101473

Comprehensive Strategies for Poverty Reduction - The Challenge of the
21st Century



Remarks at the Global Development Initiative Conference
by
James D. Wolfensohn
President
The World Bank Group

The Carter Center, Atlanta, Georgia, February 21, 2002

Introduced by President Jimmy Carter

President Carter: Every now and then the leadership of a great
organization falls in the hands of a person who is able to encapture the
essence of its purpose, and to add a dimension of inspiration and
excitement and adventure and achievement that is both inspirational and
also very productive. This happens in a university or a nongovernmental
organization like the Carter Center or Great Nation, United Nations, the
World Bank and others. I have had a chance to appoint the President of
the World Bank, and I've been able to observe his position from the Oval
Office and as a governor before I was President and during the 20 years
or so since I left the White House.

I think now we're privileged to hear from a man who has tapped the
essence of what the World Bank is and what its founders thought it ought
to be. Jim Wolfensohn has brought the World Bank that kind of insight as
one of leading world investment bankers in his earlier career. That has
awakened, I think, not only the World Bank organization itself, but the
potential recipients of its benefits, and those who invest in it in an
incredibly successful way.

I think perhaps more than any other President of the World Bank - and I
was a great admirer of others before you, I won't name their names - but
I think that this leader has committed the World Bank's purpose to
improve the lives of the poorest and most destitute, the most forgotten
and ignored, sometimes the most forgotten and despised people on earth.
And I believe that the effort to eradicate poverty and the bold
commitments that he's made have been extremely important.

We've heard, I think, remarkable talks this morning from three leaders
from Guyana and from Mali and from Mozambique. They were all different
speeches. They didn't overlap very much. Each one was correlative to the
others, but all those countries which we know very well - my wife and I
have been through them often - there's not only an economic need but a
political division that has handicapped their further evolution,
militarily, economically, culturally and politically. I think that Jim
Wolfensohn has been able to see that the only real tangible way that
strongly opposing political forces could be brought together, which is
always a problem with a mediator, is to build upon a common economic
future.

I'm very proud to have him here as a friend. He's honored us with his
presence, and it's with a great deal of anticipation that I introduce to
you the President of the World Bank, and extraordinary man, my personal
friend, Jim Wolfensohn.

Mr. Wolfensohn: Well, thank you very much indeed, Mr. President, Mrs.
Carter, our participating Presidents from Mali, Guyana and Mozambique,
and distinguished colleagues and friends.

This has been a remarkable day with such a galaxy of talent and ideas.
It's been a remarkable day for a number of reasons, remarkable not only
because we've heard from Presidents Jagdeo [of Guyana], Chissano [of
Mozambique] and Konaré [of Mali], all great leaders in their countries,
set off by Bob Rubin [Robert E. Rubin, Director and Chairman of the
Executive Committee, Citigroup Inc], who gave us such a wonderful
introduction, and of course, by President Carter himself, who reminded us
that the greatest challenge of this century is the growing chasm between
rich and poor, a phrase that I have used before, with attribution, Mr.
President, but which is really the focus I think for all of us being
here.

We're united in this issue, as has been very clear today, more by the
things that we agree upon than by the critical comments. A few
misunderstandings still exist on the role of the Bretton Woods
Institutions - ourselves and the IMF. In relation to that issue, I want
you to know that the relationship between ourselves and the Fund is a
very constructive one, and one in which both Tim Geithner [Timothy F.
Geithner, Director, Policy Development and Review Department, IMF] and
his colleagues and the Bank have a very clear focus on the issues of
poverty together. You'll be interested to know that Michel Camdessus came
to visit me just three days ago, and Michel was talking about poverty,
about water, about governance, about gender. And I said, "Michel, you
used to be head of the Monetary Fund." He said, "But I always wanted to
be head of the World Bank." So I just want you to know that there is a
very close relationship between us, and Tim is representative of the new
leadership, and does a remarkable and very forceful and very worthwhile
job.

