March 30, 2012
New Delhi, India
SUDIP MOZUMDER (moderator): Good afternoon and welcome everyone. Thank you for joining us for the press conference. We are of course very happy to have with us Robert Zoellick, President of the World Bank Group. I know you have a lot questions to ask, and Mr. Zoellick would like to share some of the highlights of his visit here. So I will not waste more time and hand it over to Mr. Zoellick to give his opening remarks, post which he will be happy to take your question. Thank you.
ZOELLICK: Thank you Sudip.
Well I’d like to begin by thanking the Government and people of India for their very warm welcome and hospitality for my colleagues and me during this visit.
I especially want to thank Finance Minister Mukherjee, and ministers Ramesh and Chidambaram for our discussions over the past couple of days.
My prime reason for coming to India this time is to thank my colleagues and the government for their strong co-operation and support during my tenure as President of the World Bank since I’ll be stepping down at the end of June.
India and the World Bank Group have been exceptionally good partners during a time of financial turmoil and economic uncertainty.
But I also wanted to hear about India’s priorities going forward – the challenges and opportunities lying ahead – so as to ensure the momentum of the Bank’s successful engagement with India continues.
I’ve had meetings with the government as well as with private sector representatives, economists, civil society, and academics on topics as diverse as the economic outlook to strengthening India’s national markets, and India’s role in the region.
And I also met this morning with a group of business executives who are interested in our Global Tiger Initiative with the assistance of the Confederation of Indian Industry and the National Tiger Conservation Authority.
A clear message that I’ve heard over the past few days is that India would very much want the World Bank Group to remain decisively engaged in the country – at the Union level, at the state level and also with the cities.
During my time as Bank President, I’ve sought to put countries’ first. They’re our clients and I also firmly believe while it’s important for the Bank as a development institution to focus on the world’s poorest countries, that we’d leave a huge hole in development and a modernized multilateralism if we were not to support middle income countries.
Some two thirds of the people living under $2 a day are in so-called middle income countries. And an effective international system requires the World Bank Group to stay deeply engaged with countries such as India, because our value is not just money, but access to knowledge and our international reach and our ability to use those to leverage private financing.
Fast growing and influential countries such as India will in turn contribute to a stronger, better informed and more effective World Bank Group because India is a global player.
The World Bank Group will seek to offer India additional financing support as it embarks on its 12th Five Year Plan.
India is the largest client for the arm of the Bank which lends to middle income countries – that’s the IBRD. We’ve already moved to leverage additional support for India through the IBRD and we’re looking at making the case to support countries such as India in the transition of funding from IDA, the International Development Association, which is our fund for the poorest.
Today if you take the IBRD and IDA lending together, the World Bank has about $38.5 billion of credits to India. IFC, our private sector arm, has an additional $3.5 billion of investments – so in total that’s $42 billion.
We are also looking at leveraging additional funding through the private sector to help India meet its development needs, especially in the area of infrastructure. And public private partnerships can help India meet some of its huge needs.
As I mentioned, IFC our private sector arm has been very active. We forecast it’ll invest about $1 billion this year in India and our IFC team has built up their advisory services, particularly with India’s low income states where we’re trying to help design effective public private partnerships.
So the World Bank Group stands ready to support India as it strives for sustained growth, that’s inclusive and environmentally sustainable.
On Wednesday, I had an opportunity to visit Odisha and saw how the Bank is supporting India’s efforts to protect its environment and provide sustainable livelihoods for people through and integrated coastal management project. And IFC also provides advisory services in Odisha for public private partnerships.
I’m also pleased the Bank has been able, in past years, to partner with India in some of the transformational programs that have been launched – for example, from roads to freight corridors to cleaning up the Ganga River- which I saw on my last visit - and importantly to improve the lives of millions of rural women through the National Rural Livelihoods program.
