Washington, D.C., April 17, 2005
MR. GOLDIN: Welcome to the Development Committee press conference;
There are examples of the Communique at the door.
I am very glad to have with me on the podium Trevor Manuel, the Minister of Finance from South Africa and Chairman of the Development Committee; James Wolfensohn, the President of the World Bank; Rodrigo de Rato, Managing Director of the IMF; and Tom Bernes, the Executive Secretary of the Development Committee.
This is the 20th and final Development Committee press conference that Jim Wolfensohn will have the fortune to attend, so it is a historic occasion, and we're sure you will be suitably kind to him.
We only have half an hour. We have to be out of the room at 3:30. So I'm going to ask the people on the podium to make some short opening statements and then open the floor.
CHAIRMAN MANUEL: Thank you very much, Ian.
Good day to all of you.
This has been a very, very important meeting, important because it makes the beginning of a serious review in international institutions in respect to the decisions taken five years ago by heads of state in the Millennium Summit.
By September, heads of state will meet and ask how far we are in respect of implementation, and clearly the two institutions here, the Bank and the Fund, have to then respond in respect of resource allocation.
The meeting we had today focused largely on resources; the vision is in place; some matters relating to the implementation. As a result of previous decisions taken, we had from the team in the Bank and the Fund, led by the Chief Economist, Francois Bourguignon, an exceedingly good document called the Global Monitoring Report--what is the state of the world now--and that was the subject of much of our discussion today because it speaks narratively and empirically to the story of development and underdevelopment, of the resource constraints and of the opportunities, and so, naturally flowing from that, a detailed discussion on the financing questions, because you would know that there are a series of proposals on the table--the International Financing Facility, innovative proposals supported by a number of heads of state now--and certain deficits still in respect of funding the Millennium Development Goals.
So this was the context, and I emerge from the meeting greatly encouraged by the spirit that obtained, and of course, the one issue is that if you want a sense of history, if you want a sense of legacy, then, building up to this point with the head of steam that we have between now certainly and the days that must be counted on to the UN General Assembly, that head of steam has been up largely under the leadership of Jim--his passion, his drive, his energy--but of course, Rodrigo and the team at the Fund have been very important in this as well.
MR. GOLDIN: Thank you very much.
MR. WOLFENSOHN: I have nothing to add.
MR. GOLDIN: Rodrigo?
MR. DE RATO: No.
MR. GOLDIN: The floor is open. Please identify yourself for the transcript.
The gentleman over here.
Andrew Bolton [phonetic], Financial Times.
A question for Mr. Manuel and anyone else who wants to chime in. The Japanese Finance Minister was saying yesterday that there needs to be reform of the governance in the Fund, and representation on the Board or the Fund risks becoming irrelevant in Asia. And, as a shareholder and also as Chairman of the Development Committee, is there a need for reform of governance in the Bank, including representation to give a bigger voice to developing countries?
CHAIRMAN MANUEL: That is, of course, a matter that has been on the agenda for some time, Andrew. Broadly, we have used the mantle of voice and representation to cover this, but it must go further. It must deal also with the issue of quota reform, certainly in the Fund. We need a more accurate representation of measures of output and use of what, at the end of the day, remains a credit union.
It is something that we flagged about 18 months ago. I placed on the table a road map. We are largely on track. We will certainly come back to this matter at the Annual Meetings, but there is work happening, and we are committed to ensuring that there is larger representation for developing countries, but also a different weight to participation from the larger shareholders.
QUESTION: Is there a deadline?
CHAIRMAN MANUEL: The deadline that we gave 18 months ago was the Spring Meetings of 2006, so the Annual Meetings this year would be exceedingly important along that.
MR. GOLDIN: The lady with the green top.
QUESTION: Joan Vianne [phonetic], USA Radio.
Mr. Wolfensohn, I bid you farewell, and I wish you health in your endeavors as you go from here.
I would like to raise a question overall of debt and money and goals. Debt relief--could you help me understand some of the mechanics of debt relief, such as which country or international institution it would be aimed at; if it is a country, will their debt be totally forgiven, or will there be some debt-for-equity swaps? How much debt are you looking to forgive? If the debt is forgiven and a country is put on good footing, then why do we need an increase in ODA, the IFF, and other types of global taxation? Just how much is how much?