On the things that we are agreed upon this morning - I was very struck by
the fact that we started with a description by Bob [Robert E. Rubin] of
the world in which we're living, and it's a world that's not easy. As we
look around our planet at this moment, it is plagued by inequity. It's
also plagued by an uncertainty as to the economic future. That puts a lot
of pressure on issues of development and development financing, because
the classic finance minister looks at domestic budget before he looks at
global responsibilities, and that is what we are finding at exactly this
moment. Minister after minister is telling me, "We would love to do more,
but we're under budget constraints, and until we see the way it's going,
it's unlikely politically that we can move forward." So there is the
backdrop of the economy which clearly affects everything that we're
talking about today.
There is also the backdrop of uncertainties in many parts of the world.
Argentina was mentioned, a serious issue, the issue of Central Asia, of
Afghanistan itself, of Gaza West Bank, Israel, of some problems that are
emerging in a more continental way through Central Asia and through the
Middle East, with issues of fundamentalism on many sides. It's a world
which is not tranquil. It's a world which in many senses is living with
problems, and again I give you that background because we're not in a
steady state of growth; everything is not harmonious there. So when we
come to the issue of overseas development assistance and we come to
approach the [Financing for Development] conference in Monterrey, which
is an extremely important conference, we cannot abstract ourselves from
the reality of a world which is concerned with terror, which is concerned
with uncertainty, where economic activity from Japan to Europe to the
United States in different proportions is described as having at least
uncertainties if not difficulties. Some pressure - as was said today -
not of fiscal problems that will move from country to country, but of
political problems that may move from country to country, in the case of
the Argentine situation, were it not to be resolved in a satisfactory
way. It's important that we start with the planet we live in, and it's
not an easy moment.

The other thing that I think is agreed is that although there's been a
lot of criticism about efforts on development, we have in fact, in the
last 20 years, made progress. We've made progress on the anticipated life
going up by some 20 years in the last 30 or 40 years. We have made
progress in relation to poverty itself. We have made progress in relation
to education and health targets. Much of the growth and poverty reduction
worldwide over the past twenty years has come in the two giants of the
developing world, China and India; with progress too in other parts of
East Asia and Latin America. Yet, too many countries are being left
behind.

There are clear areas of the world that have very specific problems,
noticeably Africa and especially sub-Saharan Africa. With its 600 million
people that will double in the next 30 years, with problems also of
conflict and of AIDS, which development policy can help to alleviate but
cannot solve, with 25 to 30 percent of the countries in sub-Saharan
Africa affected by conflict, and with the ravages of AIDS, the issue of
getting an orderly program of development is surely made more difficult.

But all that is by way of background to the things that I believe we
agreed on. Among them is the issue of partnership that is recognized now
between donor countries and recipient countries, never more importantly
than in the case of the NEPAD [The New Partnership for Africa’s
Development] initiative. This is an initiative in which the African
leadership - and President Konaré is well involved in it, as is President
Chissano – says: "This is a real partnership. We're not looking for
charity. We're not looking for handouts. We're looking for a partnership
which is in the interests of all of us. We, for our part, will give
proper leadership. We will deal with the question of governance. We will
deal with the questions of legal and judicial reform. We will deal with
the questions of financial systems that are transparent. We will confront
corruption. We will come up with plans, whether they're called PRSPs or
whatever they're called."

So I pay tribute to you, President Carter, and to the Carter Center,
because you recognize the crucial importance of having countries develop
for themselves their ownership of their programs, and you recognized, as
we have now all since, that development is not a matter of individual
projects. Development is a matter of a cooperative, coordinated,
comprehensive development strategy, which needs to be implemented with
things going on beside each other, and with sequencing that's agreed by
the government. You recognized that it’s not an overnight issue, it's an
issue which takes years, as it's taken years in every country. But you
recognized that it is a really possible sequence that can be adopted in
all countries that are in development.

So we have now this notion of partnership. I've spoken about the one side
of the partnership, the leadership in the developing world, but there's
also the need for the leadership in the donor countries, in the developed
world. There, the issues have come down again to a number of issues that
we agreed on.

