Robert B. Zoellick: 2011 SID World Congress

Transcript

2011 Society for International Development (SID) World Congress

Washington DC

World Bank Group President Robert B. Zoellick

July 29, 2011

MODERATOR:  Okay.  It's a sincere privilege for me to introduce a conversation between two people I very much admire. Michael Gerson is a former policy advisor and chief speechwriter to President George W. Bush and was also--is now a syndicated columnist, you often read him in the Washington Post, and has been a clear voice for development over a long period of time.  I was one of millions who was inspired on many occasions by Michael's thoughts and words, including the 2005 inaugural speech by President Bush.  I also have bought and recommended both of Michael's books, most recently, "City of Man," which was published with--was written with Peter Weiner, who is--and the book is about the role of people of faith in the public square, and it's particularly compelling and interesting.  The conversation is also, I think, going to be informed by the fact that Michael was part of what he described as a "humanitarian conspiracy" for the President's emergency plan for AIDS relief, what's commonly known to all of us as PEPFAR.  So, he was one of the architects of the PEPFAR initiative, which has saved millions of lives.  I'm going to turn the floor over now to Michael Gerson. Michael.

MR. GERSON:  Okay.  Thank you.  It's really an honor to be with all of you and an honor to be with Bob Zoellick, the President of the World Bank.  In our former lives, Bob and I were colleagues, and I deeply admired his stewardship of the Bank.  He is a voice for economic sanity and a voice for the world's poorest people, and that's a very important global role, particularly in a time of great uncertainty.  So, it's great to be with you.

[Applause.]

MR. GERSON:  Bob, before we get into some of the substance on the development side, let me start with a question that's much in the news and probably on the minds of many people here:  What effects are the current events in Washington relating to the debt limit having on global confidence in the U.S. economy, in U.S. leadership, and in the U.S. political system?

MR. ZOELLICK:  Okay.  Well, as I try to think about that answer—

[Laughter.]

MR. ZOELLICK:  --let me just start--and Mike was kind enough to talk about some of our work together--Mike's career is a wonderful example for those of you who wonder about the power of written words and speechwriters. It's probably not as generally known, but it should be that, on issues such as PEPFAR and HIV/AIDS, malaria, Sudan, that Mike Gerson was much more than a writer and a counselor but really was a conscience driving many of these issues, and what I respect is many people have these positions and they take them day-to-day, but they don't go home at night and really ask what legacy they'll leave, and this is something that all of you that know anything about Mike and his faith and his beliefs, (this) was very contrary to Mike Gerson's view of public service, and so he really served the American people and his President extremely well, in addition to being a great writer.  So—

MR. GERSON:  I appreciate that, but you can’t avoid the questions.

MR. ZOELLICK:  I know.

[Laughter.]

MR. ZOELLICK:  As with many events like this, I think there is a short-term and maybe a bigger perspective. On the short-term perspective, people are playing with fire.  The World Bank, as all of you know, is a pretty big and sophisticated financial institution, you know, so, we operate in markets all around the world, and I'll just say we and I'm sure any other financial institution now has to be trying to come up with a series of contingency plans, not just the first but the second and third order effects.

And people have to recognize that this is taking place in a context where you still have the euro zone in serious difficulties.  They put together a package, but it's an ongoing, muddling-through process. 

And so--and Japan, which has been struggling to recovery for growth for a long period of time had a terrible natural calamity.

So, you have an environment that was already fragile and uncertain coming out of the financial crisis, which, many of you know, was also before that a food and fuel crisis, and in an environment where the tools that people used in 2008, the standard tools of various spending policies and monetary policies have basically run their course.

And so, this is a context in which whatever one's logic about the tactics that would--it's a very dangerous environment and, to be absolutely blunt, I mean, to have a debt default of the United States would not only be a financial calamity, but it should be an embarrassment for every American.

But there's a medium- and long-term that I spend time reflecting on, because, you know, the Bank has 187 shareholders who we have--developed countries, but our clients are primary the developing countries in emerging markets. 