MR. WOLFENSOHN: Well, there are a series of proposals on the table. The initial idea came with the HIPC, the Highly-Indebted Country Initiative, of several years ago, which was to take the countries that were very much in debt much like an individual can get in debt, and help them get out of it and get started again with a sustainable level of debt. Like all of you probably have credit cards and mortgages, there is a level at which you can operate, and there is a level at which you have gone too far, and what we were trying to do was to deal with those countries that have gone too far, and that was what HIPC was all about--and $52 billion of their debt was expunged.
It was then thought that we should go beyond that and make some further debt relief, because it had not gone far enough, and what is being discussed at the moment is a series of alternatives on meeting the writeoff of the debt which range from writing off 100 percent of the debt in the case of some countries that are really deeply in trouble to writing off the servicing of debt for a period of years with other countries--two separate approaches, and the amount of money that you write off as a result of that varies significantly, from $2.5 billion even up to $40 billion worth of debt.
So all of that would be my expectation will be discussed and decided, either in Gleneagles or at the Financing for Development Conference associated in the margins of the Millennium Goals Plus Five, or indeed at the meeting itself in New York.
I regard what we have been doing, as I said before--the musical analogy is that we are in the overture. We've got all the themes playing out there--they are all mixed up--and the arias will be sung by the heads of state in Gleneagles and in New York. And the Finance Ministers are playing the overture, and you'll find out what the real words are and what the results are in Act 2 and Act 3, which I expect before the end of this year; and then, Act 4 will be the trade meetings at the end of the year on Doha, which will complete the performance.
MR. GOLDIN: Thank you.
The gentleman in the second row.
QUESTION [Interpreted from French]: La Nouvelle Expression, Cameroon.
President Wolfensohn, do you think that the HIPC Initiative for countries that have benefitted from it has in fact given the results anticipated in terms of increased well-being, better income distribution in the country, and less in debt?
You are about to end your tenure at the World Bank. Do you have any thoughts as to whether or not we could simply wipe off the debt when those countries are becoming more and more indebted despite all help?
MR. WOLFENSOHN [Interpreted from French]: Well, there is no question that you will have a great deal of work to carry out in Africa, and do have a great deal to accomplish in terms of the fight against corruption, good governance, and the provision of financing and credit to all citizens.
There is a lot to be done within the country, so I think it would be a mistake to think that simply expunging the debt, cancelling the debt in and of itself, will do the trick. It is an important instrument and an important measure to have available for countries that are deeply in trouble, and I'm sure that Mr. Rodrigo de Rato, the head of the Fund, will be looking into this very carefully, and the support of Minister Manuel and all the other ministries that will support the institution in its endeavor.
But what I am saying is that, yes, cancelling a debt is important, cancelling the indebtedness is important when it is the only way to go, but there are many other things that need to be done that include better terms of trade, the fight for good governance, some measures that need to be taken exogenously but many others that have to be done inside the countries. And I say this as a good friend to Africa. Much remains to be done within Africa.
MR. GOLDIN: Thank you.
The gentleman in the front row here.
QUESTION: This is again for Mr. Wolfensohn.
What is the gap that you anticipate in reaching the Millennium Development Goals, both in terms of funding as well as the determination of the governments and the international institutions in reaching them?
MR. WOLFENSOHN: I think they have been well-laid out in the report we have given in terms of a description of what the gaps are likely to be. And I refer you to the Joint Report of the Bank and the Fund, which is available to you.
I think there is a general agreement that there is a need for something of the order of $50 billion over the next few years in cash to allow us to do what we need to do in education, in health care, in infrastructure, in meeting the needs of countries that wish to grow but which don't have the internal resources.
But again I repeat that money alone is not enough. You need to have open markets for trade. You need to strengthen capacity, and you need to have a will on the part of developing countries to really confront the issue of corruption, as you need that same will on the part of companies and individuals in the rich world not to be corrupt.
You cannot just throw money at something unless you get the governance right, and central to it is the issue of governance and corruption. There are other issues which are very important in your country and in others, which are the issues of global issues on AIDS, on malaria, on global issues including environment. There are many global issues which superimpose themselves on domestic issues, and I think we would be making a hell of a mistake to simplify the process to just a number.
I actually think we need $50 billion more money, but $50 billion more money without the active participation of both the developed and developing country governments is not going to be enough.