One is that we must give support in terms of capacity building. This is
demanded by our colleagues in the developing world because without
capacity, without support, without knowledge, without experience, which
in some cases comes from the South itself, but also comes from the
International Organizations and Bilaterals, the way forward on
development is extremely difficult. The issue of capacity building is
really crucial. Second, we agreed that there's no sense in having
development and building capacity for building markets if markets are
closed. The Doha Conference focused very specifically on this. The pace
at which this will be resolved may be slower than anticipated, but the
direction is one in which there is a recognition that openness of markets
to trade is an absolutely essential prerequisite to development.

So is the third prerequisite, which is increasing the level of
development assistance. There have been many examples of analyses.
There's the Zedillo Report [by the High-level panel on Financing for
Development, chaired by former President of Mexico, Mr. Ernesto Zedillo,
to the UN Secretary-General]. There have been independent reports done on
health by WHO and by Professor Sachs. There's been our own work. We all
come down to the notion, and indeed the "Monterrey Consensus" states
this, that the resources are not adequate. It is clearly stated that we
cannot get where we would like to go without additional resources. I
remind you we agreed on 0.7% [of the developed countries’ GDP to be
dedicated to development assistance]. We're at 0.23%. And now the air is
full of a $50 billion figure [of additional foreign aid that will be
needed to help countries reach the Millennium Development Goals] per
year, either immediately or over 3 years or over 5 years. But it is
absolutely clear that there is a need for additional resources.

There's one other thing that I think has changed, which was referred to
today, which is the critical issue of political will to try and make sure
that those additional funds can be provided. Bob [Robert E. Rubin] spoke
of a need for getting people together to try and bring about the will for
that additional funding. In the discussions today it was very clear that
whatever you think of globalization, interdependence is with us. It was
commented by one of the Presidents - I think it was President Chissano -
that if you don't deal with the question of poverty, you have the
question of migration, you have the despoiling of the environment, and
you create a ground in which there can be ferment for crime, for drugs,
and even for terror.

This was lifted to a wholly new level on September the 11th. It was not
that interdependence was not there on September the 10th. It was not that
you could have spoken with less assurance on September the 10th, that
poverty somewhere was poverty everywhere, that crime somewhere was crime
everywhere, that terror somewhere was terror everywhere, that the globe
that we're looking at is not two halves, that there is no wall between
the developed and the developing countries. If that wall ever existed,
the image of the World Trade Center collapsing was for me image of that
wall coming down forever. Because here was Afghanistan on Wall Street.
Here was Afghanistan at the Pentagon. Here was Afghanistan in a field in
Pennsylvania. The interesting thing was that there were no Afghans
involved, no single Afghan amongst the 19 people. They were all from
other countries. They were all finding their haven in Afghanistan. Now
there is Afghanistan, bombed and without having the responsibility, and
UNDP, ourselves, Asian Development Bank and the Islamic Bank, are there
to try and help reconstruct it.

If ever our country needed a lesson or a wake-up call on the reality that
the issues of poverty are our issues, that 4.8 billion people live in
developing countries on our planet of 6 billion, with 2 billion more
coming in the next 25 to 30 years, all but 50 million going to the
developing countries, September the 11th surely gave us that wake-up
call. When the Carter Center meets 25 or 30 years from now, we'll have a
world of 8 billion, with 6.8 billion give or take in developing
countries. If we cannot recognize that that issue is not separable from
domestic issues, then we are both blind and letting down future
generations.

I believe that that recognition is upon us. I think it is affected today
by the lack of certainty in our economic future, and it's being clouded
by a lot of debates on which there is no debate. The debates are marked
by statements such as : "Let's have effectiveness. Let's have
productivity. Let's ensure that the money is well spent. Let's ensure
that it's not corrupt in terms of the programs that we're dealing with.
Let's ensure that women are given a very important place in the
development process. Let's ensure that these issues are owned locally."
These are not issues for debate. They're conditions under which increased
assistance can be given, but they're not debatable items. They're not a
reason to hold up action. Yes, we can debate further how we can improve
our capacity and efficiency in judging the effectiveness of our
expenditures.