And what is striking is we're in an environment where the nature of the recovery from crisis is multispeed.  So, with most of the developing countries with which I work, the challenge is now, one, that their growth has recovered so well that the danger is more overheating or asset price bubbles, where the developed countries are struggling with spending, debt, large-scale unemployment.

This creates a tension in the international system and, if one thinks about this, the World Bank came out of the Bretton Woods at the end of World War II where people are trying to learn the lessons of economic calamity in the '30s leading to World War II.  And so, you need some system that deals with trade, with development, with exchange rates and capital flows, with security, and in a sense, that system is now very much in a state of flux because these emerging markets now represent a half of global growth where, in the '90s, they might have been in the 20 percent.

This has happened relatively fast, and the relevance of what is going on in Washington or Europe or Tokyo these days is people are trying to decide, well, what should be the norms, the rules, the expectations of this system.  And I'll just have to frankly say that, for people in the developing countries that I work with, it's a little bit of a disappointment and frightening to see the United States which, you know, some people have an admiration for, some people say, well, maybe it's been too pushy or too--play a role--but to see it basically sideline itself is a troublesome prospect, whether you're in Africa or China or India or others.

And so, the bigger picture here is a combination of dealing with the substantive challenges that the U.S. or Europe and Japan face, but also a sense about what role will they play in shaping this future international system that does, as everybody here working on development know, have some incredible opportunities.  One doesn't have to look at gloom and doom on this. 

You know, Africa has grown, on average, about 5 percent for a decade.  There's lots of opportunities there.  We find private capital going there. 

You know, China has grown 9.9 percent over 30 years.  So, it depends on how you look at the world but there are great opportunities but they have to be seized and we have to figure out how developed and emerging markets work together in a different way than they did in the past.

MR. GERSON:  Bob, another news item that's getting a lot of justified attention is the food crisis in Eastern Africa where 11 million people are at some risk in the current drought.  I know that the World Bank is taking immediate action in the crisis, but what can be done to address the longer-term food problem in developing countries?

MR. ZOELLICK:  Well, again, there is both danger and opportunity with this.  The opportunity is that, if we can increase agricultural and production--production and productivity in the developing world, significantly in Sub-Saharan Africa, we can take advantage of higher prices to create higher incomes, to help overcome poverty, to create a basis for assets and ownership, and we at the Bank and working with others are trying to deal with this problem by really looking all across the value chain.  So, this is everything from research on seeds, including different conditions with climate change and drought and others, and we help organize something that was actually started by Robert McNamara in the '70s, the Consultative Group on International Agriculture Research, and there's great potential, again, from some of this--the research in seeds to these centers all around the world to fertilizers, to irrigation, to transport systems, the roads.

I was meeting yesterday with some Presidents from West Africa where the problem isn't so much the production but getting the goods to market.  We estimate that about half of the production is lost on the way to market, so, investment in storage facilities. 

And again, this doesn't all have to be governmental.  We have a private sector arm, IFC, that is looking at the value chain and trying to see how you can try to improve the production and productivity depending on the country.

So, in monetary terms, the Bank was probably investing about $4 billion a year in agriculture now; it's sort of $6 to $8 billion a year, and we try to--we coordinate some of the programs that some of the G8 and the G20 have put together in this area.

But there is also, I think, the phenomenon of how we deal with some of the risk and uncertainty in the system and the price volatility.  So, what people saw in agricultural markets in 2007 and 2008 was not only an increasing level but the sharp changes in prices.

Now, the first step on this, and this is one of the issue the World Bank's been working with the French chairmanship of the G20 to try to come up with some ideas.

Step number one is governments shouldn't make it worse.  So, when you have a potential shortage then, when countries put on export bans, you create a sense of crisis and panic.  Countries aren't going to be able to give up their ability to do that totally, but at least we got an agreement recently that, for humanitarian purchasers such as the World Food Programme, that they would be able to access countries' foods even if people had export bans.

And this may seem obvious, but during the crisis in 2007 and 2008, Josette Sheeran, the head of the World Food Programme, and I were having to call governments to create exceptions so that Liberia could be able to get access to food.