MR. GOLDIN: Thank you.
The lady over here.
QUESTION: Mr. President Wolfensohn, after ten years of partnership with Africa, of course, one of your legacies is poverty alleviation; but since you are leaving and going to another job in the Middle East Region as the Coordinator of the economic aid to the Palestinians, I was wondering if you would be better off with your own foundation to continue to help Africa.
So what is your message for us to take to the Africans, the 800 million of Africa you have been dealing with for the past ten years as President of the World Bank?
MR. WOLFENSOHN: Well, my message is that I am going to continue to take a huge interest in what happens in Africa. You can't forget Africa after ten years, as you probably know--in fact, I have been going there since 1960. So I will continue personally to take an interest, but it so happens that I have a side job now, which is to try and help in Gaza. But it is not going to stop me taking a very strong interest--and if I did, Mr. Manuel would call me and tell me to get back to Africa--at least, I hope he would.
CHAIRMAN MANUEL: Of course we would.
MR. GOLDIN: Thank you.
The gentleman at the back, there.
QUESTION: I saw here in the statement that there is no mention about the international taxes that were discussed today. I would like to have both Mr. de Rato's and Mr. Wolfensohn's assessments about the proposal of international taxes.
MR. DE RATO: There is a mention in paragraph 11--even with the mention?
Jim, do you want to--
MR. WOLFENSOHN: Go ahead.
MR. DE RATO: Well, I think that the mention states very clearly that both the Bank and the Fund will continue doing the analysis we have already done, from a technical point of view, to make governments aware of different tradeoffs that different options produce to them or can produce in terms of legal difficulties, financial considerations, and also budgetary considerations.
Once again, I want to take this chance to insist that this is not a question of technical analysis--it is a question of political decision. And at the end of the day, what is important is that the governments do take decisions to increment additional resources for development.
MR. WOLFENSOHN: I think that coming out of the meetings was quite a momentum to get on with some pilot projects in terms of both the taxation and the International Financial Facility, particularly in relation to GAVI, which is the fund put together for vaccinations. So it would not surprise me if, as a result of this meeting, you saw some pilot projects proceeding in both those cases.
CHAIRMAN MANUEL: If I may just add one little point in the spirit of what was discussed today--general agreement that every country must commit more resources. You have got to push the boundaries, because the funding deficit in respect of the MDGs as well as growing the productive side of the economy in very poor countries, that deficit is huge. You are not going to do it on current resources, so additionality is the first principle.
Secondly, it is important to see both the International Financing Facility and innovative financing, which includes the international tax proposals, as part of the same basket of positions.
There is something else that sparked the imagination today, and that is that in the light, or certainly in the wake of the tsunami in December, there was a lot of individual giving. So part of what we need to understand is that there are many people out there who might want to make a significant contribution of their own on a continuous basis. And part of what we need to do as governments is to create opportunities for individuals to give thus, ensuring that the money is well-spent, ensuring that individuals have measurable change as a consequence of their giving.
There is a spirit that dominates the world, and that is the spirit that we want to talk to as well. So, beyond just looking at what governments do, opening the doors to invite individual participants to give is an enormous challenge, and that is one of the issues.
On the issue of taxation, the question has been moot. Last night, we met with Secretary-General Kofi Annan as well, and amongst the issues that arose both last night and today is the fact that it is going to be an emphasis on donations rather than taxation in the narrow sense of the word, which may be a bit more difficult to manage.
MR. GOLDIN: Thank you.
The gentleman standing up there.
QUESTION: Thank you very much.
Christopher Story, International Currency Review.
At the earlier World Bank press conference, I asked a question about drugs and the extent to which the institutions are actually getting down to monitoring these flows and trying to identify them and separating them out, because after all, if those funds could be captured, all your discussions fall to the ground and are no longer necessary.
So, what steps can be taken to do this? I mean, everyone knows this is an extremely urgent problem that needs to be addressed, and I would like a real assurance that you are actually going to do something really positive about this.
MR. WOLFENSOHN: Well, I can tell you that coherent with your question but not as a result of your first question, I have been meeting in the last years with the UN drug officials, and we are extraordinarily close to them in a number of countries. We are well-informed of and acting with them in Afghanistan. We are well-informed and acting with them in some parts of Latin America. And I think the Bank has never been more informed or more aware of the economic and social impact of drugs.
