wfn.org | World Bank President address Lambeth Conference

["Christopher Took" <storm@indigo.ie>]

ACNS LC049 - 25 July 1998

Remarks of Jim Wolfensohn, World Bank President to the Lambeth
Plenary on International Debt-July 24, 1998

[Transcript of conference recording]

It's rare that one gets two introductions that are so diverse.
The introduction from the Archbishop of Canterbury was one of
warmth and understanding and friendship in a joint endeavour to
deal with the issues of poverty.

The other introduction was a 20-minute film which would have you
believe that I rather like children dying, that I have no faith,
that my interest is to collect debts, that I have no
understanding of education or health, that I know nothing about
the impact of payments imposed by governments, that would lead
you think that I know nothing about the slums in Jamaica and know
little about Tanzania. And all I can say to you is that I believe
that each of those assertions is wrong.

It so happens that for the lady [in the video] who's not here is
that two and half years ago I went to Seaview Gardens and
Riverview City and unable to go in with police because they
couldn't guarantee my security, I went in with Father Albert to
the worst sections and segments of Jamaica and of Kingston.

At it was there that I met with the people of  [......] where I
met with gang leaders who were armed, where I sat by the
roadside, if I may say here, having a beer with some of the gang
leaders talking about how we could alleviate poverty, and where
we as a bank have put $200 million into Jamaica to try and make
life more tolerable.

[After] an invitation to Tanzania I have met with President Mkapa
more than once. We talked about issues of poverty. We talked
about issues of corruption. Indeed the president was elected on a
programme on corruption which arose out of a seminar which was
given by the World Bank and where he took the seven items and
used them as a basis for his election campaign. And where I had
constant dialogue with him including about the issues of
education where contrary to the film, we are recommending
communal financing of education, not individual financing, so
that poor children can go to school. 

I'm not angry about the film. I'm upset.

I'm upset because it paints a picture of our institution which is
quite simply wrong. I work with 10,000 people in the bank who are
committed to poverty eradication. We do not get up every morning
and think what we can do to ruin the world. I did not leave my
business three years to come and work in the issue of poverty
eradication and the issue of making the world freer, more
equitable and safer for our children to be characterised as
someone without [.......] in a Christian Aid film. I find it
difficult to take and very unattractive. 

And maybe we should put out a film about what it is that we're
doing. And maybe we should criticise NGOs and maybe we should
criticise others who don't act. But we don't, and the reason we
don't, ladies and gentlemen, is because we're too busy.

We have a problem not just of poor people in Jamaica, and not
just of poor people in Tanzania and not just of poor people
throughout Africa, we have a problem of three billion people in
the world that live under $2 a day.

We have a problem of 500,000 children dying as a result of
childbirth annually that could be saved. We have a problem of a
billion, three hundred million people that do not have clean
water. We have a problem of a billion and half people who do not
have access to any form of house.

I have been to 83 countries. I do not go to the beaches as was
suggested. I go to the slums and I go to the villages. And I
yield the moral superiority to nobody. And nor do my people. [
......]. I care. My people care. We work to try to make the world
a better place. 

And the characterisation of the bank as the epicentre of debt
problems which create all the problems of the world is neither
fair nor correct.

I agree with the film on one thing, that there is a significant
and overwhelming debt burden for many countries. I agree that if
there was less debt we'd all be able to do much better in terms
of poverty alleviation. I agree that if we were to alleviate debt
there is a chance-a chance-that that money would go to education
and health and the improvement of the lives of people.

I say "a chance," ladies and gentlemen, because it is a chance. I
want to step back for two minutes and tell you what I do every
day. What I think about every day. An organisation which is 54
years old, which is owned by 180 countries and which gets money
from borrowing in the marketplace because the governments do not
fund us more than the 20 million in equity that we have. Or the
IDA funding which we give annually to poor countries, six billion
a year, which we manage to get from those governments with
enormous difficulty. Why do we get it from donor governments?
Well, some governments give it voluntarily. Not all governments
give it voluntarily. 