On this visit, when I was in Odisha, I had an opportunity to meet more women who’ve benefitted from the rural livelihoods program. And that stop reminded me that just as important as the money that was received was the opportunities that they felt were now possible. One of the women told me that the greatest benefit of this program was opening her eyes to the world. Economic empowerment offers dignity and respect and those gains reach far beyond numbers. Later today, I’ll also meet with some women from SEWA – the Self Employed Women’s Association - where we – through the Bank and IFC have built a very strong partnership trying to finance some of their efforts.
So I close where I began – with thanks to India. The World Bank - through its financing and technology – can help India meet the challenges ahead and open up new opportunities for tens of millions of people. That is a fantastic opportunity.
But if you’ll permit me, I’ll also want to end with a note close to my colleague Roberto Zagha who’ll be leaving India later this year as our Country Director. He has done a fantastic job and his colleague Tom Davenport from IFC is also – with the strength of our Bank and IFC staff – has left a lot to be proud of here. They’ve really done a superb job. And yesterday I had a chance when in Chennai to thank Sunil Kumar and the some 400 support staff that we have brought together in Chennai because they keep us at the top of our game worldwide, whether it be with financial information technology or support operations. So thank you. I’m pleased to take your questions.
MODERATOR: Thank you, Mr. Zoellick. Before we take questions, some ground rule; please do introduce yourself, your name, your organization, and do raise your hand so that I know you're interested. Let's start with Indivjal
REPORTER: I'm Indivjal from Business Standard, According to the World Bank [unclear] anyone earning below $2 a day is poor [unclear]. But our Planning commission says our poverty line is Rs. 28 a day in urban areas, Rs. 22 a day in rural areas. How do you see the whole controversy around the poverty line and then the [unclear] when the World Bank is engaged in any project, will it see poverty line as $2 a day project? Or whatever planning commission says?
ZOELLICK: Well, frankly, I've seen that this topic has gained a great deal of attention and heat during my visit, and I have to tell you that, frankly, I think it's been overdone, and here's the reason why.
Countries set individual poverty lines that are based on various calculations - some cases of livelihood support, nutrition. But under any poverty line, what you see that India has done is reduce the number of people in poverty, and that's a good thing.
Now, the Bank itself has some multiple lines that are based on rough international comparisons, but the fact that we use multiple lines also tells you something, which is whether you're living under a dollar a day or $1.25 a day, or $2 a day, people are still struggling. So, I think even if people are reduced--or you are able to get people above the poverty line, people are still poor. And so, the challenge for India and the challenge for the World Bank as a partner is to try to create an upward ladder of opportunity.
So, the good news is that India has reduced the number of people that are below its basic sustenance poverty line. But t I certainly did not encounter any statement or interest by the Indian government that they don't want to increase the income of all Indians, particularly those at lower levels.
QUESTION: I am Srivats from Hindu Business Line. Just wanted your assessment of the pace at which India is going upon undertaking structural reforms. And what kind of growth outlook do you have in this current economic environment?
ZOELLICK: Well, I start with an observation that I think reflects how far India has come, and that is there's an active debate about the fact that 7 percent growth is too low.
I've worked with India over the course of decades, and I remember when 7 percent growth would have been seen as a pretty good year. Now, that's a good thing, because India, I think, can do better. And so, our current estimate is about the same as the government's, about seven percent growth. But I think the structural reform agenda that you mentioned will be the key to advancing that even higher.
So, some of the sessions that I had here with some of the experts that Roberto put together focused on issues such as creating a truly national market. Now, a national market is partly rules and regulations and laws. It's partly infrastructure investment. And I think that there's a huge potential. And that's why whether the area be railroads, whether it be roads, whether it be ports, whether it be some of the agricultural limitations that prevent one state from exporting to another, that there are significant opportunities to be had.
Now, to put this in the context, remember, we're coming out of the worst economic crisis since the Great Depression. India, I think, properly had some expansionary policies to try to offset the downturn, and the Bank, I'm pleased to say, was able to really increase our lending to about $9.5 billion in 2009. So, we certainly saw the need.
And India, like other countries, is now having to get back--get the deficit back down. The monetary policy had interest rates somewhat higher, and that's understandable because India had higher inflation. That inflation rate is coming down.
