Interviewer: Could you explain why with all that’s happening today in Lebanon, this escalation of violence I mean, how it will interact with all the needs for reform that you spoke about? Paul Wolfowitz: I think, well first of all, Lebanon is important because the people of Lebanon matter. I mean that generally speaking, I think the international community has responded very positively when there has been wars or tsunamis or other kinds of crisis around the world, but when I said Lebanon is important, the reason I think because Lebanon was in the past a real model of successful economic management, a kind of inspiration, an indicator of what the economic potential of the region is. And indeed I know in the United States and I think elsewhere in the world you see just how successful Lebanese people are, given a chance. And that’s important for the region as a model, but secondly it’s a model of diversity, and I was struck in the meetings today at how some of the senior Arab leaders that come from overwhelmingly Muslim countries talked about Lebanon’s importance as a model of diversity in a region that needs that kind of model. It will be a tragedy if the violence overcomes the opportunity for progress here. What has impressed us at the World Bank is since the terrible war of last summer is how quickly the Lebanese authorities have moved to recover from that damage and indeed I think by the standards of most reconstruction efforts around the world, this one is one of the fastest. And secondly, we are very impressed, and may be because it’s the pressure of crisis which often brings out the best in people, that the government really has put together a coherent economic program that addresses all three of the country’s needs, which is to get the government fiscal situation in shape, to get economic growth going through some structural reforms and this is, as I said in my statement, critically important to make sure that the poorest in the population don’t suffer the most from this kind of adjustment. And we see a truly well‑thought through program of economic reforms, and I hope for the sake of the whole country and for the region that it can be implemented. Interviewer: Mr. President in the past there was always conditionality in aid to Lebanon, especially the IMF was very tough because the IMF never cooperated with Lebanon at the time of the Prime Minister Hariri. What has changed today? And has conditionality changed and what is the prospect really with this violence – okay, you said it’s a tragedy but I mean, can we hope for these reforms if things are that bad in Lebanon and what’s the alternative if this violence blocks everything, I mean, how can this money be used? Paul Wolfowitz: If the violence blocks everything, it’s the people of Lebanon who will suffer, which is why I hope that there will be the kind of reaction against the violence that will hopefully calm the situation. Because I really do believe the whole country stands to benefit from the program that’s been put together and the enormous amount of support that’s mobilized behind it and I would repeat very strongly the message that I tried to convey this morning also and that we have stressed in our contact with the government is that it’s very important that this economic reform program is one that benefits the whole population, not just a certain portion or just the privileged portion of the population. Everyone will benefit and therefore it’s in everyone’s interest to make this succeed and I don't know to stress that strongly enough. I think, experience in the last 20, 25 years shows that when outside institutions, whether it’s the IMF or the World Bank or some big country comes in and tries to tell another country this is how you need to run your affairs, it doesn’t work. What does work and that’s what I would call conditionality, what does work is when a country says we’ve decided to take some hard decisions because they’re in our interest and then institutions like the World Bank come in and support those hard decisions. Interviewer: So, it’s a turning point in the policy of the World Bank to ask for, to say what the country needs. I mean, you don't anymore say, you should do this and that. Paul Wolfowitz: The term we use in the Bank -- we have a lot of words that I hope this means something to people who don't work in the Bank -- is country ownership. When the country takes ownership of a program and we say this is a good a program and we can support it, that doesn’t mean we can give our support no matter what the country does, but it means that they have got to be convinced of what they’re doing is the right thing, it can’t be imposed from the outside. Interviewer: President: you said the program is there to benefit all the Lebanese population. There is part of the Lebanese population today that is quite important and is the Shiite community that is directed, lets say, or led by Hezbollah. So, do you think that Hezbollah playing a political role in Lebanon and having a share in this country would not prevent any aid, any engagement from the World Bank and international community in Lebanon? Paul Wolfowitz: What I can’t stress strongly enough, is that we’re not a political organization. We’re an economic development organization. In fact, the fundamental