101591

Making Globalization Work for the Poor of the World




by
James D. Wolfensohn
President
The World Bank Group
Geneva, Switzerland, February 18, 2003




I am really delighted to have the opportunity to be here. I feel a little
bit like a student at a university coming to defend his thesis, worrying
about an examination, and I spent until 3 o'clock this morning thinking
how I was going to approach this august group, hardly slept, and have
some prepared remarks, but look forward very much rather to responding
and interacting on questions on a subject that is of great importance to
us as it is to you. And I want particularly to acknowledge the
contribution that Juan has made by putting this group together and in
particular for giving it a human aspect, which is something that I
believe we share.
I spent a lot of time last night trying to think about definitions and
what is globalization and what are the issues that might be important to
you, and I wrote just a little bit of an introduction which will be the
only thing I read in the course of this period. Just to make sure that I
can get down some of the basics. And even as I look at it now, I am not
sure I am going to read it, because I think all of us know, and I am sure
you who have studied this so significantly in recent times, that the
interconnections and the interdependence of this world are real and
advancing. They have been around a long time. They have expressed
themselves in different ways at different periods, going in cycles, but
the linkage of our planet in terms of economics, of finance, of
information, of crime, drugs, health, of migration, are not things that
this Commission or anybody can easily turn back. My friend, [?], spoke of
Sanskrit literature and I do not whether he has been here, but if he has
he has probably told you about the kupamanduka, the well frog who lives
in the bottom of a well and at some moment emerges and sees the world for
the first time and is a changed frog, and I guess we are all changed
frogs also having come from a place where we were living in our local
environment and now all of a sudden the world is there with us and it has
impacts and some frogs do well and some frogs do badly, at least I
believe that is the Sanskrit story.

So it is with the world in which we live. The forces are there. It is not
for this Commission or for us I think to reverse the forces, but what is
important is for us to maximize the potential of globalization, knowing
as we do, and as I am sure you have studied, that in the recent years
some billions of people have profited and some billions   of people have
not, and the issue that I think all of us are concerned   about is how one
can create an environment in which development goes for   everybody. And we
are all of us I think looking to the hope and the dream   of a more
socially just world in which all of us can live.

That indeed is the focal point of our institutions. We have a big sign as
you go in, which Eveline will know, which is to fight poverty with
passion, and that is what we do every day. Ten thousand colleagues, 2,500
of them overseas, 164 different nationalities, who get up every morning
not thinking how they can screw up the world or how they can disadvantage
people, but rather how they can make things better, and sometimes they
become a bit sensitive when they are put in a box of being evil-doers or
part of that terrible institution, one of the two, sometimes they become
a bit sensitive when they are put in a box of being evil-doers or part of
that terrible institution, one of the two, IFI twins, which is a
characterization that is given often to us. I was thinking last night of
the basis on which so much of the discussion takes place. It is that the
UN is good but banks are bad. The World Bank and the IMF are bad. The
World Bank is an instrument of capitalist policy, that it is influenced
only by the big countries, that its set of conditions which are conceived
only in Washington, and then imposed without feeling on every country are
set of conditions which has caused the world to diminish in its
objectives of advancing the claims of individual people. That NGOs are
good, official institutions are bad. I can go through a lot of the
characterizations because I come up against them every day, and it is my
hope that your report will not follow those characterizations because I
think they are simplistic. I think they are 60s, and in some cases, 80s,
but they are not the year 2000, they are not what is happening out there.
It is not the Bank as it is today and surely our institution has made
mistakes as indeed everyone has made mistakes. But surely there have also
been advances, advances in global poverty, advances in life span,
advances in the rights of women, not anywhere near as far as we are all
hoping for in the MDGs but surely there have been some advances, and we
are all concerned with the same danger spots. We are less worried about
China today, we are less worried about India today than perhaps once we
were. We are less worried about Russia today than perhaps once we were.
And we are worried about Africa. We are worried about some parts of Latin
America. We are worried about Kashmir. We are worried about all the
things that all of us worry about.

That leads me to a preliminary point that I would like to make, which is
that as we talk in this room about globalization I think it is important
to remember that there are two preconditions to our discussions. One is
the global economy. It is very difficult by any analysis to see a
rectification of social rights or an improvement in the advances on
poverty unless you have growth. We can argue about what is growth, and
what it is, whether you measure it in economic or in economic plus social
terms but there is very little in the minds of I think any economist that
it is hard to redistribute existing resources. It is much easier to do it
in an environment where there is growth, and where there is a positive
approach to development. Mr. de Soto has his own views about the
redistribution or the recognition that existing resources which surely
should be followed, but I think even he probably would agree that an
atmosphere of growth is an important precondition.