My sense, and this is one where I've really learned more from Indian experts, is that some of the inflation was really based more on supply side constraints, and particularly in the agricultural area.
So, I think that in terms of overall macroeconomic policy, India, at least relative to others in the globe, has come through this reasonably well, and I think the structural agenda that the government has set forward is the right thing to do.
Now, one of the reasons that, when I come to India, I don't only visit Delhi is that this is a vibrant democracy, and it's also a country that has a federal system. So, I visited Rajasthan and Bihar and Orissa and Mumbai, and clearly for the government to make some of these structural policy shifts, they have to work with the states in a number of these areas, and that's also how the Bank can be supportive. So, I mentioned not only on the IBRD side, the World Bank side, but our IFC team is focusing their efforts on some of the low-income states.
So, I think that there is still great opportunity to be had, and I'm very confident that India will continue to be a fast-growing economy and a more influential economy in the world.
REPORTER:: My name is Tritesh and I'm working with Governance Now magazine. I have two questions. First is on Ganga River Project, that World Bank is supporting India on that. We recently saw one of the professors taking fast on the issue.
Are you looking to the whole issue in a holistic way, because it's a lifeline for at least 45 crore population of India because lots of towns are situated near the bank of Ganges.
My second question is not as a president but as a U.S. citizen, because this is the time when World Bank is also re-electing a new president and there are voices raised by poor countries and other countries to have their nomination in the World Bank. So, what do you think about that, as U.S. has its fiefdom on selecting the World Bank president? And you should have gone away from that practice and chosen a candidate from the poor countries to have inclusive representation on that.
MR. ZOELLICK: So, this is from Ganga to Washington.
MR. ZOELLICK: Well, let me start on the Ganga, and I'll ask Roberto to add some particulars on this.
I visited this project on my last visit here, and one of the reasons that the World Bank participated in this was that the Union government as well as the states along the Ganga placed this as a high priority. And I believe our commitment was about a billion dollars, which is still only a modest of the overall amount. And we wanted to put in a substantial financial contribution, but our major contribution is trying to share the lessons we've learned from around the world about the cleanup of rivers and how to do this in a sustainable way.
Now, part of this of course deals with the sewage that goes into the river, part of it deals with the industrial plants, and how you make this an ongoing effort. And frankly, there were also some very important biodiversity aspects, because I was able to see when I was last there this very rare river dolphin, as well.
Any time you have such a waterway that is historic, that has religious significance, that has economic dimensions, that has environmental dimensions, a key part will be an active consultation with the communities and the states involved. That's something that is primarily the responsibility of the Indian Government. But my own sense is that, as part of the debate, people obviously have strong feelings. They deserve to be heard. But if we can help clean up this historic river with the environmental and economic and social benefits, I think it would be a great achievement.
So, do you want to add anything, Roberto?
MR. ZAGHA: Not much, except that professor has stopped his fast, as you know, and so that's a very positive sign that there's a dialogue opening up with the government.
And just yesterday, we went until 10:00 at night discussing different perspectives of how the Ganga should be--pollution issues should be addressed. And you have, as Mr. Zoellick said, a spectrum of opinion. Some people think the waters of the Ganga should not be touched. Others think they can be touched under certain conditions. And a third category are much less sensitive to the religious and ecological dimensions, and social dimensions.
So, it's a very complex issue and you need to create--aggregate different preferences in a way that makes sense both for the values of people and for the long-term development of the country.
And the Government of India is working very diligently on that. You know, there was a Green Tribunal case that has recently ruled in favor of one of the dams. Some dams have been stopped.
So, it is a complex issue on how to exploit the hydro potential of the Himalayas is something that will be very important in the years to come.
ZOELLICK: On the issue of the succession of the Bank, first, that's a decision for the 187 shareholders. It's obviously not my decision.
Second, I am pleased that there are three excellent candidates that have been put forward, and I think that says good things about the interest in the Bank as a whole.
