with Paul Wolfowitz
President, World Bank Group
Sao Paulo, Brazil, December 20, 2005 Ms. Angela Furtado: Good afternoon, Mr. Paul Wolfowitz is going to start with a few words on his trip around Brazil and then we will open up for questions. Mr. Wolfowitz: Bom dia, and since I'm in São Paulo I think the right way to begin is, if you'll forgive my Portuguese, to say Parabéns aos São Paulinos, for the big soccer victory and to Ronaldinho Gaúcho, the best soccer player in the world two years running. That's impressive, that's probably where all the other reporters are actually on the big news. Let me start with the obvious. I'm delighted to be in Brazil, and I'm very happy to have been able to visit Brazil so early in my tenure as president of the World Bank. I'm very glad to have started what I expect is going to be extensive travel in Latin America with a … for me long six-day visit to this great country - a country that represents so many contrasts, opportunities and challenges for the region as a whole. Brazil, as a regional and global leader, is paving the way in many areas of concern to other developing countries such as trade, HIV/AIDS and sustainable development. I'm proud that there is a close partnership between Brazil and the World Bank Group in addressing issues like those. The purpose of my visit here was twofold: I came to learn about ways in which Brazil is making progress in addressing the major challenges that are common to a number of countries that we call middle-income countries, countries that have achieved significant progress and development but still have a long way to go to be considered fully developed countries; and I've also come to learn more about … the program of the World Bank Group here in Brazil, to ensure that we're offering you our very best support and applying it where our expertise and resources can be most useful. Perhaps I should explain when I use the term World Bank Group. We are a big organization that includes two very big pieces, one is what we traditionally call the World Bank, the International Bank for Reconstruction and Development, that lends to governments, and the other is the International Finance Corporation, or the IFC, which lends to private businesses, and in fact we have significant Bank Group offices here in São Paulo, of the IFC and in Rio de Janeiro, of the IFC, and our main mission is in Brasilia ... as part of the World Bank. Sorry, but we are a big and complicated organization, I thought explaining that might be helpful. Over the last six days I've had a chance to see some of the things that the Brazilian government and people are doing to address the challenges of managing this big economy, the challenges, I'd say, very severe challenges of addressing extreme poverty, which is still quite extensive in this country, and to make progress on education and health and other social issues. I had very good meetings in Brasilia with President Lula and with Minister Palocci and his economic team. I visited several programs designed to target assistance to poor families, such as the Bolsa Familia Program which is helping to bring a minimum level of income to roughly 8 million families in Brazil. Here in São Paulo, we saw a slum on my first day here, a slum upgrading project that is bringing basic infrastructure to the people of Guarapiranga. In Ceará, we had an opportunity to see how the government is investing in education, infrastructure and participatory development. In fact one of the most touching moments of this whole trip for me was in Russas, where we attended a ceremony for an adult literacy program, where two Brazilian adults burned their old ID cards and signed their names, for the first time in their lives, on new cards. It made me very proud that the World Bank had had some role in supporting that project. I'm proud to think that we've helped in some small way to improve the lives of poor and deserving people in Ceará. Let me say just a few words about this important issue of sustainable development. On the second leg of my trip, I visited the Amazon Rain Forest, I've read for years and years about what a remarkable place it is, and how enormous it is, but no matter how many times you read about it or see maps, to actually be in a small part of a region that is bigger than all of Western Europe and Central Europe put together is awe-inspiring. And until you've actually been there I think you can't quite appreciate either the majesty of the region or the magnitude of the problems that it faces. I met with local communities in Santarém and around the Tapajós River, where some very creative experiments are taking place in the area of community-driven development. In Tapajós, we saw some small community-based projects where rubber tappers and furniture makers are producing goods using the limited resources available locally for export. We saw furniture makers who use only wood from dead trees, and who are marketing their product from deep in the forest, amazingly enough, using a solar-powered internet connection and radio station. And we also saw enormous challenges, we met with farmers who were struggling to make a living in a sustainable way, and with NGOs and other stakeholders in the rain forest. Some of these interests are competing with one another … and it is my impression that none of them, not enough of them at least, are talking to one another, at least not in a constructive way. I think in that regard perhaps the World Bank Group can play a constructive role in helping to bring people together in a common purpose and trying to bridge what I think are some fundamental differences. Brazil has made some impressive progress in this regard, but much more remains to be done. Environmentally friendly growth that includes populations that have historically been left behind, such as women, young people and indigenous people, who are locked into a cycle of poverty, is possible. I'm going to be making a speech later this afternoon where I'll talk more about this whole issue of bringing environmental concerns and development concerns together. I firmly