The second element is global geopolitics. To try and speak constructively
about what we can do in terms of poverty, what we can do in terms of
social justice, in an atmosphere we are concerned with war, where we are
concerned with Iraq, North Korea, and many of the other worries that we
have, where we are concerned with global terror, where we are concerned
about fundamentalism, where people in New York, where I was just a few
days ago, now see men in battle dress at the end of each bridge and each
tunnel with automatic rifles, with tanks at Heathrow Airport, with an
atmosphere of it is a red alert today, or an orange alert today, we have
to recognize that whatever we decide here or you decide and recommend
here has to be couched within the context of the way our planet is
functioning. We cannot just descend and say here is a new road map that
can be applied without regard to the broader features of the economy and
the geopolitics.

And it has to be said that today is a very difficult moment. We are in a
difficult climate, with $10 trillion dollars in the US, and $8 or $9
trillion in Europe, and $4.5 trillion in Japan, constituting the better
part of 70 per cent of the world's GDP, growing at 1 or 2 per cent per
annum, that is not enough of an engine, and it is not an engine that will
pull along the developing countries. Although there is growth in
developing countries, much of it internal, particularly, and much of it
in trade, in China and India which are helping push things along but
where a lot of people are being left behind. So I say that only to
characterize that there is this overlay of general global conditions in
which we have to operate, and it is not in a vacuum in which we are
operating. So we are affected by that.

The other point that I would like to make is that I think we have to
recognize that whilst we are looking at things in the context of
globalization and the issues which the President just showed me that you
are in addressing in terms of migration, in terms of fairness, in terms
of equity, in terms of the rules of the game, in terms of all the things
that you are appropriately looking at, that even if you could solve all
of those and could write the ticket that you want, with no doubt one
person, one vote, to make the World Bank look like the UN, to do all the
things that are being suggested, even if you did all that, let me tell
you that that is not going to deal with the questions of poverty.
Globalization is an issue but there is a whole range of other issues
which I have seen now visiting 120 countries which are internal to
countries, which relate to the way in which countries operate, and which
relate to the ways in which we operate. And there let me say that I
think, starting at the outer perimeter, what is critical as we approach
the questions of social justice and equity is that the international
community comes together in ways different than we have operated up to
now. If ever there has been a set of stove-pipes as they are called,
which are these iron pipes where everybody is operating within their own
environment, it is the way the international community functions, whether
it is the organs of the UN themselves which hardly talk to each other,
whether it is the UN speaking to us or to the Fund, whether it is civil
society talking to official institutions, whether it is multinationals
talking to bilaterals, whether it is academics talking to the community
at large, whether it is addressing the question of the faiths and how one
deals with the faiths or trade unions.

There are some places as I know one--this being one--where there are
representatives of both the governments and trade unions and it is no
doubt a unique institution in that sense. But, without the structure of
the ILO, it is still necessary for all of us to come together in ways to
make more effective what we are doing. Just to give you a little example,
everyone is pushing on the question of the efficiency and effectiveness
of the international financial institutions and well they should. We have
been doing a lot on that for years and now we are asked to judge the
effectiveness of our institutions within the context of Millennium
Development Goals as though we are totally responsible for the Millennium
Development Goals and I have recently been looking at this and part of
the problem that we have is that the methodologies do not exist to
measure six-monthly how we are doing against 15-year goals.

The methodologies do not exist as to how well the Dutch are doing or how
well the World Bank is doing or how well the ILO is doing, in terms of
these Millennium Development Goals and yet we are calling for these
methodologies which we need to bring about and the measurement is not
there but I took a look the other day at the $50 billion which is the
figure which is used for overseas development assistance and I had not
read the DAC reports adequately--no doubt everyone has--but I discovered
when I read the DAC reports that, of the $50 billion that is forthcoming,
$35 billion of that is bilateral assistance of which $33 billion is
grants and, of the $33 billion in grants, it is broken down to $13
billion in funds for consultants and for education. It is broken down
into $2.5 billion for debt relief, $3 billion for costs, $3 billion for
emergencies, which leave a grand total of $11 billion in cash going to
the countries from the bilaterals. And, if you then take a look, not at
the grants which are that $33 billion, but if you look at the loans you
discover that, after you pay interest, there is a negative flow of $1.5
billion dollars which brings you to the grand total of some $10 billion
and I am not here passing judgement on whether the money is being spent
correctly in using consultants or in technical assistance but, when you
look at the question of global effectiveness, it is nonsense just to look
at multinational institutions to which the international community gives
$17 billion a year, of which $15 billion roughly goes in cash to these
other places but--and I will be coming out with a paper on this which I
will submit to you and which I think you may find interesting--it is that
the question of effectiveness is not just effectiveness of international
institutions, it is effectiveness of all of us and may I add, it is
effectiveness of NGO's as well.

So we have a lot of ground to catch up in terms of the methodologies of
partnership as I always quote President Mkapa about the number of forms
he has to fill in and the number of visitations that he has. He was
telling me this morning that he has got six of my people coming out there
to do a $700,00 loan, about five years too late--is that right? I mean
whatever it is, he is very worried, and correctly so about the number of
people that come and the way in which we continue to fight each other.
So, that is not globalization. That is management. Management. And we are
pretty lousy at it. We are pretty lousy at managing the system and that
has nothing to do with structure. It has nothing to do with changing the
rules of the Bank, or the rules of ILO. It has to do with human behaviour
and these boxes that we put each other in are very hard to break down and
we are, I think myopic, all of us, in the way in which we deal with that
and then you get to the country level and let me deal briefly with that.