And I spend an enormous amount of my time trying to convince
governments that their responsibility to the poor of the world is
not just to responsibility for charity, is not just a moral
responsibility, but it is a responsibility to themselves in terms
of interdependence with a world which has 4.7 billion people in
development out of the total of 5.6 billion.

And I have troubles. I have troubles in the United States with
Congress and I have troubles locally because you may or may not
know that the level of overseas development assistance from those
very governments in the last seven years has gone from 60 billion
to 45 billion. That is not the World Bank. That is not the
Monetary Fund. That is you. That is the people who are your
parishioners and the governments you elect. 

They are not giving the money for either debt relief or for
overseas development assistance at the rate that it should be
done, and people like me and in many cases people like you are
giving pressure to the governments and should continue to give
pressure to governments because they are the source of this fund.

When I come to the office and I look at the range of issues to
alleviate poverty, I reaffirm everyday that the issue which you
are facing and that we are facing is the issue of poverty in a
world which is inequitable and which, as I say, has three billion
people under $2 a day.

Did you see headlines recently about Indonesia and, together with
the Monetary Fund that is represented here, funds have been put
together under their leadership to try and stabilise the
financial situation in that country.

Do you realise that 30 million more people are now living under a
dollar a day than were living under a dollar a day five months
ago? Thirty million more people. A total of 50 million people.
And that 120 million people in that country of 200 million people
are living under $2 a day. Some of those statistics get my
attention. They get my attention in Korea, in Thailand, in
Indonesia, in the Congo, in Bosnia, in Gaza.

I come in every day thinking of the proportions of this problem,
which, ladies and gentlemen, are enormous. 

We are losing the battle. It is not just the instances which
you've seen here. I can tell you from my visit to over 80
countries harrowing stories, tear-jerking stories. Stories that I
have seen with my own eyes that have caused me to break down. Not
because I am a banker that has no feelings but because I do, I
care. And so do my people.

And it is a grave injustice to put at the centre of the criticism
the bank and my friends at the fund.

I have no doubt that we have made mistakes. It would be very
difficult in the toughest business in the world, that of
convincing governments not to be corrupt, to ensure that there is
equity, to ensure that there is fair distribution of social
resources, to ensure that rural communities get their fair share,
and urban communities get their fair share [. . .]. It would be
impossible to wave a magic wand and cure that problem. 

What I look at in terms of countries is that we should have some
adequate form of government. That there should be fairness, and
equity and representation. And in the last 10 years we've seen a
move, happily, from a third of the countries in the world living
under some form of democratic government to three-quarters.

But many of them are in transition. Many of them that were
dictatorships do not have strong governments. Capacity is the
limitation in many of these countries, and conditions of inequity
and corruption are abounding everywhere.

I think about justice issues. If you don't have justice you
cannot protect civil rights. If you don't have property rights
you cannot have property. If you do not have bankruptcy laws, 
you cannot re-organise corporations and industry. If you don't
have a functioning financial system you get the problems of
Korea, Thailand and Indonesia. 

These are not issues for professionals that are interested in
macro theory. These are down-to-earth practical problems without
which, face it, you cannot have alleviation of poverty.

The highest item on our agenda on which we're putting 3 billion
dollars this year is education and health. If you want speeches
on education and freedom on education, one of things you should
do is come to the bank and in terms of raising money I would love
a dollar for every school I have visited under a tree in
classrooms that do not have windows, no latrines, trying to bring
new methods of education around the world. 

We are the leaders in education, in health care. You talk about
cholera. No one talks about River Blindness. We've eradicated
River Blindness or nearly eradicated River Blindness in Africa
for 30 million people in which by activities by the banks and by
NGOs  we have managed to clean up the water, kill the mosquitoes
and restore people to arable land. 

We're the major fighter in the world against AIDS. We're the
major fighter in the world against malaria. None of that is in
your film. None of it.

But look at the realities. We look beyond education and health
and we say you cannot have a thriving country and poverty
alleviation without communications. 

President Museveni, who we met, gives me lectures constantly on
the issue or rural roads and rural communications and as you know
. . . your grace, you don't resist President Museveni. And so he
is getting his rural roads. But it's not just in Uganda. 