Some better information on stocks, the quality and quantities.  People are used to this in the United States, but in China and India we haven't really had this information, and this information can lead to some of the panic and volatility situations.

Rather than try to control prices which isn't going to work, it makes sense to focus on those most vulnerable and most in need, and one of the things we started to learn at the Bank after the '97 financial crisis in East Asia and Latin America is that the macroeconomic stability wasn't enough.  You could lose a generation if you didn't have the appropriate food and nutrition--literally, lose a generation because it affects--as people here probably know, the cognitive ability, the potential of children to reach potential.

So, we've been working with developing countries at different stages of development on basic safety net programs.

And just to give you one people here probably know pretty well, Mexico started something called Oportunidades--in Brazil, it's Bolsa Familia.  These are called conditional cash transfer programs.  They go to the, in a sense, the 10-15 percent most needy and on the condition that people send their children to school and people get health checkups.  Probably done more for women's health in Mexico than anything in the history of the country.

A sign of kind of how the World Bank kind of does business differently is we then have taken this model and, in one form or another, helped some 40 countries develop this.

And the reason why it's quite important is that this is done in Mexico and Brazil for about a half of 1 percent of GDP.  So, you talk about entitlements programs, this is a very basic, effective, well-run safety net for reasonable cost.

Now, for some countries in Sub-Saharan Africa, may not have the capability to do that, so we work with World Food Programme, UNICEF, and others on things like school feeding programs, which can become platforms for dealing with child nutrition and other aspects.

So, in my view, one of the ways you have to deal with the volatility and uncertainty is that every country should have some basic, efficient, and effective safety net for those at the bottom.

Now, part of the lesson, if you look at, say, the North African countries, is they had some very expensive programs, the bread subsidies in Egypt, increase everybody's wages.  So, I'm not just saying throw money at the problem, but what I'm saying, we've learned from other developing countries how to create sort of effective safety nets, and I think this is going to be important because I believe the food price issue is going to be with us for a considerable time for some structural reasons that I'd be happy to talk about, too, if you wish.

MR. GERSON:  Well, I am interested--is this--food--high prices and volatility a permanent circumstance now or is it a temporary problem?

MR. ZOELLICK:  Yeah, that's a good question and I get it a lot.

I think, you know, what people who covered agriculture markets were used to is normally, you have a price increase, you get a supply response. 

But I think the situation we're in now is going to remain with relatively higher prices with risk for a longer period of time for the following reasons: 

First, what drove some of the prices in 2007 and 2008 is that food stocks have become relatively low.  So, you look at corn or maize and wheat stocks globally and there's not a great deal of cushion.  Rice has gotten a little bit better, but the problem with rice is it's a rather thinly traded commodity.  So, only about 7 percent of the rice that's produced in the world is traded.

So, what set off the crisis in 2007 and 2008 was the failure of a Philippines rice tender, and then people pulling back.

So, and the rice market is better, but because of the thin trades, it's vulnerable.  The basic grains markets have relatively low stocks.

Now, normally, you would expect those stocks to get replenished over time, but there's another phenomenon, and that is, as emerging markets become wealthier and people eat better and have two meals instead of one meal and they eat more meat, you're seeing an increase in demand.  So, it's not blaming anybody; it's an understandable process.  But what it means is that even if you have some good harvests, you're not really replenishing the stocks, because it's going into the increased demand which is a gradual process.

What that suggests to me is that, for a considerable period of time, we are somewhat at the whim of a weather event or some other--and so, what happened in 2008 is you had weather conditions in Europe and North America and Australia and others.

So, I think, in a sense, the pressure on prices and the volatility is going to be a factor with us for a while, and there's one other dimension, which is we see a much closer connectivity now between energy and food prices than even ten years ago.  The correlation is very tight. 

Some of this is biofuels, but it's not all biofuels.  Part of it is the use of energy for fertilizers and transport and other things.

And there's another phenomenon which is that, talking about financial markets, investors now look at commodities as an asset class--so, like, bonds and equities or mortgages, and now you have commodities, and this is a very debatable topic.