believe that sound development and sound environmental management support one another rather than compete with one another. Finally, if I had to generalize about what we would like to do here in Brazil and in other middle-income countries, particularly in Latin America, it is to help Brazil and countries like Brazil to sustain economic growth because without growth it's not possible to reduce poverty. And the fact is that 25% of the population in this beautiful region still lives in poverty. But the Bank is only a minor partner in these efforts; our program in Brazil, while large for us, is increasingly small compared with Brazil's own efforts. For example, we're about one-tenth of what your own BNDES does and ultimately it's up to the Brazilian government and people to keep finding ways to work together to address some of these issues. But we are committed to helping with programs that are targeted in areas where we have something substantial to contribute and where we can make a difference to see that the benefits from key initiatives and the benefits from economic growth are distributed more rapidly to the poorest people of the country. Muito Obrigado, I'd be happy to take a few questions. Ms. Furtado: I'd like to ask those asking questions to please state their names and the name of the organization they belong to. Questions …? QUESTION 1: I'd like Mr. Wolfowitz to be more specific, in what programs could the World Bank engage more firmly, invest more heavily, following this visit ? Mr. Wolfowitz: Well, I think one example… I need to be careful….because I'm here most of all to find out what we're doing, this is not a decision-making visit, and you're … I think, most interested in what might we do beyond what we're doing now, but I think to me…. part of the reason for learning what we've been doing is, if you find things where we seem to be making a useful difference, then that's a logical place to push forward. My impression, for example, is that the Bolsa Família Program is a real success… that we've been able in a small but significant way to contribute to that success … by the way it's a success that we can help bring to other countries. Indonesia, where I spent three years as an American Ambassador in the 1980's, has recently introduced a cash transfer program, in their case, not yet conditional. They're very interested in understanding how to convert that to a conditional cash transfer program and the expertise that is here in Brazil is something that the World Bank Group can help to bring to Indonesia. But what struck me also is that once you get families up to at least a manageable, a barely manageable level of income, and I must say, the two things that were striking in the visit to the favela yesterday was on the one hand what a difference the program made for these families and on the other hand how amazing it is that they manage even with the program, it's a real challenge. But once you get to that level then it seems to me one of the most obvious things that needs work is the educational system and I'm no expert on Brazil's educational system but I've heard in the course of this visit that increasingly families with means are sending their children to private schools... and that the public school system needs substantial improvement, and I think we do have a lot of knowledge about educational reform in many countries in the developing world, and if the Brazilian government is interested in tapping into that expertise it seems to me it could have real value. You know, the Bank publishes… we do an annual report called the World Development Report and this year it was focused on the subject of equity, and one way to summarize the main conclusion of that report is that equity - meaning particularly equality of opportunity - is not simply something that we should do for the sake of the poor, although that is a good enough reason, but it's also something we should do for the sake of economic growth and just stop and think about it - education is a stunning example. Investing in children of any social class is investing in the future of this country, it's an investment that will pay off for their lifetimes, so it's a 50-year return, and if you don't do it you end up as we saw in Ceará with adults struggling against the odds to learn how to read and write. So this is terribly important both from a point of view of equity and from a point of view of growth. Another area would be the … this whole area of environment, which is … a huge challenge, it's a challenge for the world, as well as for Brazil, I think though it's a little early to draw our conclusions but I think there are opportunities in the Amazon region for the World Bank Group to facilitate cooperation between Brazil and many outside donors, both governments and private institutions, that are interested in contributing to sustainable development in the Amazon. And I have to pick a third important area … I've been impressed even before this visit and much more on this visit that one of the biggest obstacles to increasing Brazil's growth rate and creating jobs for the poor and resources for investment is that the climate for business here is still a very, very challenging one. And I think there are some things where we can help both at a micro level through the International Finance Corporation working with specific Brazilian companies or working to develop things like … the sustainability index on the stock exchange or the new exchange, but also in assisting more broadly in improving… providing advice on which people can make decisions about how to improve the business climate here so... Summarizing, the problem of poverty and education would be one place to go and the problem of the environment and the Amazon is one place to think about, although I also think Brazil's ability to produce carbon-friendly energy through the ethanol program is exciting both for Brazil and for the world. And finally, how to assist in ways of making this economy produce more jobs and more growth. QUESTION 2: Tiago Velloso, from Agência Estado. I'd like to ask Mr. Wolfowitz … you said that sustainable development, or better, sustainable growth of the country's economy in fact is key to reducing poverty, and various economic agents in Brazil are debating whether the economic policy of the Lula Administration will lead to long-lasting economic growth. I'd like to hear from you, your assessment of the economic policy implemented by this Administration and, a second question, whether greater trade breakthrough on the part of Brazil would favor the emergence of this healthier business climate that you've just mentioned. Mr. Wolfowitz: I guess I'd make three points. Number one, it seems to be true of Brazil and of most Latin American countries that .. because of extreme inequality… the benefits of economic growth have not done as much to reduce poverty as they might have done or have done in some other countries in the world. So we're very interested in programs that can help to correct that. Secondly, that… real poverty reduction I think is going to require growth rates higher than what Brazil has been achieving, I don't mean to diminish the difficulty of getting even those growth rates in a country this big and in the general economic climate in South America, but I think Brazil can and could do better and I think that it is essential to creating jobs, which is essential to fighting poverty. And I guess finally, one of the big challenges that affects everything else is the … what economists call the lack of fiscal space and I know there's a lot of discussion about how to deal with that challenge and I don't have either the wisdom or the standing to tell you how to decide those things, I do think there is no way to do it without making some hard decisions and historically the temptation to avoid hard decisions leads to hyper inflation, which is one of the real diseases of economies in this part of the world and I think Brazil is so much better off today because that's been brought under control. Ms. Furtado: We've only got time for one or two other quick questions now. QUESTION 3: …….. (unintelligible name) from Bloomberg News. In the space of a week we had Brazil and Argentina say they were going to return over US$ 20 billion to the IMF and it's been very positive for these countries that they've managed to advance so much, that they don't need those funds. Are you finding it harder for people to want your money, to accept your money, and how do you see that ? Mr. Wolfowitz: First of all, we're not trying to get people to accept our money, I mean, it's a voluntary transaction, we do think that and frankly, you know, if they can get money cheaper commercially more power to them… our interest is in helping countries develop and help their poor. I do think, and I've heard it here in Brazil, I've heard it in China, I've heard it in India, that when they can get a loan from the World Bank they get something with it that is valuable beyond the money, and that's the kind of expertise that, for example, helped to improve the Bolsa Família Program or helped in China to improve the… some of the irrigation restoration projects that they were doing in Western China. And the challenge for us in this regard is that we're a pretty large organization, we can be too bureaucratic at times, everybody wants a different kind of safeguard system and we need to … it's not a matter of competing in terms of making money cheaper, it's a matter of competing in terms of making it not so burdensome to do business with the Bank. But people…. We're always gonna be a little more difficult than the commercial bank… commercial banks don't apply environmental standards, for example. But that's precisely one of the things that many governments, including the Brazilian government, value about working with us, that we not only apply the standards, we bring the expertise to meet those standards and when governments want to do that, that's what they're coming for. Ms. Furtado: A last question… QUESTION4: Stanley, from the Associated Press. I'd like to turn our attention just quickly to Bolivia, a little bit. One, your opinion on Evo Morales's victory and two, how do you think Bolivia now, given his rhetoric, could harness the wealth of the country's huge natural gas reserves to benefit the poor, to help reduce inequality and … you know … you see a role … the World Bank….what would its role be now in the future government of Morales ? Mr. Wolfowitz: I can only say a very little bit because I don't know enough yet, I look forward to meeting President Morales, and I look forward to getting to Bolivia… I think the most significant thing to say is… it's nice to be in Latin America in a year when governments are elected 'cause I'm old enough to remember when that wasn't the case at all and it's not a perfect system, I think Winston Churchill once said "democracy is the worst form of government except for all the alternatives" and I think governments that are accountable to their people, that have to deliver results, is ultimately the best way to promote development. On the specific issue about revenues from natural resources, I've seen this in many countries, as I said I lived for three years in Indonesia, which, believe it or not, made better use of its oil revenues than most countries, 'cause it didn't … it was far from a perfect record, but I noticed in my travels around Africa that some of the countries that are doing best are the ones without big oil resources, as it can be a curse as often as a blessing. So my only advice would be… make sure you work to manage this wealth as a blessing for your people, and if we can help with mechanisms that ensure transparency, and accountability and wise investment of these large flows of money I think we have… the World Bank Group has some expertise in that regard, a number of countries in Africa have asked us for that help and if Bolivia is interested in this it's certainly something we'd be happy to discuss. Thank you very much. Ms. Furtado: There are copies of the talk available for you over there, if you are interested, ok ? |
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