constitution of the World Bank, we call it the Articles of Agreement, stipulate we can’t take political considerations into account, only economic ones. And I think the clear message, in any case, is that the whole country, all elements of the country will benefit if the benefits of the economic reform are shared equally and the burdens are shared equally. That’s our basic theme and I would just hope the politics don't get in the way of what I think is an ambitious but realistic reform program. Interviewer: Do you think that this reform program can be carried out by the Lebanese government with a President that is blocking everything? I mean, political or non-political organization, you still looking at the situation as such to analyze how things go in the country to aid the country. So for example, in the Palestinian territories, I don’t think the international community wants to help Hamas. Paul Wolfowitz: We can’t, I can’t predict how the politics will go and certainly we can’t dictate how the politics would go. What we are trying to say is, it would be in the interest of everybody in politics, who wants to see the county advance economically, to support this common effort that is a very well thoughtout Lebanese program and has extraordinary international support. You saw that this morning, President Chirac said the total was up to $7.6 billion. There is a real opportunity here for the whole country to benefit and I would hope that the politics goes in the direction of saying, lets get onboard and then politicians who block that progress deserve to loose support. But our own focus is on why this is good economic program. Interviewer: President, we heard this morning about a post-conflict program with the IMF, an agreement. Could you maybe explain to the Lebanese citizens what does it entail, this is post-conflict program? Is it more hardships and sacrifices for the Lebanese, because usually the IMF is engaged in pressing for fiscal policies that are not very popular. I suppose you know about it because the World Bank is very engaged also in the program. So, how would you explain this post-conflict program? Paul Wolfowitz: Well, it’s not a program that’s designed by the IMF., And we’re, I should emphasize, we’re optimistic that the IMF will conclude such an agreement. They haven’t got to that point exactly, but if they conclude the agreement then they would give some financial support to Lebanon, as a kind of endorsement of the government’s economic program. It’s not a new program, it’s not new conditions imposed by the IMF, but it would represent the IMF’s judgment that the government’s program is one that can bring the country into economic balance within a reasonable period of time. And we welcome it at the World Bank not only because it brings some additional resources, but even more important, it will build confidence among the whole international community, particularly the private sector, that Lebanon is on track to financial viability and that’s a very important part of maintaining Lebanon’s attractiveness as a commercial and banking center, which I think is a key to Lebanon’s future. There is belt tightening involved although it’s not imposed by the IMF, its part of the government’s own program, but it’s a kind of IMF -- we can almost call that an IMF seal of approval that the program designed by government is one that makes economic sense. Interviewer: The money that we got is $7.6 billion, and the debt schedule of reimbursement this year is $3 billion, according to what I hear from the Central Bank. So, , if we have these three billion, now, the rest of the money will be for future programs or will be dispersed later or how is it going to be dispersed? Paul Wolfowitz: I think every donor is different, I have more of a sense of what our money will be used for and that’s to help the government structure social safety nets, so that more money goes to the poorest parts of the population. Interviewer: That’s what you said in your statement. Paul Wolfowitz: Secondly, everyone seems to agree that reform of the power sector is an essential part of reducing the drain on public resources and that needs to be done with a lot of care to how -- it will impose some short term cost on the population. I think with huge long-term gains our money will help to ease that transition. Interviewer: Okay, are you confident on the future of Lebanon? Paul Wolfowitz: I am hopeful and… Interviewer: But not confident? I mean, in view of the not solved Palestinian question, with Iraq having its problems. Prince Saud Al-Faisal outlined today the three escalations in the area. So, how confident are you on the future of Lebanon? Paul Wolfowitz: I am confident that this government has put together a really bold and remarkable package and that if it’s fully implemented, that Lebanon really can achieve its promise. There are going to be obstacles in the way and I guess one don’t have to say, there’s certainly no guarantees in a situation like this, but I would call myself cautiously optimistic that Lebanon can make it and if Lebanon succeeds, it will have a positive, beneficial effect for everybody in that part of the world. Interviewer: Thank you very much. Paul Wolfowitz: Thank you. ### |
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