From what we've seen in the studies, these people who move in and out of commodity markets won't necessarily change the trend, that's based upon supply and demand, but it could affect kind of the movement and the volatility as money moves in and out of these markets.

So, for all these reasons, I've argued that the G20 needs to put food first as an issue.  It's the basic sustenance of life, it's the core aspect of all societies, but while we deal with the risks and uncertainties, let's also try to make the opportunity on the production side.

And just to give people a sense, again, where a little creativity and innovation can--you can take something that has a bad reputation and make it more positive:  We worked with some Sub-Saharan African countries on rain index futures.  In Sub-Saharan Africa, as this audience probably knows, you only have about 5 percent of the crops are irrigated, where in South Asia it's more like 40 percent.  So, you have good rains, good harvest, good year; no rains, you're in trouble.

You can figure out what the rain levels you're going to need in a country to be able to have an assessment of whether they're going to have a good harvest.  And so, in a sense, you can buy an insurance policy.  So, you can use the nasty derivatives for a good purpose. 

Through IFC, our private sector arm, we're helping a number of emerging markets in a partnership with some big banks to actually be able to have the access to commodities and futures markets that are commonplace in the United States but you really don't have in some developing markets because of different aspects of the banking and credit system.

So, part of, in a sense, the changing role of the World Bank is how we can also kind of innovate and use markets to help deal with some of these risks.

MR. GERSON:  Let me switch topics just a little bit with the political situation.  There was a House markup this week on foreign assistance where aid took a huge hit, and multilateral aid a particular hit in that context.  It's a tough fiscal environment for a lot of these issues.

How do you make the case, particularly to Republicans, in this environment that American interests are implicated here, that cuts are dangerous?  What's the best kind of set of arguments right now?

MR. ZOELLICK:  Well, one that I've been reflecting on at the biggest level, and it relates to aid, but it relates to the U.S. role in the world more generally, is that, if you go back to 1947, when another generation and Harry Truman engaged the United States and the world and you look at levels of income per person or per family in the United States, they're about a quarter of what they are today.  And if you use GDP as opposed to GNP, it's even less; okay?

So, Americans, the individual American, is about four times wealthier today than his mother or father or grandfather, grandmother was in 1947.  And in 1947, Americans thought the world was important enough to engage it seriously in terms of economics, investment, trade, security.  What does that say about a generation that's four times richer and says, well, we have to pull back?  So, at the big level, this is a fundamental decision about a country and, you know, whether priorities embroil the world.

Now, at another level, I make the point that the types of things that the World Bank and many others do is move beyond charity as it might have been seen in the '50s or '60s, but it's definite self-interest.  Now, what does this mean?  Well, first, I talked about the fact that the developing countries are now about half of global growth.  So, the more growth we get in developing countries--you know, you're not going to get it from, at this point, from Europe or Japan, you look at the U.S. companies and others who are doing well, they are benefitting from this growth in some fashion or another, whether it be the Caterpillars, the John Deeres, the services industries and sectors.  You know, America has about 4 percent of the world's population.  If we're going to grow, if we want to continue to grow, we've got to be able to market at the rest of the world, and what's really changed a lot is, including Sub-Saharan Africa with infrastructure development, there is increasing opportunities here for investors as well as on the trade side.

Now, then, there's another dimension of self-interest.  You know, the world is an interconnected place.  It may be diseases and whether it be SARS or avian influenza, what happens in one part of a world affects another, it may be a sense of values in who we are as a people.  Do we care about what happens in Southern Sudan?  Do we care about what happens in Liberia?

And then, increasingly, what one sees in the security area is the interconnection of these interests.  So, you know, we, at the World Bank, published one of our major World Development Reports about the challenge of post-conflict or fragile states, the connection between security, development, governance, and rule of law.  So, the story of Afghanistan is not just a question of soldiers fighting; it's a question of whether you can create some economically sustainable system where the government eventually owns the challenges of its own country.

