Interview with James D. Wolfensohn on Peace and Poverty: Ten Years at the Bank

I think it is that the institution has changed, its relationship with both leaders in developing countries, people in developing countries, and is now perceived more as a partner than as a policeman. I think we have built a greater sense of understanding. We listen more, and we try and work to help countries achieve their objectives rather than trying to impose on them our objectives.

Well, I think that the greatest accomplishment is that the 10,000 people in the institution and I now see eye to eye on where we are going, and I think I have been greatly influenced by my colleagues, and I think I have probably had some influence on them.

But where we have come out, which is with a central focus on poverty within a sustainable environment, and with the concern for people rather than statistics is, I think, the greatest success and the greatest accomplishment that we have had. It's not just my accomplishment. It's the accomplishment of the whole institution.

For what I could have done better, what I wish I had done, I wish I had listened more earlier with my colleagues than rushed off with bright ideas and expecting people to follow me. I think probably in the first instance that brought about quite a lot of frustration on both sides, on mine and on the sides of the colleagues in the Bank. So, that's one frustration, but the other frustration which I think all of us share here is we have not yet gotten the world to understand that the question of development is an issue for everybody, and that is an issue which is in the self-interest of everybody. It is not just something which is charity or something that you do when you are fixed to all your domestic issues. It is something that is integral to the future of the world, and I think I have not been successful in getting that message across as much as I would have liked.

Well, I think it's for a number of reasons. The first is I think many citizens in the world are very worried about global governments. They hear things about globalization, they wonder who is in charge. They hear people in rich countries being affected by what's going on in poor countries people in poor countries worry that their future depends on rich countries people are groping and hoping to find institutions which can give order to this whole thing. So, there is a general reaction to international institutions from the G-8, which is the leading, the leaders of the industrialized countries, to World Trade Organization to the U.N., to the Bank, to the International Monetary Fund, all of us are under the gun because people first of all don't understand us, and secondly, frustrated at the lack of sort of global leadership. So, that's the first general answer.

I think the second answer is that in all of the things we do, there is always somebody that doesn't like what we do, even if you please 90 or 95 percent of the people, there are always five percent ever the people who criticize you, and so you are never free of criticism in this world, and what we have to try and do is to balance the challenges that are before us, and keep before us, our primary goal is to alleviate poverty and ensure a sustainable environment.

I think in the end people will understand that's what we are doing, but on the way through, you're correct in saying we get a lot of critics, but we have to keep squarely in mind what our objectives are, and what we are trying to do.

Well, I think global security has taken much of the money, because the world is spending a thousand billion dollars a year on defense. Unfortunately, more than $200 billion of that is spent by developing countries, but about 750 billion is certainly spent by the donor countries, by the rich countries. And in that sense it has taken a lot of the money. But I think there is a growing a awareness that you cannot bring about peace just by spending money on articles, the way that you bring about peace is by giving people hope by giving them opportunity, by giving them something to look forward to, and that's where development comes in.

If you can replace poverty with hope, and with opportunity, then you have a real chance of lasting peace, and so it's my hope that gradually the world will understand that if you are going to deal with the question of security, you must have with it the question of development, and I think gradually that is coming into people's recognition.

Undoubtedly, the World Bank is the knowledge bank. It is not the only knowledge bank but it probably the best organized knowledge bank, and we have two activities here which I have often said. One is the lending of money and the granting of money, and providing money on very low interest rate terms. The other is the work that we do in giving our experience over 60 years good or bad, by the way, to developing countries to face problems we have seen before. In that sense there is a huge contribution that the Bank can make, and so the knowledge bank will always be part of the World Bank's activities.

Well, I think we have made a very big change, in the thing that was called the Comprehensive Development Framework, which later changed into the notion of a poverty reduction strategy for a country. We made a big jump from having a situation where a country's future was being determined at least in part by the Bank dealing directly with governments to broaden the participation in setting long-term plans to include civil society and the private sector, and that was done as a matter of practice now in nearly 70 countries. We have these poverty reduction strategies that are established not by the government, but by segments of society which include critics of the government.

Not all governments prepared to do that, but where it is done, it ensures that there is a national sense of goes beyond one political cycle. We have been very, very committed to try and broaden the participation in the establishment of national strategies, and that will continue to be the objective of our institution.

Well, I think the story includes but is not limited to Mozambique, Uganda, Tanzania, some aspects, Senegal some aspects, Ethiopia some aspects. What you see very often in Africa is advances in segments of the challenges, but not always complete in terms of dealing with all the challenges.