Third, when one talks about building a more inclusive Bank, I think it's important to not only look at the top leader but to look throughout the organization. And I mention that because, during my tenure, I tried to emphasize the advancement of developing country professionals as well as women--about half the officers are now women--and this is something that I think not only makes it a better institution, but it helps us with another dimension, which I mentioned in my opening remarks, but often gets lost, which is treating countries as clients.
There are still some people in the development field--and this actually came up in the succession competition--that believe that certain development experts can come with the magic bullet, and you need one or two or three priorities. As a generalist who's been around different fields, the lesson that I learned is you have to go talk to the clients and hear what they think are their priorities. It may be infrastructure. It may be some of the complexities of coastal zone management. It may be rural women's development. And then, where the Bank has strength is being able to draw experience from around the world and be able to share it and customize it.
So, I emphasize that because, while the top leader, I like to think, is important, it's not by any means the sole piece of it.
As for the role of U.S. officials, my sense is just this. I've spent some 20to 25 years working in international relations from the point of the United States and Treasury and USTR and State and other locations, and I think it's important to have the United States be an active participant in the multilateral system.
So, sometimes there's a certain irony in this question, because I often have to fight against those in the United States that want to move away from these institutions. So, therefore, I believe it's important for the U.S. to have some people that are in leadership roles in some of the institutions. Now, that may or may not be the Bank. But if you go back and you look how at the international system works, there's never been an American who's headed the IMF. There's never been an American who's headed the World Trade Organization. There's never been an American who's been a UN Secretary General. There's never been an American who heads any of the regional development banks.
So, I would just suggest, if you want to keep the United States engaged in multilateral organizations - keep openings somewhere, because the issue that I have to deal with is keeping the United States supporting these organizations. But I hasten to add, that may or may not be the Bank.
REPORTER: My name is Shweta Punj. I work with Business Today Magazine. I was just wondering, has the World Bank done an assessment of all the social sector schemes that India has, such as NREGA, the efficacy of these schemes. And also, what would be your priority sectors in India?
ZOELLICK: Well, the second part of your question is easier to answer, because our priority sectors are what India determines are the priority sectors.
Now, we have an active dialogue and we share what we're encountering globally. And frankly, we're learning things in India that we can apply more broadly. And let me give you just an example that I talked about today with some of the conservation groups but also with the Finance Ministry.
In October, India will be hosting a biodiversity international conference, the Conference of the Parties. At the last biodiversity meeting in Japan--Nagoya, Japan--the Bank introduced the idea of wealth accounting for valuing ecosystems. So, take those mangroves that I visited the other day. In sum, under a pure GDP notion, people may just wipe those mangroves out for farming purposes, but as the people in that community learned after the 1999 cyclone, there's a benefit in terms of protection through the mangroves. So, we are trying to experiment with the idea that you need a broader notion of accounting that captures ecosystem services.
So, we've started some pilots with a number of countries around the world, and India is one that we are engaging with this, so that we can learn from the Indian experience and then transfer it globally.
Now, that's an example of really a two-way street. We have some of the world-class knowledge, but it doesn't only work coming from Washington. It has to be done in individual countries. So, we're doing this with Colombia and some countries in Central America and Mexico as well as India.
So, when I mention the countries' priorities, at the same time we engage and we share some of the experiences that have been learned elsewhere. The types of rural women's program that I went to yesterday are ones that, in a sense, we do all over the world and we try to capture some of the knowledge.
But if you take me one step further, I would say, first, infrastructure is going to be very important for the growth and productivity of India, and yet this has to be done in a way that is also sensitive to some of the environmental and social concerns. You heard about it with the Ganges River. You heard about it with tiger preservation, another topic that we're talking about.
Second, I think that overall there is a great possibility to improve the effectiveness of public spending, and this is not just for India; this is for any country; but how to make sure that the money, whether it's at the union level or the state level, gets the full benefit.
And this also leads to a third aspect which is, for India to really grow, it has to keep investing in its people. So, these are educational issues, these are some of the nutrition issues, some of the health issues.