At the country level, what I do everyday and what we have been doing
every day is to start with the notion of the countries in control and
that what we are there to do is to support the country. It is asserted
that the Washington consensus is imposed. I can tell you, at least for
the last years, that is we have tried our best to make that not the case.
There is a Santiago consensus. You and I were there, which I thought
caused the Washington consensus to die. People still talk about the
Washington consensus and they do not talk about the Santiago consensus
which added the human dynamic to this whole thing and took particular
national approaches and when you get to the particular national
approaches, there are a few things which I think we are now facing. The
first is, that developing countries themselves, and I refer you only to
NEPAD and to Monterrey and to Johannesberg, say up front: we need
building of capacity and government, we need legal and judicial reform to
protect rights, to create rights in some of the things that Mr. de Soto
talks about, we need a financial system that functions and we need to
fight corruption. This is not something that is addressed by rich
countries to poor countries. This is something which poor countries and
developing countries understand themselves are a precondition to
development.

If you do not deal with those sort of things, you are dealing with a
flawed entity. And I am not suggesting that corruption is one sided. It
is two sided and we need to pursue rich corrupters and we need to deal
with the question of criminalization of corruption, so I am not making a
value judgement. But I am saying that if you read NEPAD--which I read
again in the last few days--the African leaders are saying that this is
what we have to do. And they are saying we need to work in every one of
those domains, in terms of corruption, legal judicial reform, financial
sector reform, strengthening capacity, and it is not surprising that that
is the case. When I first got into the business of trying to do
development, it was in 1961, when I went to Nigeria and I went to Greece
and then I went to Brazil to try and look at issues of foreign investment
and there was a firm then called business international which was the
only firm that put out lists of things that you needed to look at. And
they were the same lists then that they are today. It was what is
rational. You need to invest in countries which have this organized and
then you need to look beyond that at the issues of education and health
and infrastructure and all the things that I could write a speech on,
that are a part of each country's development programme and may I add of
the preservation of culture and values.

We are talking extensively in the Bank and have been for years, although
not always for the satisfaction of my board, as Eveline might tell you.
On issues of culture, on issues of values, on which I got beaten up
terribly by my Board of Directors. Now they beat me up less on questions
of religion of inter-faith relations. How can you deal in Africa with
education and health without dealing with religious organizations. Fifty
per cent of the education is done, 50 per cent of health care delivery is
done, 90 per cent done by women. It is absurd to think that you cannot
interface with these organizations. Absurd. And yet, a community
regarded, when I talked about culture as a luxury. They said this guy has
come from Carnegie Hall and something else, he is elitist, but why the
hell is he talking about culture. Why is he talking about values. And now
when I talk about spirituality they think I have gone mad. But they are
issues which are starting to be, which are at the core of human
development and you have to deal with those sorts of questions.

And why am I saying all this to you. I am saying to you that the issues
include globalization but they are not just globalization. I agree with
you that we need to deal with the questions of the ordering of the
system, of the unfairness of the system, of how things are not working in
the system, of the fear that exists because of some aspects of
globalization. But we have to look at this thing in the round. And
looking at one, I have to say that the core of much of this is in the
creation of jobs and decent working conditions.

We did a study of voices of the poor which characterises the work of our
institution. And we discovered when interviewing 60,000 poor people that
it is not just money, it is voice, it is dignity, it is safety, it is
women not wanting to be beaten up, it is health, it is optimism, it is
the chance for the kids, it is education, no different than we have
anywhere here. And at the base of it is jobs. People are not looking for
charity. They are looking for opportunity. And, I think, all these things
we share. So these are the only things that I wanted to say and now I am
ready to take whatever criticisms or questions you have. The only thing I
would like to say is that I think this issue is very complicated and that
globalization and its impact is one element, very important element. But
it is far from the only element that is going to lead to a social justice
and human improvement, and it is far from the only issue which eventually
will deal with the question of peace, because this issue of poverty is
the question of peace. And I therefore hope very much that in your
reports and the way in which you are addressing these questions, you will
give maximum importance to globalization, to the structure of the Bank,
of the Fund, of the international system, but that you will not ignore
that there is much that can be done without structure and there is much
that has to be done by the countries themselves. I am not saying this in
an accusatory way. I am saying this in a realistic way and I believe that
if we can come together with a greater sense of dignity to each other and
recognition to each other and work on management at the international
system as well as work on management at the local systems, that a huge
amount of progress can be made.

And I would say that the first thing we have to do is not change
structures, is change ourselves, because there is a great deal we can do,
within even the existing structure. Although, I am not suggesting that
you do not change it. There is a great deal that we can pick up if we are
honest and if we recognize the urgency and if we work together.