The problem of AIDS is still rampant in the continent, although those you mentioned, Senegal are there are countries that you mentioned have brought the incidents down significantly by having the leaders of those countries go out front and confront the problems of sexuality, of drugs, and the need for prevention as well as treatment.

Resolute action on AIDS is essential to the future of Africa. There can be no future for Africa, unless AIDS is confronted and defeated, and I might say in a defendant way, malaria is another huge challenge along similar lines. We have been very successful with tuberculosis, but the answer to your question is that I think you have a fair measure of leadership in a number of the countries that I have mentioned, that it is possible to confront both the economic issues and the AIDS issues, and that it would be our hope that following NEPAD and the peer review mechanism which is are put in place, we could hope for a more cohesive approach to the development in the French countries that constitute sub-Saharan Africa.

Well, first of all, let me say that I think success and failure on poverty is not alone an issue for the World Bank. If it were, I could claim success in China and success in India with hundreds of millions of people coming out of there.

I think the Bank has contributed in China and India, and I think we have contributed in Africa. I don't think that our actions are dispositive in either of those cases. I certainly believe that we have been helpful in Africa, but I think I'm disappointed, as are most African leaders, in the achievements, but the future of Africa as with China or India is not a World Bank issue, in the sense that I'm not president of China, India, or 47 countries in Africa.

We should understand what we can do and what we can't do. We can be supportive. We can give advice. We can be vigorously involved through our local offices, and we are. But the future of Africa depends on African leadership. It doesn't depend on World Bank leadership, and our task is to empower and support African leaders who are prepared to stand up, take the risks that are necessary, take the challenges that are necessary to bring about progress in Africa, and one of the great things that I think has happened in the last 10 years is that Africans themselves now have the greater sense of self-confidence and a greater understanding that the issue is not Africa looking for charity or Africa being treated like a child or Africa being a colony. It is Africa standing up straight with African leaders, more mature, more focused, and better educated. And it is for that reason that I actually feel very much more positive on Africa 10 years later than I did 10 years ago. I think we are seeing a generational change. I don't think it would happen in five minutes but I do think the future of Africa is positive.

And, of course, like every African, I regret we are not seeing larger progress, but I hope we will see larger progress in the years ahead.

Well, I think the answer is undoubtedly yes, and I think Western solutions, if they don't become African solutions, don't work. Simple answer is even if the origin is Western, there needs to be an African-owned solution. What we are seeing now is more confidence in Africa, and the development of more innovative solutions in Africa itself.

Well, it is the Board that's discussing it. If it doesn't have anything to do with management, we have come up with many different alternatives for the Board to decide. As you know, the Bank is owned by more than 180 countries, and they each have shares in the Bank, and there is a form of proportional representation on the board, and the countries that put up the capital, both to the Bank and to the Fund, are the ones that have the greater number of seats. So, what the board is now looking at is how there can be a better representation and better information and better support to the Africans that are on the board, and it's my hope that the shareholders will, during the course of the coming months, come out with some possible improvements in the current situation, but it is being left in the case of the Bank to the Development Committee under the leadership of Trevor Manuel, who is the Finance Minister of South Africa, and who understands very well the issues which they're facing, and I hope that Trevor will confront these issues and bring about a solution.

Well, we certainly try to. In fact, every grant or loan goes to our board on which there is representation from African executive directors, and it's safe to say no loan would get through the board if it was opposed to African directors. So, our loans were intended for poverty reduction and for constructive solutions in Africa. The real question is do they achieve their objective, and are they well-done? And that is the issue we are addressing, the question of governance, the question of corruption, the question of effectiveness.

And I think that now we get it pretty right going in, the question is what's it like when you do it, and what are the results, and that's where all the effort is now going. I think we can't be faulted for intent or for objective, but the objective. The real question is how do the projects get done, how effective are they, does the money go where you hope it will go, and it is at that level that we are now most vigorously engaged.

Well, I think there is a significant difference in what we can do for China today than what we could do ten years ago, or even 20 years ago. I mean, twenty years ago in China, we were looking to provide them with fairly basic information. We were looking to help them train personnel. We were looking to them to give them a framework in which they could operate that would match and in some cases influence their five-year plans.

Today, China is a highly sophisticated government, extraordinarily well-informed, and very rich in terms of reserves and available cash. So, they no longer need the funding that we used to provide. They continue to want funding on concessionary terms, but even that is a lot less impressive than it was in earlier times, because of the huge reserves that China has.