So, from topic after topic, what I find is, it--and when I talk to congressmen, actually, there are different groups.  There's people interested in security, there's people who are interested in economics, and then, one of the, I think, great things about America is that the religious community has also, I think, gotten more deeply engaged in these issues.  So, there's constituencies that can do it.

But finally, so, for all this, you know, there's a tremendous amount of misinformation.  I mean, the U.S. foreign assistance contribution is less than 1 percent of the budget.

So, look, we're in a difficult budget time.  We and everybody else all have to try to figure out how to take cuts. 

You know, at the World Bank, recall we actually got capitalized, we make revenue, we put money back into the developing world.  We borrow as a AAA borrower, I might add, and provide these benefits.  So, we're in a different situation than kind of some of the foreign assistance players, but that in itself is a logic, because the money that was first invested in the World Bank is leveraged many, many, many times, pursuing U.S. interests.

MR. GERSON:  We are going to have opportunity for just a couple of questions at the end of this session.  I think we're going to have some housekeeping here just to determine how that's going to take place.

MODERATOR:  The way we're going to--because we have so many folks in the room, the way we're going manage the Q&A is, I would ask you if--you have cards at your table and pens.  If you would please start thinking about your questions for President Zoellick now and we'll collect those in about three or five minutes.

Maybe Mike, you might ask another question while people are formulating that, and in the process, we'll start collecting questions after that.

MR. GERSON:  Great.  Related to that question, the earlier question, in our current fiscal environment, outcomes, transparency, accountability, have never been more important when it comes to aid.  You've spoken about democratizing development economics.  What do you mean by that and how is the Bank practicing that?

MR. ZOELLICK:  Okay.  Well, at its most basic level, it builds off what I was saying we've seen happen in the developing world. 

In a way, the mid-20th century view was sort of a hierarchy of experts from the developed world, the North-South concept; that's gone.  The concept of the Third World is gone.  I mean, the Second World left, at least it should move up one, but at a minimum, you know, the nature of these economies are much more--you can learn from each other.

And in fact, there are some interesting things that developed economies can learn from developing economies as well, in areas such as private sector capital going into infrastructure.

But the key notion here is that we as an institution play a role that's much broader than providing finance.  Our primary purpose is trying to take the knowledge and experience, as I mentioned, with conditional cash transfer programs, safety net programs, infrastructure programs, banking programs, and being able to share them around the world and help countries customize it in a way that builds markets, institutions, capacity.

Now, to do that effectively, you have to reach out and get other people's ideas.  This is the democratization.  It's not--it comes from a series of expert sources, and create a broader dialogue and engagement on these issues.

Now, one vehicle that the Bank has launched in recent years that may end up being the most important thing that I've been able to do there is we've created an open data and open information initiative, and this is an interesting little story, because I used to go to meetings like this and sometimes a professor would come up to me and say, you know, you've got some great information sources there at the Bank, they go back in decades, they're a great resource, but you charge for them.  And then, this is a lesson for all of you that deal in bureaucracy, I go back and I talk to our economic staff and I'd say, well, why are we charging for this?  And they'd say, well, we add some value and we update--it's just cost return, da, da, da, da, you know, and you get--do this question three or four times, and you finally realize it was, like, $3 million extra that--to help somebody with their budget. 

And so, what we finally said is, look, we're--this is a public good, we're making it open and available for everybody.

So, we've opened up over 7,000 datasets and we're going to be adding to them, that go back decades, and we've changed the whole mindset, because now we start to have some of our staff come up with different software applications where people can engage and use this, and we even created an Apps for Development competition where we said to the world, look, come and bring us your ideas, and the only requirement is you use our data and you relate to the Millennium Development Goals.  And we had over 115, 120 different contestants.  You could see that it opened up us to the software development community in some parts of Africa, like East Africa.  We didn't get as much to West Africa, and the ideas that people came up with about gains, applicability, uses were things that, you know, in 10 years, with smart people in a room, we never could have come up with.