And even as I came here, we just did another educational loan for India for the secondary sector, because India has gotten a lot more children into school, girls as well as boys in the primary are. But if you're going to compete in an international economy, you need to get more people in the secondary area. So, it's the fundamentals of investment in people but also some of the aspects that we talked about here for structural reform.
And then, that connects to your effectiveness point. And this is a very important point that applies to India but applies to all countries. Everybody has invested a lot of money in development and anti-poverty programs, and sometimes they're extremely well-intentioned and good purposes, but we have to be honest when they don't work.
So, one of the things that I've emphasized at the Bank is a results orientation, the idea that we have to be transparent as we do these programs, and we have to ultimately be accountable. So, we're trying to build this into every project that we do so we can learn the lessons, including the mistakes that are made.
And indeed, we actually this year created one of the--it's only the third new lending product that the Bank has that's called Performance For Results. And the idea is that the payments would actually be dependent on the results, and so connecting it not just the inputs but to some of the overall outputs and outcomes. So, we tried to build that in.
In addition, we have various independent evaluation groups at the Bank that also double-check our work. Sometimes that's not so pleasant and the former head of our Independent Evaluation Group was actually a senior Indian official who has now gone onto the Asian Development Bank, but it's healthy for organizations.
So, I emphasize this because the Bank has also had to learn over the years, just as countries had, and one of the core principles that I've tried to put in place, in addition to the client service, is a more open institution. So, we have an Open Data Initiative.
So, you go check our website, and you can now find every project that we do on the website, and you can point and you can get the information on that project; and before long, we want to have it interactive so that the people in a village will be able to act with us and say, "This is what you think the project is doing, but here's what it's really doing."
So, if you take what I was doing in Orissa two days ago, I was trying to do that face to face. Well, that's nice, but I can only be in so many places at once. With the changes in telecommunications, we should be able to get ongoing, interactive, live interaction from the people in the communities about our projects. And of course, since we're always worried about corruption, too, that's one of the best fights against corruption, is that people on the ground can say, "You may think this is what's happening, but we were supposed to get two teachers, and only one showed up."
QUESTION: Hi, this is Mahua from Hindustan Times. You know, we've had the BRICS meeting in Delhi and they're talking about a bank, the BRICS bank, and you said that it will take time in sort of coming up to be operational. What will be your role as and when it comes up? What's your comment on that?
MR. ZOELLICK: Well, I didn't get to look at the exact communiqué language, but I was told that the next step was for the finance ministers to analyze the concept.
And you're all shrewd journalists. Analysis of concepts can either be done quickly or take a while. So, I really don't know how quickly it will move ahead.
But let me tell you what I think is driving this. It's partly the question we had here. I think India was one of the sponsors of this idea, and partly it was because they want to get more money into infrastructure and development, which is exactly one of the topics that I've been trying to talk about here, so I think it's a reasonable concern and issue that people have.
If they do develop the institution, the Bank will want to be a partner with it, just as we are with regional development banks and NGOs and civil society groups and national development banks. And where I suspect we will be able to complement each other is that some of the institutions that have been developed in individual countries are stronger on the financing side than they are on the knowledge and learning and expertise side. We have the benefit of being global and operate in 187--we have 187 shareholders. We operate in about 120 countries. So, we might be able to share knowledge and then do joint financing. We do this with the Islamic Development Bank.
So, we worked on projects with the Islamic Development Bank, which probably has more in the way of financing than some of the technical, sort of analytical work.
And so, the spirit that I've tried to take with the Bank is not to be a monopolist but to cooperate whether it's private banks, BRIC banks, development banks.
As a practical matter, because I was involved with setting up some of the regional development banks earlier in my career, it's not an easy sort of task. People have to agree who is going to put up the capital. They have to agree on the governance structure. They have to agree on a location, and all these same questions that apply to things like the Bank President of the World Bank apply in that context. And if it's going to borrow, you have to get a rating, and obviously the higher rating you get, the cheaper you can borrow. So, we have managed to keep the Bank as a AAA rating which is--the United States isn't a AAA rating now. So, those will be challenges. But I don't mean to suggest those in a way of being cool to the concept. I mean frankly, the more that countries want to work together on development cooperation, it should be our role in the Bank to support that.