So, our role with China is now one that is far more advisory, far more related to keeping the Chinese up to date on developments in other parts of the world, but I may say also from our point of view, also drawing on China's experience. Last year, we had a very important conference in China on what we called scaling up, how you take smaller projects and take them to scale, and the reason we had the program in Shanghai was that China has had the greatest experience in doing projects in scale mirrored only possibly by India.

So, we have a lot to learn from China as well as a lot to give to China, but we are dealing now at a postgraduate level. Ten years ago, we were dealing at a college level. We have now gotten to postgraduate. So working with the Chinese is a very different proposition today than it was ten years ago, and I must say still a rewarding one. The friendship that was built over past decades still exist, and we look forward to a continuing relationship with China.

Well, first of all, I don't think cosmetic displays or manipulated statistics are any good from the World Bank or from anybody. I hope we don't do that, but if it's perceived that we do, then it's work that is valueless.

What is important is what is real, and in your country, Nepal, unfortunately reality in recent years has been very hard on people in poverty. You had many governments. You had many tragedies, and you had internal dissension of the type you know better than I.

We continue to offer help in Nepal, but as I said earlier, in relation to Africa, the future of Nepal is in the hands of the Nepalese and in the hands of your leaders, and we can be there to give advice and help, and will continue to do so. And you have not only, I hope, our help, but you have our prayers because the powers in Nepal have had a terrible period, and we are there ready, and continue to be ready, to make constructive contributions in any way that we can.

Well, first of all, on the last point, we have been significantly criticized at the moment because we are putting too much pressure on education and health, and so I'm glad you think we should do more. It buttresses the actions of our institution, and we will continue to work in education and health, and will continue to do so in Latin America, as we have up to now, with notable programs particularly programs such as we have done in Mexico and Brazil in support of is the government efforts to have subsidies to poor families in order to get the families to keep up the education and the health of their children. So, I feel very proud actually of what we are doing and have done in Latin America in the areas of education and health.

Now, with regard to the former question about corruption and inequity, there is no doubt that for decades, maybe generations, Latin America, as an area, has had one of the worst distributions of income. It's not a subject that I came to first at the World Bank. I have been involving Latin America for thirty or forty years, and it was quite apparent on my first trip that the gulf between the rich and poor in many countries was unacceptable and would soon be washed away.

What you're seeing in Latin America now are a series of reactions to this. In some cases they are development. In others they are the ballot boxes. But in countries like Brazil where you have a president, Lula, elected democratically, you have the seeds of what is perhaps the most important experiment in Latin America today, which is an electorally-put-in-place president who is attacking the very questions that you're speaking of--corruption, equity, social justice--and is doing a good job at it. The hope that I have, and that I think everybody has that there are friends of Latin America, is that this peaceful transition, and if I may say so, this peaceful change of culture, will, in fact, take hold.

So, a lot depends now on the leadership in Latin America, and on the willingness of the country to stay with these programs to bring about ultimate success.

I would have to say that I think we have come a long way on youth since that first meeting for which I was very grateful when, if you will remember, one of your number told me that youth was not the future; it was the now. That was a lesson that I have not forgotten. I know it to be the now because 1 billion 800 million people are under the age of 12, and nearly half are under 23. That conference made me recognize that not only were the numbers young, but that there was a need to reach out and listen more to young people, and that I'm happy to say we have done significantly in the last years. We have now in twenty of our offices youth groups that representative of all segments of society that comment on and work with us on our projects.

There have been enormously encouraging results. We have had that meeting and several other meetings in which we have called on young people to contribute in different ways to activities, and I believe that what we are doing is opening up now our institution, and I hope through us more multinational institutions to recognize that if half the world is under 23, the world of 40 and 50 years olds should not try to make their decisions for them, and we should listen, and that at young ages they're very different and better informed than we were at the same age.

So, I think we are in the middle of a revolutionary change in terms of youth, but it will come slowly. My hope is you who are young now will remember when you become middle-aged that you should not act middle-aged but you should continue to think about young people.

So, the test is going finish more yours than mine in a decade or so from now, and I hope you will remember the question you asked me when you have kids, particularly when they become teenagers, and you want to shut them out, but really should be listening to them.

So, we are doing our best. I think we have come a long way, but this is something that will change with generations, and your generation is going to be the one that's going to make the big change.