So, it opens the whole--the notion of democratizing development is we want to--development only works if people own it.  It can't come from outsiders alone, no matter how well-intentioned.  So, if you start to share the information, if you start to engage with people with their own perspective and solutions, you have a much better chance of learning what works and what doesn't, having better feedback loops, improving results and accountability, having transparency because you're engaging the community in the process and, frankly, opening up the Bank to whole networks of people that weren't part of our broader set of partners.

And it also starts to drive how you think about things.  So, for example, we'll be doing a very big report on gender and development in the autumn we're releasing--and you start to say, well, it's a little hard to know the effects of this if people aren't keeping the data on gender.  And so, we're now opening up a gender data initiative.

And what I find most--just to give you an example of what this could be in real life, you can now get on our website and, with IDA, which are for the 79 poorest countries, you can punch up a country and you can see all the projects we have in the country and you can push each one of the projects and learn what's going on in that project, and by the end of the year we'll have this for our IBRD lending, as well. 

And what I'd like to do is move to a world where people with a handheld device could also be able to start to interact with that.  And they say, well, you think this is what the results are but this is what we see in the village.

This is a whole transformational flattening of what was traditionally seen as kind of a hierarchical system, and I think it reflects what's happening more broadly in the world.

MR. GERSON:  Well, let's get to a couple of these questions. 

Here's one:  In many developing countries, there are issues with property rights.  People do not have documents on their property.  How does it affect domestic development in poor countries and what can the international aid community do about it?

MR. ZOELLICK:  Well, the question is exactly right:  Property rights are fundamental and, if--since I was making the point recently on gender, you know, you not only have to think about basic property rights but who gets property rights.

So, for example, one of the issues in the gender area is, in some countries, women didn't have access to property, that means it's harder to borrow.  It transforms the whole economic development process.

Sometimes--and this is, again, the point about learning from experience as opposed to just textbooks, one of the programs we did in--I think it was in Ethiopia--was intriguing was that, on the property rights document, we simply created space for another name and picture, and this vastly increased the registration for women as well as men in the property; a simple change.

Now, at the same time, property rights issues--and so, we work with countries on land registration schemes, doing business environment and improving the investment climate for other types of property.

Donald Kaberuka mentioned the rule of law and legal systems--these are all components of having use of property rights.

At the same time--and this is where, again, the customization is important--some countries have had different types of tenure.  I mean, sometimes it was tribal or a community tenure.  And you also have to figure out how to work and be sensitive to those issues, as well, but it's part of the broader point that I was making with the Bank about, while we're a big financial player, our real effect is by building those institutions and markets.  So, you know, it may be the property rights to have effective micro finance or micro credit or other aspects.  And so, ultimately, it's an empowerment agenda, and the ultimate power for everybody is to own something and to be able to build from it.

MR. GERSON:  Here's another:  Can you share some ideas of working on development in the context of civil strife?

I would add to that:  I was just in South Sudan for the independence, which was really a remarkable event after half-a-century of civil war, but they have huge post-conflict challenges, and I would also really recommend the World Development Report on this topic for this year.  What are some of the lessons that you've learned about working in conflict and post-conflict situations?

MR. ZOELLICK:  Let me start out with sort of just a perspective on this.  This is a topic that interests me.  Partly, I think, on one of the trips to Juba--you were with me.  I'm not sure whether you were with me in Rumbek.  Rumbek even takes Juba a step back--and the--what I was always struck by was that you have people who focused on security issues, you had people who focused on development issues.  Sometimes, you had people focused on governance issues, but they really weren't interconnected.

And in the sense of the Bank, you know, our original name was the International Bank for Reconstruction and Development.  So, our first loan was to France as part of the recovery of Europe.  So, to me, the challenge that you just outlined is the reconstruction issue of the 21st century.  How do we interconnect these topics better?

So, you know, as in a lot of problems in life, it's an art, not a science, but one of the key dimensions would be the importance of basic security, creating inclusive-enough coalitions--this is an important concept:  You may not be able to get everybody in a society but from the political economy view, you have to be able to get a critical mass that kind of moves the issue forward.

You have to be able to get early results, and let me just give you an example of where this may seem obvious, but it was often hard to achieve.

