrees on the desirability of canceling these debts, many of them incurred not by the governments that are struggling to pay them back now, but by governments that have long since disappeared.  The question is how to make sure that that's done in a way that preserves the viability of IDA as an institution--that's the International Development Association--and to make sure that we have the right kinds of commitments from developed countries to make sure that the developing countries as a whole benefit from this initiative and there has been a lot of work done, some significant steps taken.  The U.S. administration committed itself recently to supporting the legislation that was introduced in the U.S. Congress that would authorize this funding for IDA.

I think that's an important step forward. We're very much looking to the continued leadership of the UK government which played the leading role in Glen Eagles, but we in this institution are eager to help make this happen.

I think not only the heavily indebted countries, but the developing world as a whole can benefit, if we complete this.  I guess I should say when we complete this.

MR. MILVERTON:  Yes.

QUESTION:  I'm with Turkish Television. 

From the World Bank's viewpoint, how do you see Turkey's recovery efforts after the 2001 financial crisis?  After this point, what do you think it should do?  Thank you.

MR. WOLFOWITZ:  I think the short summary I would say is I think Turkey has done amazingly.  I remember when Kemal Dervis left this institution to go back to Turkey to work on the economic program, and I've known him for quite awhile.  I said here's a very brave man, and I think he was a brave man.  I think the Turkish government as a whole took some very brave steps, and I think Turkey is the better for it.  There are obviously still some very big challenges, but I think if anyone had said three or four years ago that Turkey would be doing so well now, it might have been said they were dreaming.  So I think it's real progress.  I think it's very important not only to Turkey but to the whole Mediterranean and the larger Middle East region that that success continue, and the World Bank is heavily involved with Turkey.  Turkey is one of our larger partners and look forward to continuing that relationship.

MR. MILVERTON:  Yes, Tony.

QUESTION:  Anthony Rowley, I'm with Emerging Markets. 

Mr. President, you've inherited a very large institution.  Can you tell us what you intend to do to make it more focused and possibly more efficient in the future?  Where you would see scope for rationalizing activities between the World Bank and the regional development banks?  And also if you could also just talk about--

MR. MILVERTON:  You have to keep it to one question at a time, I'm afraid.  We've got a lot of people to get through.

MR. WOLFOWITZ:  If you ask two, I get to choose which one.

[Laughter.]

MR. WOLFOWITZ:  I think let me say first I am very grateful to Jim Wolfensohn.  I think this institution is much stronger now than it was when he took over ten years ago, and I hope to strengthen it further and not to turn it on its head.  I don't think that's what is needed.  I think, as I've said over and over again, there is a real challenge in Africa and a real opportunity in Africa, and it's important that we strengthen our focus there.  I think it's very important that we continue again an effort that was started already, but to measure results so that we can not only hold ourselves accountable--that's important--but also so we can adjust course.

I think one of the lessons of the development experience of the last 40 years is there is no single unified theory of development that can explain everything or predict everything, and that countries and institutions that adapt, that reinforce success and correct for failure will do best.  So I want to sustain the effort to measure results and strengthen that effort as much as possible.

I think, again, to reinforce something that has started here already, very importantly, I think the effort to hold ourselves to a very high standard when it comes to corruption of any kind in World Bank projects, it takes a lot of work.  It sometimes takes tough decisions, but it's important to do that.  I think we can set an example and by setting an example, hopefully somewhat change the environment.

And finally, I do think that the decentralization trend of the last six or seven years has strengthened the Bank.  I think in many ways the most valuable work we do are the people who are out in the field.  I think our job here in Washington should be to give them as much support as possible, to liberate their energies as much as possible, and in that connection, too, I think we have strong new leadership at both the Inter-American Development Bank and the African Development Bank, and Asian Development Bank, of course, has been a valuable partner as well.

I think I'd like to strengthen the relationship with those regional banks.  You know development is a team sport, and I think I alluded to this earlier.  Not everybody can be in the scoring positions.  Somebody has to play goalie.  Not everyone should be the coach or the leader.  In fact, I think the most successful development efforts are when the leadership role is by the developing country itself.  But you have to see that the whole field is covered and that everyone involved is playing as a team, and we're part of a team and we want to make that work.

MR. MILVERTON:  Press Trust of India, please.