Bob [Robert E. Rubin] mentioned already today that I   suggested to some,
including in this country, that we would be happy to   adopt the best
practice of any country in terms of how they measure   the effectiveness of
their domestic investments. The fact is that no such   calibration is
really well established. So we're in a way being asked to do something in
advance that many countries have not succeeded in doing themselves. To
take it beyond the United States; does Germany calibrate the amount of
money it puts into German education programs before it increases the
money in education? What measures does it use? Do other countries in the
OECD measure their health investments, and if so, what methodology? I
would love to see it. We're ready to see it, and we're ready to examine
it. But don't let these arguments confuse you in terms of the fundamental
issue that faces us, which is the commitment that needs to come from the
rich world to take its responsibilities seriously in relation to the
developing world. This is not charity.

The other thing that I think we agreed on is that there are two elements
to this. The first is that poor people do not want charity. People in
poverty want a chance. People in poverty, the 1.2 billion under a dollar
a day, and the nearly 3 billion under $2 a day, in my personal
experience, are the best people you meet when you travel. They have a
will. They want to be proud. They want an opportunity, and if you give
them half a chance, and give them the responsibility, they do well.

The new paradigm of development is to turn poor people from the object of
charity to become the asset on which you build. We have to do that if we
are going to have leverage in what we're doing, if we're going to have
scale, and if we're going to have continuity in what we're doing. These
are not weakened people. They're not persons with disabilities that
happen to be poor. There's much that can be done to improve the
conditions in education and health and in terms of opportunity.

The first thing I   think that all of us need to understand, as we come to
the programs that   the nations are putting together, is that we are
partners with the   people that live in poverty. I think that's crucial for
us as we think of   this development paradigm.

As we go beyond this question of people in poverty, and as we come to our
role in trying to assist the world move forward, we must also recognize
that what brings most of us here I believe - I know what brought
President Carter and Rosalyn to this realization - was a strong moral and
ethical commitment that it's just not right to have these differences in
the world. It's through all our religions. It's just not right. We need
to move on it.

If you don't have that conviction, there is a new and very real
commitment which is based on self interest. The world will not be stable
if we do not deal with the question of poverty. It will not have the
growth for us because we look at the developing world as our largest
market. It will not be stable because we will be affected by migration,
health, environment, crime, drugs, and terror. I am not putting it on the
basis that we should make the decision because of a threat, but for some
people that argument helps. And the reality is there.

What we need to do collectively is to get our leaders to understand that
when they discuss the budget, equal with defense, equal with domestic
spending, is international spending. We need to educate our children over
the next 20 to 30 years to understand that our country, the United
States, or my original country, Australia, or from wherever you come, is
not the only country in the world, that we need to know about Islam, we
need to know about other cultures. We need to be open. We need to know
about Hispanic tradition. We need to know about Central Asian tradition.

The issue of education, the issue of being open, the issue raising global
citizens in our children is a challenge that we face, as it is faced in
the developing world, for their children better to understand the
importance of democracy and other things for which many of the developed
countries stand.

I think on all these issues, amongst the people in this room, there is a
tremendous consensus. What we need to do is to ensure that there is the
action taken in the finance ministries and by our leaders to provide the
resources that are necessary to act.

The Monterrey document says that there is inadequate funding. There is
inadequate funding. Let's condition the availability of that funding on
the undertakings that are voluntarily opted by the leadership in NEPAD
and by the leadership in the other developing countries that are seeking
partnership. But let us not fail, because if we fail, we won't probably
fail ourselves above a certain age, but we will surely fail our children.
The issue of poverty is the issue of peace, and we must never forget it.

Thank you very much.

President Carter: Jim has agreed to answer two questions, so if you have
a question to ask him, please raise your hand, or a comment.

Question: [Inaudible]

Mr. Wolfensohn: I am very glad you raised that. I remembered when I was
walking down that I forgot to mention private sector, and I forgot to
mention the other partnership of which I was going to speak. I spoke of
one partnership, which is donors and recipient countries. But the other
crucial partnership is the partnership of those that assist the
countries, and that is the bilateral and multilateral donors, civil
society in all its forms and the private sector. Crucially in the last 10
years, there has been a move that gives far greater importance to private
sector, not just international investing, but as was again commented
earlier today, creating an environment in which domestic investment will
occur and flourish. Job creation is absolutely crucial to the question of
poverty alleviation, crucial.