What we are unfortunately, however, not able to do, nor do we have the power to do it, is to go in, investigate, search, and seek for the moneys that may have come from trading in or dealing in drugs.
I think you know that in the case of Afghanistan, you have a $30 billion economy of drugs and maybe $2 billion of that in Afghanistan itself, and the other $27 or $28 billion is exterior to Afghanistan in terms of transportation, mark-ups, and all the things that go with it.
So all I can say to you since your last question is that we are very, very well-informed now, but the mechanisms to recapture that money, if you could find it, are beyond the realm of the World Bank. I wish they were not. I don't know in whose realm they are. Maybe the IMF has an army and a police force that can do this.
Do you have that, Mr. de Rato?
MR. DE RATO: It was not known. Why did you say it? It was not known.
MR. WOLFENSOHN: I'm sorry.
MR. GOLDIN: The gentleman with the camera around his neck in the front.
QUESTION: Kevin Rafferty [phonetic], from The Tablet.
I wonder if you can tell us, Mr. Wolfensohn, Mr. Manuel, Mr. de Rato, how much conversation has been formally and informally about the method of choosing the chief executives of the Bank and the Fund.
Mr. Wolfensohn, since you are going, perhaps you can comment on whether it's a good way of choosing the Bank President; and Mr. Manuel, maybe you can tell us whether you think other voices should be heard in the selection process.
MR. WOLFENSOHN: Well, I think it was done fantastically well ten years ago.
MR. WOLFENSOHN: I don't know very much about the interim process, but I do know that Mr. de Rato is a pretty good choice, and I have a feeling that Mr. Wolfowitz will be a pretty good choice. But since I was not part of the conclaves that decided it, I can't really make any comment beyond that.
CHAIRMAN MANUEL: Perhaps you want to go first, Rodrigo?
MR. DE RATO: No.
CHAIRMAN MANUEL: I think that it is something that we all are very mindful of. You know, at the time of the appointment of Horst Koehler, there was a bit of a stand-off and an agreement that democratic participation would be sought, and it is correct in a multilateral institution to seek at least the best standards, the same standards that would apply in private enterprise, and that is to seek the best individuals.
The difficulty about the present arrangement is that the process in fact masks the individuals, and of course, Jim is correct--both Rodrigo here and Paul Wolfowitz are wonderful individuals, perfectly capable. But unfortunately, the process hasn't helped. It's not their fault. It is a governance issue. So I think Rodrigo should perhaps not get involved in this fight, but it's something that we as Governors need to deal with on an ongoing basis.
MR. GOLDIN: I'm afraid we just have time for one, perhaps two, questions.
The lady in blue has been very patient.
QUESTION: Sonia Nasala of Salasafel International [phonetic].
My question is for President Wolfensohn. What would you say personally is your greatest achievement during your tenure as President of the Bank, and what will you miss the most?
MR. WOLFENSOHN: Well, I'll miss the most these press conferences, but that apart, I think the greatest satisfaction I've got is from having the Bank become more of a partner than a policeman with the developing world. I think the relationship of my colleagues with our clients is transformed totally. That does not mean that you can't have disagreements, but it does mean that you work with the countries and with the people that you are dealing with, and that they are running the show, not us.
I think also, it has been a big success to build our relationship with international institutions, to strengthen our relationship with the Fund, but also to strengthen our relationship with civil society and the private sector. And I think that all of us are now recognizing that poverty alleviation and peace is not a job for one institution--it's a job for all of us--and may I say I think it's also a job for press and the media. I think that there has been a change in the media and, in my opinion, not yet enough, but a change to recognize that the issues we are talking about here are not just another story, but that in fact there is a responsibility on the media to present these issues, because they are really the issues that are going to affect us all. And my hope is that as we mature, the press corps and television will mature to understand that this is not just the next headline, this is something that really matters. And I think that the Bank, in its really more passionate pursuit of poverty issues and environmental issues today, has made a lot of progress, and I am very proud of that.
MR. GOLDIN: Thank you much.
With apologies to those of you who haven't had a chance to ask questions, that brings to an end this press conference. The transcript will be on the web and will be posted in the press room.
Thank you very much.
[Whereupon, at 3:15 p.m., the press conference was concluded.]