QUESTION:  Parasuram of Press Trust of India. 

Your visit to India got a lot of attention all over the country.  I was wondering how confident are you of reaching the Millennium Development Goals in India as well as elsewhere?

MR. WOLFOWITZ:  It's a mixed picture.  It's a mixed picture.  I think India has made a lot of progress.  I think one of the challenges in India, and that's what I spoke with the Prime Minister and the Finance Minister about when I was there, is how to move the results of that successful growth more rapidly to the poorest people in India. Our lending in India is now going to focus heavily on rural development as part of the program I think you called bharat niman [ph].  Our piece of it will look at rural roads and rural water supply.  Some very large fraction of the world's poor still lives in rural India and that's important, and indeed I would say, in general, when we look at the World Bank's approach to projects, we're trying as much as possible to use our additional resources to help governments bring up the poorest parts of the population.  And the recent World Development Report that focused on equity makes the very important point that it's not just a matter of doing this for the poor because they deserve it, but in fact if you especially take care of children when they're growing, if you make sure that they are not malnourished, if you make sure that they're educated, it's a huge investment in the growth potential of the country for the long term.

Some countries are very much on track to meet the MDGs.  Unfortunately, and particularly in Africa, quite a few are not.  I think having those measures is a way to improve performance and as much as possible you want to get countries back on track.

MR. MILVERTON:  Mr. Blustein.

QUESTION:  Paul Blustein with The Washington Post.  To follow up with a question about debt relief, do you support the view put forward in the staff paper on this issue that the agreement reached at Gleneagles is not adequate to protect IDA, and what do you expect--given that, what are you hoping to come out of the final agreement in terms of modifications of it, and what do you expect? 

MR. WOLFOWITZ:  As I said earlier, what we're looking for and what I think to some extent we're getting is both much stronger commitments from the G8 countries as to how they will implement their obligations, flowing from their commitments at the Gleneagles Summit and then also to make sure that they are not the only contributors here, and we need to have all the contributors to IDA come along as part of it, and I think it's a challenge to bring that many countries together on a consensus, but I think we're getting there and very much look forward to this weekend as a way to move it.


QUESTION:  Harry Dunphy, AP.

A follow-up on debt relief.  How do you address the concerns of countries like Belgium and the Netherlands who weren't at Gleneagles and are concerned about the future finances of the Bank and the future of IDA?

MR. WOLFOWITZ:  Well, actually, I share those concerns strongly, and I am glad they are raising them, and I think the way to address it, as I said in answer to the previous question--I'll repeat it--I think the way to address it is to get the strongest possible commitments from all the countries, including the G-8 but also other contributors, and some of those smaller countries that you mentioned have a very good record of stepping up themselves and contributing, and I think they are entitled to have a sense that the other countries will deliver on what they have promised.

There are different ways in which it can be done.  I mentioned earlier the legislation in the U.S. Congress which seems a promising vehicle for the United States.  Each country is going to have to do it in its own way, in accordance with its own system, and at the end of the day, the shareholders of this institution are going to decide whether or not we have something that meets all the requirements.  But as I said earlier on, I think if we can get these debt burdens removed from the poorest countries and if we can keep IDA viable so the developing world as a whole is benefited by this rather than hurt by it, I think it's a winner of a deal.

MR. MILVERTON:  Yes, the lady in the front row.

QUESTION:  Tatiana Bautzer, with the Brazilian newspaper Valor Economico.

Do you think there will be a political consensus in this meeting to start changing the voting power in the Bank; and what is the strategy of the Bank for middle-income countries like Brazil?

MR. MILVERTON:  You've got two sweeping questions to choose from.

MR. WOLFOWITZ:  On the first question, I think it's a big issue in front of this institution and other international institutions.  My sense is we are still in the early stages of trying to figure out.  It's easier to say that you'd like a different system than to agree on what a different system would be.

But certainly--and I think this goes to the second part of your question--increasingly, countries that were once poor countries and dependent on the Bank for concessional assistance are increasingly able to find many other sources of financing, both from their own resources and from commercial borrowing.

I think if we want to remain relevant to them, we have to adjust the way in which we do business; we have to be more responsive to what their needs are.  That means among other things, for example, making it less cumbersome and less time-consuming to work with the Bank. 