Well, I the first thing we could do is create an environment in which people can talk about corruption. One of the things that I think we have been successful in doing is, in fact, opening up the debate. Ten years ago, when I came here, the Bank never talked about corruption, and now we are doing programs in more than a hundred countries, and it is a regular subject for discussion. Ten years ago, when I talked about corruption, people would say there is no point in talking about it because you can't do anything about it. When the last 10 years tremendous amount of progress has been made, both in legal approaches to outlaw corruption in rich countries and to open the debate in developing countries. I think what we all have to understand is no pronouncement by me or the Secretary-General or the president of the United States about corruption is going to make any difference in developing countries where there is corruption. What I say, that will not make any difference or make some difference in getting the debate going.

But the thing I learned is that corruption is solved from the inside. Corruption can only be involved from within countries, and I think what we can do is create an environment in which the press in which radio in which policy feel enfranchised to talk about it and act on it and put more pressure on politicians. If politicians realized they would not get elected if there was corruption and this the elections were themselves not corrupt, then you would have a real chance because the average citizen in developing countries regards as the number one issue--the number one issue--the issue of corruption because of inequity, social injustice, and because it affects poor people more than it affects rich people.

So, I have hopes on the corruption issue, but I believe it will only be solved from the inside. I think we can put pressure on leaders from the outside, but the objective of our pressure must be to enfranchise people inside the country to bring about change.

I think the answer is all those countries signed up to the Millennium Development Goals in the year 2000. You the remember that the Millennium Development Goals were established at a meeting of the United Nations where nearly 200 leaders signed up to these goals. And I think everyone signed up to them as a sense of objective.

By the way, the objectives were all proportional. They weren't in absolute numbers. They said half the percentage of poverty so that if you had a large number of people in poverty, your objective was to half it. It may not bring you to absolute standards, but it was to half it. It was to bring about a percentage improvement on infant mortality, on maternal mortality.

One absolute standards was to get all kids into school, which was an appropriate one. So, I think as objectives, these things were appropriate. In, of course, the event of discovering that the actual success is different in different countries and in nations, but I think the objectives were sensible, and it's appropriate to have, I think, good objectives to try and achieve, and some African countries, some Asian countries, some Latin American countries, of course, achieve the objectives.

Well, I think we have put quite a lot of attention on the MDGs, as a matter of fact. I think that the answer in general is there was a partnership established in Monterrey between the rich and the developing countries. And I think the answer to your question is very clear. I think that developing countries obligated themselves not because of Washington or London or Paris, but obligated themselves because they knew it was in their interest to build government capacity, to have legal and judicial systems that protected rights and contracts, have financial systems that were clean, provide the financial micro credit through to industrial investment and leasing. And they obligated themselves to fight corruption, and hopefully get rid of it.

Those were obligations that the developing countries said we must undertake in order to achieve our objectives.

And by the way, they were more or less repeated in the NEPAD agreement of the African leaders. The rich countries, the developed countries, agreed to help build capacity in these developing countries. They agreed to provide additional aid, and they agreed to open their markets for trade. And unfortunately, we have seen some less than appropriate progress, although it's picking up significantly and just today the Europeans announced that by 2010 they would double the amount of their assistance from $40 billion to $80 billion, which is a huge step forward in terms of the development assistance and aid that is forthcoming from the European countries, and very, very welcome.

So, I think that the terms of the deal are very clear. The developing countries have their things to do. The rich countries have theirs to do. We should hope for a better result on the Doha Development Round on Trade, and we should hope for better performance on the part of leaders in the developing world. But I think the terms of the engagement are well stated, and it is hoped that they would be carried through.

The main challenges, frankly, are to get done what has been promised. I think that you have pretty complete answer in the agreement that was made in Monterey. There is a need for performance now, and I don't think you need to go beyond those objectives to achieve the goals you are looking for on poverty and development.

Well, I think we have vastly expanded our commitment to equity in women. Firstly, inside our own institution by having more women vice presidents and more women who have opportunities inside the institution. I am ashamed to say that when I got here there were all too few women engaged in senior management positions, and thankfully that has now been turned off significantly.

But beyond walking the talk inside the institution, what I think is tremendously important is that consultation with women, empowerment of women, support for women's activities, recognition of women's initiatives both governmentally and in terms of civil society has become now a absolute hallmark of what we do. We put out a publication which is called Engendering Development, which deals with the question of gender. I must say even if I hadn't worked 10 yours dealing with these issues, I would have been brought up sharply at my appearance at the Beijing conference 10 years ago when I was attacked by more than one group of women about the performance of the Bank.