QUESTION: My name is Mrinalini. I am from ET NOW My question to you is that the BRICS declaration that was adopted yesterday also was very, very critical about the role of the developed economies as far as fiscal responsibility is concerned and they were very critical about the global institutions like the IMF and the World Bank and the need for transparency as far as the elections for these institutions go and as far as their responsibility goes in providing stability to the global economy. Would you concur with the view that the BRICS took yesterday?
MR. ZOELLICK: Well, since I haven't read the whole document, I can't endorse it blankly, but let's take the items that you mentioned.
An open and transparent process? Yes, and that's what the shareholders have agreed and they should live up to it.
Second, an open and transparent institution? Definitely yes.
One of the things that I instituted at the Bank was a Freedom of Information Policy that is based on the Indian and U.S. Freedom of Information laws, and it's now the most advanced freedom of information policy as a multilateral. So, you, as a journalist can ask for information and, as I said, sometimes the bureaucracies resist this. I think transparency and sunshine is healthy for it.
Third, let's see--what other part did you mention? Oh, the fiscal responsibility.
Well, let me answer that more broadly, because I think each country's circumstance is somewhat different.
I think that we're in a period where there's been a lot of focus in the developed world--and in the developing world, too--on getting the macroeconomic stability; so, trying to get control of the spending and the debt, and I think that's important to do. I mean, we have to get the economy back on track.
Second, a number of countries, particularly the United States but also the European and Central Bank, have extremely unusual monetary policies. Now, I'm not being critical of those policies, because those policies are designed to help countries get back on the track of growth, and that helps India and everybody else. India still has about 14 percent of its exports to Europe, so you want Europe to grow.
But I will say that the most important thing for the developed countries is a similarity to what I mentioned for India, which is the structural reforms for growth. So, the monetary policies buy time. They don't solve the problem.
And so, what I emphasize is that, whether it's developed or developing countries, you have to work on the fundamentals of creating growth--your tax policies, your employment policies; in the United States, some dealing with the entitlement policies; your infrastructure, your education, your innovation, your energy policies--because if the developed countries do not take those steps, my concern is that you will see the monetary authorities pressed to continue with unusual policies and their policies won't really be the right ones to solve the problem.
Again, I'm not blaming them, but because growth will be stumbling, they'll be doing things that--it's like a wrench that doesn't fit the nut. They'll be trying to kind of make it work. And then, we'll have what will be likely an international economy that will have sort of muddled-through growth, volatility, and high degrees of uncertainty.
Now, as a development institution, we have to help our clients prepare for that. So, we're actually talking with all countries about basic safety net policies. We're talking about increasing domestic demand and to try to watch their financial systems to be able to prepare for that.
So, again, I think it's--sometimes in these international debates it becomes finger-pointing. That's not what I'm trying to do her. But I'm trying to say, what I've seen over the past ten years is a much deeper integration of the international system. And so, countries have to share their overall responsibility and in this case structural reforms are as important for the United States and Europe as they're going to be for India.
One last point just to show the difference: In the past five years, two-thirds of global growth has come from developing countries. Now, if you looked at those numbers in the 1990s, it probably would have been in the low 20s. So, that shows what a transformation we've had in the international economy. I think that's healthy. I think it's good for the developing countries to grow more, but it also shows that the shifts of responsibilities including on issues like trade will become more important.
MODERATOR: We'll take two more questions [unclear 0:27:55].
I'm Sudhaman from Financial Chronicle. Can you give us some specifics of the additional funding that the World Bank is looking for India? That's one thing.
And secondly, do you think the Doha Development Round is dead, virtually, dead, or do you think it will be revived some things would move forward? That's one question. And secondly--third question—is regarding this quota. Developing economies feel that advanced economies should shed their quota, transfer it to emerging economies. How do you see that?