Whenever I would talk to the security people in a country gone through conflict, they wanted jobs, they wanted jobs fast, because they wanted to show progress, they wanted to stop young men from going back to violence. 

You talk to economists and they say, well, that's make-work jobs; they don't last, we can't do that.  So, we've actually learned a fair amount, which we're trying to apply in North Africa and other places about ways that you could do more rapid job creation in ways that doesn't interfere with building the private sector and job creation over time.

So--and these, for example, they may be a food-for-work program.  So, you get some basic sustenance and meanwhile you help build some of the sort of local infrastructure.

The importance of local ownership--so, in the case of Afghanistan, you know, the U.S. and others have struggled with big infrastructure projects and others--you know, the project that we've helped put together with Ashraf Ghani years ago that's probably been the most successful is this National Solidarity Program, where you put together--you develop local councils, they make their own decisions, and they may have small sums of money, $30, $40, $50,000, but they decide, is it small-scale irrigation, is it a school, you know, is it a feeder road.  This develops a sense of ownership and, frankly, in some of those situations, people would be willing to stand up and protect their community against those who might otherwise threaten a school or operation.

So, I think this is a field where it also requires the Bank to integrate more effectively with some of the UN players, regional bank players, and I think on the security side, we're seeing the importance of regional security groups. 

So, it's in my mind because I met with West Africans yesterday, the role that ECOWAS has played in the Côte d'Ivoire situation or in some of the others in West Africa is very, very important.

So, what I find interesting in your point, Michael, is that the--I'm finding that even, for example, at National Defense University or others, these topics are very interesting to them, what we can try to do on the development side, and it reflects a problem that you see throughout development, which is that sometimes people operate in rather--in tunnel categories.

So, I'll give you another one that this audience is probably aware of:

It would surprise people, but the humanitarian and development community still don't interconnect as effectively.  So, people do humanitarian, then they pull out, the development--we need to figure out, for example, working with the World Food Programme, how some of their sourcing issues can help us on the development side even as they're buying humanitarian goods, which is what Josette Sheeran is trying to help develop.

Another area is nutrition and agriculture.  You talked about agriculture.  You know, for people here who are knowledgeable, you know that the nutrition and agriculture people were often, never the twain shall meet.

So, there's a lot of the effort is just to try to interconnect these issues without getting bogged down in people's specialty.

MR. GERSON:  It's interesting, when I was in Sudan, there is a lot of the use of oil money and others to employ people.  It's often regarded as a form of corruption, but it's interesting, when you have an armed population, that those kind of programs prevent the emergence of militias.

MR. ZOELLICK:  Yeah.         

MR. GERSON:  You know, so, we look at that as not particularly good for economics, not particularly good for pluralism, but it's kind of rational in some of those contexts.

MR. ZOELLICK:  Yeah, and just to give you one other sense on this is that your comment is that--often, the international aid community, with the best of intentions, overwhelms countries with very modest capacity.

So, another simple thing that we've learned, we've run a series of what are called multi-donor trust funds, and there's one in Southern Sudan.  These are critical because, if a country has 40 donors and each one is 40 donor visits and each has their own program, these are countries that have a hard time getting basic staffing.  And so, they get overwhelmed.  So, it makes much more sense, put the money in the one pot, have the country, work with the country on its priorities so they own it, help them build the capacity, and then be very careful in terms of trying to improve the governance and transparency and others so that the money goes where it needs to go.

MR. GERSON:  Here's another question:  What is the Bank doing to promote the rights and status of women at the policy level?

MR. ZOELLICK:  Well, I referenced a little bit about the gender report that we will have coming out in September.

I hope this will move us to another stage, but over the past few years, we've been trying to get people around the world to understand the basic concept, which is that gender equality is smart economics.

And so, let's start with the basic concept, if you take 50 percent of your people and you don't allow them to reach the potential, it's probably not good for your economy.