So, I'm grateful for the Beijing conference, but my last appearance in front of a group of women was to receive their adulation and support which was quite different from 10 years ago.

As in all meetings with women you are never satisfied, and they shouldn't be, so I want you to know there is still a long way to go. I'm never allowed to rest, either by my wife or my daughters, but I do think we have made decent progress and I'm very proud of it.

I think that this is a very, very important question that since I got here has excited an enormous amount of emotion that I don't fully understand.

The first thing is I think you cannot deal with the question of development without understanding and having a dialogue with faith. Unfortunately, there are many people who draw a distinction between international financial institutions and faith based organizations, but I reject that. I think that it is absolutely essential as a matter of principle that financial and development institutions understand what the faiths are doing and have a dialogue with them. With the Archbishop of Canterbury, I established a thing called the World Faith and Development Dialogue, and we have had a number of meetings with faith leaders that have led to really practical results in terms of joint approaches on AIDS, some approaches on education, but most particularly on an understanding of what it is that we can do to help each other.

What I learned, however, when you talk about interfaith dialogue is that there was very little interfaith dialogue in the development business. Faith seemed to keep away from each other. They don't talk about the human aspects nearly as much as I expected them to do. Many tend more particularly to focus on the faith-based aspects rather than on the common aspects of humanity. And I was a little disappointed in that. It's not surprising, I suppose, when you look at the different objectives of different religions, but I hoped we had been helpful in some cases in bringing together faith leaders to look not at their own religions but to look at the human content of this, and, of course, this is something which is elementary in most religions, but I think we may have in a curious way been a catalyst to bring the faiths together to talk to each other. I think there is a lot of progress still to be made on interfaith activities, and I think there is more progress to be made between faith activities and institutional activities of the type in which the Bank is engaged. I think it's a highly important issue particularly today when religions significantly are a force for good, but where in their extremities they could be a force for evil. And I refer here not to any single religion. I refer general toward the issue of extremism in one form or another which is not constructive for peace and not constructive for poverty.

Well, I think, first of all, Gordon Brown has been a very strong champion of debt relief and should be supported. This comes on top of the $52 billion of debt relief which has been achieved by so called HIPC Initiative which we initiated here at the Bank, and I think it is time to take another look at the overall questions of debt for the poorest countries. As you know, there are a number of proposals one from Gordon Brown, one from the Japanese, Canadians, from the Americans, which have different starting points and different end points, but all of which address the questions of debt relief.

And so, I think it should be readdressed. I think the debt relief alone is not the key to development. I think it needs to be associated with very careful conditions. It's just like an individual. You know, if you lessen the debt of someone who drinks too much or is on drugs, it helps them for a while, but they get back into debt and it doesn't really have any long-term effect. The same is true of countries. You need to be sure that in relieving debt it is part of a constructive program that will help the country get back on track. And secondly, what you don't want to do is to ruin the market for developing countries to borrow. People get the ideas that developing countries will always have their debts forgiven. You're not going to get anybody to lend them any money.

So, I think the issue of debt relief is very important. I think the approach taken by Gordon Brown and by others is constructive, and it would be my hope that by the Annual Meetings of the Bank in September there will be some sort of recognition of a way forward as well as a recognition of ways in which the relief can be financed.

Well, the most important lesson I learned is poverty is a human issue. It is not a statistical issue. You have to look at poverty on a human basis to keep your passion, to keep your enthusiasm, to keep your belief in what you're doing. I think this is not a job for technicians. I think have you to have terrific skills. You need to have terrific technology. You need to have terrific procedures. You certainly need a terrific team of people we have at the Bank, which we have, 10,000 of them.

In the end, I think the most important lesson I learned was that people in poverty are individuals, that they are not people that want charity. They want opportunity. They have a very clear sense of their values in most of the cases, which does not differ very much from the average person in a rich country. They want a chance. They want their kids to be educated. They want freedom. They want voice. Women don't want to be subjected to beating and terrible activities on the part of their men.

And they want to have hope, and I think that the big lesson that I learned is that we need to give hope to people in poverty. We need to help them get out of poverty. We need to all recognize that unless we have a sustainable environment, none of us is going to live in a very attractive way. And I guess my advice to my successor would be to take that series of experiences and build on it, and it's my hope that he will.

The answer is I would like love to go back to my high school and make a speech, and next time I'm down there, if they write a note I will be glad to come.