ZOELLICK: On the first question, I was able to get the Bank Board to agree to increase the single borrowing limit for India alone. So, I'm actually quite pleased India is the one country that has a higher limit than all the other countries because we operate as a cooperative.
And we were also able to work out some other arrangements with India. So even after we've vastly expanded the lending in the crisis, we're looking from IBRD to do about $1.8 billion of lending in the years ahead, and I have some ideas how we can try to stretch that, but that's the basic amount.
Second, remember, we had the IDA lending, and that goes to this transition that I've discussed, because India and a few other countries are moving above the income level for IDA. And one of the points that I discussed with our Indian colleagues is some ideas that I and our team are developing for the next IDA on ways we might be able to keep IDA resources coming to India but perhaps in a slightly different way. And so, this would be a couple years out, but we're trying to do the homework to go above those amounts.
And third, remember, we have the IFC funding. And what is very encouraging to me is that our IFC team was doing about a billion dollars this year. So, on top of the 1.8, you have a billion dollars plus whatever IDA funding that we have.
And the other point that I've been discussing with the government is we need to try to leverage that as much as possible. So, can we use it in the form of guarantees or as part of a special public-private partnership infrastructure facility where we might put in some money, the government of India put in some money, some private sector money. So, we're trying to stretch each of those dollars further.
Your second question was on the Doha Development Round. My basic view is, before people declare something dead, I think that they should have something else as an alternative because, going back to these issues about the international economy, by and large the international economy has resisted protectionism. There have been some protectionist actions, but globally it hasn't had a terrible effect on trade, but you can't take that for granted. We're still going to be in very difficult periods here.
So, there are ideas about sectoral reforms, sectoral liberalization. Some of this may appeal to India because some of these might be service sector based. There are ideas about trying to move things forward in certain industrial sectors. There are ideas about regional or bilateral or other agreements.
So, I'm a committed believer in the trade opening process, but I know it's a political difficulty. So, I would keep trying to push for ways to advance it.
And I might add on that note, where the Bank has done some very good work is that, in addition to the formal barriers of tariffs and quotas, there's a lot of costs built into custom systems and logistics systems, what we call the "beyond border barriers."
And actually, one of the things I discussed here in India is how we could work with India and its neighbors to institute some of those improvements in customs and logistics systems so as to help deepen the integration in South Asia; because if you look at the economic integration in South Asia compared to other regions, it's quite modest, and there could be other mutual economic gains through that.
And I think your third question dealt with voting shares. One of the things that I was able to do was to get a voting share increase. So at the IBRD, I think it's slightly over 47 percent for developing countries' share of the vote. But I personally think this is sometimes over-emphasized because we rarely take votes on our Board.
Now, at the same time that we increased the voting shares, we did something that was probably more important, which is we added a 25th chair on our Board for Sub-Saharan Africa.
And the way that our Board works is most of the influence comes around the discussion around the table. So, by adding what is a third chair for Sub-Saharan Africa, I think we actually have a better sense of participation and discussion.
So, I'm not trying to say the voting parts are insignificant, but I'm trying to put it in context, just like this gentleman's question. When I think of a fair, more diverse, more inclusive Bank, it starts with how you treat your clients as partners; it talks about your staffing; it talks about voting shares; it talks about the senior level officials you bring in. So, one of the people who is a top contender to succeed me was somebody I brought into the Bank. Well, that's a good thing--I mean, I brought in at a higher level. She had already been at the Bank once.
MODERATOR: The last question. The lady in blue over there. I'm sorry, it has to wait.
REPORTER: I know you're in a hurry, so I'm going to ask very specific--
ZOELLICK: I'm not in a hurry. I've been here a long time, I think.
REPORTER: This is going to be very specific. The first is that, you know, you have supported India's Bank Recapitalization Program a couple of years back. And now, with asset quality declining, there is a need for bank recap. So, are you going to look at further bank recap within this fiscal particularly?