The numbers, just in relation to foreign investment, are staggering. In
1990 overseas development assistance was running at 60 billion a year. In
1990 foreign investment in development countries was running at 30
billion a year, half the size of overseas development assistance. In 1997
overseas development assistance was running in the low 50 billions.
Private sector investment was above 300 billion. It had gone from 30
billion to 300 billion, from half the size of overseas development
assistance to six times the size of it. Since that time bank lending and
portfolio investment has decreased, but direct investment still last year
was above 160 billion against the 50 billion of overseas development
assistance, still 3 times the size. But again, direct investment was
spread inequitably, for reasons that are clear, and more than 90 percent
went to 12 countries only. So it needs to be spread out. The role of the
private sector is crucial, as is the role of partnership between private
sector civil society and the official institutions.

Question: [Inaudible]

Mr. Wolfensohn: It is an absolutely urgent issue, and what is interesting
is, that in the summit meeting which will be held in Canada - the item on
the agenda chosen by Prime Minister Chretien - the central item is
Africa.

The issue is clearly going to be on the table. I do not have the inside
information that Mr. Camdessus has, but I believe that the G-7 is going
to have to say something about its initiative in Africa. I hope that
something will be said. Certainly there is good will, I think, on the
part of virtually every one of the leaders of the G-7, G-8, but the
translation of that is going to be something that will be interesting. It
will be the translation of that will in relation to trade - on which
quite a lot has been done, but not an adequate amount; on the level of
direct assistance, on support for capacity building, and on technology,
that will be crucial. I think there will be something done, but I do not
know what will be done.

I think there's a lot of good will. I'd say at the moment, in terms of
the funding in Africa, that I don't find a lot of immediate constraint on
the basis of availability of funds. Some of my colleagues from African
leadership may differ, and I'm sure they will, but we are moving in the
area of debt reduction. We put a billion dollars up for the AIDS crisis.
These are small numbers in terms of the challenge of AIDS, for example,
and the overall challenge. But there's also the issue of the ability to
get the NEPAD programs up and running, and absorptive capacity in
relation to the NEPAD programs. I believe that it will be a very short
time before properly developed NEPAD programs will be under-funded. I
think in this year we're moving to that stage, I think it's straining and
we could probably do with a bit more, but I think it's probably one, two,
three years away till NEPAD really gets up and running and we have the
programs, that you'll find that financial constraint hitting.

It may be that that's very important because that will give the donor
countries a chance to get themselves better organized for the funding
that is required for Africa, but clearly in Canada it's going to be a
very interesting meeting.

Question: [Inaudible]

Mr. Wolfensohn: I know what I would like to whisper in the ear of
President Bush. I don't know, when you say in a practical sense, that
involves the judgment of President Bush, not me. But I have a very strong
feeling that the leadership that the United States gives is leadership
that goes way beyond military might. I think the great thing about our
country is that it stands for values that are rich, not just for this
country, but for the world, values of tolerance, of openness, of
democracy, of caring, of generosity.

I would like to, if I got the chance of whispering in the President's
ear, I would say, "Mr. President, the leadership that this country must
give is moral leadership, and leadership in terms of values, and
leadership in terms of generosity, intelligent generosity, productive
generosity, if you like. But this country needs to change its image
overseas in terms of that it is not a country of self interest, but a
country that is prepared for global leadership and sharing of our values
with values in other countries. We should not impose our values. We
should make them available, should not impose our culture, but we should
seek to allow countries, obviously, to support their own cultures and we
should help them support their own cultures, and we should be part of the
world, which is a world that in a way is coalescing as the United States
did."

Our culture is not the American Indian culture. Our culture is an
immigrant culture, melding the cultures of people in a very open way. If
there's one country in the world that I think could be an example to the
world, it's the United States. So I think it's that leadership that I
would hope that this administration and other administrations will be
remembered for, and that would be great.

Thank you very much.