I think what they get from us and what I hope can continue is a level of expertise and knowledge that doesn't come from normal commercial borrowing, but in a sense, we are facing you might say competition.  I think it's important that we effectively compete.

Increasingly, if you think about it, if the fight against poverty is successful, more and more countries will be in this middle-income category, and if this institution is going to remain relevant to the world, it obviously needs to be relevant to the middle-income countries.

MR. MILVERTON:  Barry?

QUESTION:  Barry Wood, Voice of America.

Mr. Wolfowitz, the World Development Report released this week is the first document, I think, to have your name on it--certainly the first WDR.

It speaks about equality and educational achievement, infant mortality, life expectancy--and yet nowhere in the Report are there measurable results.  The rankings of countries that used to be in previous Development Reports are not there.

So my question is how are you going to present measurable results in terms of who is doing the best job?

MR. WOLFOWITZ:  As you say, it's the first with my name on it.  It was actually pretty much done before I got here.  So I will look at the specifics of your question, but I think the important thing to emphasize in that report--and I think it is a key point--it that it is not a--on this issue of equity versus growth, the fundamental point I think the Report makes, or one of the fundamental points, is that often, in important instances, improved equity actually will improve performance and improve growth.  And in particular, as I said earlier, where you are talking about investments, for example, in maternal nutrition or in child education or education for girls, you are not just providing equity--you are actually investing in one of the most important factors, one of the most important drivers of growth.

And we are certainly looking at measures of effectiveness when it comes to things like health and nutrition and education.  Those are critical factors in the MDGs. 

So I'll look further at it, but I think those are areas where we need to measure, and I think we are measuring.

MR. MILVERTON:  The last three questions--the gentleman here, and then Mr. Balls behind him.

QUESTION:  I am Ernesto Kaizer from El Pais from Spain.

Mr. Wolfowitz, you recall that the agreement of debt relief for Africa was designed in the G-7 Meeting of Finance Ministers in June in London.

Afterward, it was ratified by the G-8 Summit of Gleneagles, and it was said that in September, it was a very important date, because of the Boards of the IMF and the World Bank.

What is your timetable now to implement this agreement?

MR. WOLFOWITZ:  As soon as possible.  The sooner the better.  But obviously, as the previous questions have said, we have to get a consensus that we have the commitments necessary to make sure that this debt cancellation doesn't come at the expense of the viability of IDA, doesn't come at the expense of the other developing countries, and the sooner we can get that, the better.

MR. MILVERTON:  Mr. Balls--I'm afraid this will be our final question.

QUESTION:  Thanks.  Andrew Bowles, Financial Times.

Just another question on debt relief.  When you are talking the weekend of the Meetings, as somebody who has stressed the importance of realistic political analysis and accountability, do you think you can tell other countries that the U.S. can be trusted on the idea that, even with the bill circulating in Congress, they will make good the contributions to IDA over a 40-year period, just given the budget institutions of the U.S.--or do you think there is a real question there?

MR. WOLFOWITZ:  You know, there are no guarantees in life.  I think it is important to recognize that the viability of IDA is going to depend on continued efforts by this institution, by the development community as a whole, to push not only the United States but all the developed country partners to maintain their contributions to IDA.  At least for some considerable time to come, it is going to depend on additional support and additional efforts from all the developed countries.  And I think it may be by making a point--one of the reasons for measuring results, one of the reasons for having what Prime Minister Blair called "a deal for a deal," is that I think one of the challenges in getting additional resources, not only from the U.S. Congress but I think, at least in the long term, from all the developed countries, is to demonstrate that this money is being used well.

There are many, many people who are prepared to be generous--we saw that in the outpouring of the contributions to tsunami relief.  They want to be convinced that that generosity is producing results.  And in fact, since I mentioned the tsunami, both President Clinton and I feel very strongly that there is a challenge there to the development community not only to deliver results for the people of Indonesia and India and Sri Lanka who have suffered from this catastrophe, but also to deliver results for the generous people in--we call them rich countries; many of those people aren't rich themselves, but they are generous, and they are prepared to help people in need--they need conviction that their contributions, their generosity, actually are effective.

So I think it needs to be seen in that larger context rather than thinking that there is a guarantee in this world.

MR. MILVERTON:  Thank you very much for attending the press conference.  We look forward to seeing you over the next few days.




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