The second is that, you know, the Iran crisis is, to a great extent, a banking crisis, as well, since money is not being able to routed [unclear] to India and China, and the BRICS have made it very clear that they are not willing to support the sanctions and they are greatly dependent on Iran for oil. So, what are you views on that? How do you think the crisis can be resolved?
And third, within the country--this third question--within the country there's a lot of] angst from the FIIs on the new [unclear] provisions, but across the world, there is a move to prevent tax avoidance structures. So, what do you think of tax avoidance structures, and what do you think of India's move to [unclear] anti-avoidance rules on FIIs.
ZOELLICK: That's a fourth one you snuck in.
ZOELLICK: Well, you put in two parts. I'll defer to Roberto on the bank capitalization. Do you want to say anything about that?
ZAGHA: Very quickly, we did support bank recapitalization. It was a very successful operation because it enabled the banking system of India to respond to credit demand at a time where the private sector was not expending credit. And we have not been asked for another recapitalization, but if asked, we certainly will look at it very seriously.
ZOELLICK: Your second one related to oil prices. I believe that the increase in oil prices has put an additional strain and risk factor on the world economy. I've noted that they've come down a little bit in recent days, and I think that's good.
I think this is significantly driven, as your question suggests, by political insecurity uncertainties in the Gulf, but the oil market often depends on sort of what is coming in and out of line. So, for a while, you had Iraq down. Then you had Libya down. So, a lot really does depend more on the specifics of market conditions.
As for the sanctions, I don't think you can separate this from the broader nuclear and security questions. That's obviously not the remit of the Bank, but I think all countries have to be aware that I don't think that problem is going to go away so soon. In other words, so, if you're asking, will this be a potential point of uncertainty in oil markets, I suspect that it will continue to be a point of uncertainty, and that's why, at the Bank, we try to help countries deal with that and try to support them.
And then, you had a two-part--last one--the tax avoidance.
Well, the Bank has tried to--as other international institutions--has tried to support the G20 efforts, which India has been a part, to avoid tax havens, and this strikes me as a fair and reasonable step. I mean, part of this comes out of the financial crisis, and people feel that, while different countries are going to have different tax systems, that it's not really fair for corporations to dodge taxes.
Because we have detailed relations with all countries, we sometimes have tried to help the G20 to understand that there may be such special circumstances that require adjustments. So, for example, we worked with Panama and some of the Caribbean countries, because the OECD rules assumed you had to have a certain number of tax treaties with countries. Well, if you're a small Caribbean country, you might have a hard time getting other countries to negotiate tax treaties with you. So, that's not really fair to the Caribbean countries. So, we often kind of try to represent the smaller and poorer ones or, in the case of Panama, Panama was used as an international financial sector because, frankly, people trusted the legal system more than others. So, they had to clean up their financial banking sector, which they're doing, but we partly try to help them, and so--try to help them with the expertise, try to help them with the G20 to get some of the bigger European countries to understand the process of change.
So, I think that we want to try to eliminate tax havens, but we also don't want to be unfair to poor countries that need to go through an adjustment process.
And then, you asked on the Indian policies. We had some discussion with the Finance Ministry to try to understand this and its relation to investment. The sense that I had, but this is something more appropriate to ask them, is the heart of their policy really relates to your question. They believe that people should pay taxes somewhere. And so, what they want to try to avoid is companies that, through special tax arrangements or treaty arrangements or others, avoid taxation.
And my sense is that--and this is really again for them to decide--or to explain--that some of the discussion about retro activity was not what they've intended and that they really see this as interpretations going forward. That really is for the Indian authorities to address. But I guess I would say, given some of the press discussion that I've seen, in the international as well as the Indian press, I think the Indian government is sensitive that it wants to have an environment that draws both domestic and foreign investment. And so, I hope that investors will give the Indian government time to discuss this and explain further their logic, and this is just part of a budget presentation. As you know, that runs a longer process.
MODERATOR: Thank you, Mr. Zoellick. We have to really bring it to a close, I'm sorry. I just want to thank everyone for the excellent questions and Mr. Zoellick for the time that he has taken to answer them. Thank you, Mr. Zoellick.