Now, the reason I start with the smart economics is that, in societies around the world, you'll come into different concepts of roles and families and men and women, but what I've found is it can be the poorest villagers in Afghanistan or it can be somebody in Europe that realizes that the facts show you that this leads to better economic development.  This leads to more income for a family, and that starts to drive a whole series of willingness to engage women more effectively.

It is--you know, we're looking at issues of everything from the effect on girls' schooling, the infant mortality issues, the maternal health issues, which obviously is a critical aspect for women in developing countries with opportunity.

Two, some of the topics we talked about property ownership, ability to borrow.  So, it varies by country and in experience, but as we do more research we also start to learn things about, for example, the benefits of working through women head of households.

So, the data is now quite extraordinary and compelling from a variety of sources--and this was driven by some of these conditional cash transfer programs in Latin America--you put money through the women heads of household and the use of the money for children, for the family, for actually the community, is many, many multiples of the male head of household.

Now, being gender attentive is not only issues for girls and women.  So, the part about the problems of young boy soldiers in many of these environments--and so, we've tried to do some pilots to learn more about these things.

We--institutionally, when you run a big institution, you have to figure out how to make sure it's not a "check the box" issue, and so we have what are called task team leaders on a lot of our projects and we tried to create an incentive fund to allow some of the task team leaders to work on projects that have particular gender dimensions because I want to build it into the DNA of kind of people doing these.

So, anytime you face a challenge like this, you always have to decide, do you build it as a separate capacity, or do you try to learn and then integrate it through the organization.  And we've tried to use some pilots in specialized aspects.  We're trying to use research to increase people's attentiveness in the Bank, but around the world, but then the real goal is how do you integrate this and scale it up.

MR. GERSON:  Okay.  One more question and just, like, a two-minute answer, because that's our time:  Can you just briefly comment on the latest demise of the world trade talks?

MR. ZOELLICK:  Well, I did this recently and got a little attention.

What I'll just say is this:  The general environment is that Doha is doomed and people are kind of looking beyond it.  I believe this would be an extreme tragedy for the international system, because, at the time we talk about pro-growth, trade, we've seen historically, can be one of the best drives of growth.

My own belief is that, ironically, the U.S., with talking about cutting ethanol tariffs and subsidies, some of the other things about agricultural subsidies could put together a package that--you can't do it by its own, and we're in this world of emerging markets, the emerging markets have to step up, that can play a leadership role in driving it forward.

Now, I realize these are hard choices and complex politics and so on and so forth, but at least I was trying to make the case that simply looking at the U.S. position, if the U.S. is still a leader in the world, there is still an opportunity to push this, and if not, then what?  So, what are you going to do to open markets and try to create additional opportunities?

Having said this, it would require, I think, the Europeans would be very supportive--but it would require the Brazils, the Chinas, and the Indias to also no longer pretend like they're Sub-Saharan Africa.  And I do believe the Africans can help us do that.

So, I was against the view of dumbing Doha down, as I warned that you're not going to get a deal on that, anyway.  And so, I was making the case for being bold and more aggressive.

I know, in the U.S. constitutional system everybody says, oh, you just have to bring this back to Congress, but as you know, Mike, I've passed a few of those agreements, and I honestly think that, if you're not on offense, the Congress isn't going to do it for you, and maybe the discussions about debt limit are the best suggestion of that at all. 

It's not going to come that--you're not going to get a trade deal driven by Congress.  So, you need somebody in the United States to be able to organize this in a--with a vision and an offensive direction.

The last point is this, that also fits to this:  We have to help people adjust to change.  So, the other place where I think the United States has not kept up is, you know, we have an unemployment insurance system that is 80 years old.  We have a trade adjustment assistance program that's 40 or 50 years old.  You have a workforce investment act that's 30 years old.  Why not take these literally tens and tens of billions of dollars and ask yourself, is this the system we would design to get people back into jobs in an economy that's changing, and I think you'll find you want a different system that can help people adjust to change.

MR. GERSON:  Well, Bob, thank you for your thoughtful answers on a variety of questions.  Thank you for your service to the world's poor, and thank you for being with us.

[Applause.]

MODERATOR:  Thank you, Mike.  Thank you, Bob.