The issue of rural development in which in Africa 70 percent of
the poor live, is a crucial element, an essential element in
seeking to deal with the question of poverty and the one and a
half billion people in the world that don't have clean water [. .
.] . We have a portfolio at the moment of 14 billion dollars in
water projects. We are the leaders in trying to clean up water.

And whether it is the use of water for arable purposes, whether
it is an initiative on the Nile that we're taking with the seven
mineral states or whether it is on Brazil where we're bring water
to the [ . . . ] in which I have been to many times, seeing not
just the water but the toilets which people are so proud to have
because it gets rid of disease. 

It is that that I worry about when I come to the bank. 

And I also worry about a broader range of issues. I worry about
the rights of women. We are the leader in terms of putting money
into issues of gender. I worry about the disabled. I'm worried
about the elderly. I worry about social services.

And we at the bank this year will put $18 billion into activities
against poverty and with IDA another six billion [...] a total of
24 billion going into projects of this nature.

That is why I get anxious. That is why I may sound defensive. I
do not feel defensive. I feel that what we should get out of this
conference is not a sense of confrontation because I am doing
many of the things that the church wishes to do and should do
itself. I am not putting out brochures or films about the
inadequacies of the banks. About the mistakes that have been made
in various countries. About the lack of maximising your advantage
in communities.

I'm not putting out films about what you could do in terms of
health and education and distribution because I don't believe in
accusations. I believe in ....

The reason that I have come to admire the Archbishop of
Canterbury to such an enormous extent is that he has shown to me
an openness to say, "We're both fighting poverty. Let's see what
we can do together."

I urge you in your discussions not to focus on the bank and fund
in terms of debt. And let me now deal in the last five or seven
minutes with the debt issue. The debt issue is a very critical
issue. 

There is no doubt that in many countries the payment of debt is a
principal reason that social and other services could not be
provided. ....In the highly indebted countries the amount of debt
is around $215 billion on present data, that is today's value of
the future debt. In real terms it's probably between three and
four hundred million dollars. But let's take the $215 billion
figure that we've got. As the archbishop said the total debt of
the developing countries is 2 trillion dollars, 2 thousand
billion dollars. 

The HIPC initiative which was attacked interestingly by the
representative of UNDP and I will refrain from commenting on
those observations. The HIPC [...] initiative was actually
started by the bank and the fund. And the reason was very simply
for ten days after I went to [..... ]. I visited Mali and in Mali
I met a moor or Moslem cleric wearing a white robe who said: "Mr.
President, I must ask something about what you're doing. All I
know is that with all the money coming in, my parishioners are
not getting better off. He said I'm not an economist, but what I
think happens is you put money in this pocket and you take it out
of this pocket, and there's nothing left in the middle." And I
thought that's a pretty good understanding of economics and I
came back and together with my friend Michelle Tan [.....] we
decided to attack the unthinkable, the forgiveness of debt by the
multi-lateral agencies along with the bi-laterals.

And let me just say to you that the 215 billion dollars, the
world bank has less than 9 percent, less than 9 percent. The
Monetary Fund has less than five percent. Between 55 and 60
percent of that debt comes from individual creditor countries,
many of whom are represented here. The United Kingdom, the United
States, European countries have 55 percent of the debt and the
rest are banks and various assorted creditors.

What we did in HIPC was to say let's attack that debt problem by
getting every one together to try and relieve debt and we
establish one principle which is referred to here as "six years
before you have to do it," before you begin the forgiveness. .. 
Again a fallacy.

Uganda was less than six months and indeed we started forms of
debt relief as soon as we get the HIPC programme started not in
terms of the reduction of existing debt  but helping to ensure
that you do not accumulate additional debt. But that's by the
way. Let us take the point in terms of this debt problem, as we
have said that we're prepared to bear our full share. And we've
done it on the basis of a very simple proposition. Which you may
understand in human terms.

First of all, most of you, although some may not, given this
august body, most of you perhaps who are not in the church, have
some form of debt. You may a credit card. You may have a
mortgage. You have something with which you can live. It's part
of life and there is a level where you can live with debt. That
is part not only of an individual's life but it's also part of a
country's life, so there is some sustainable level of debt.

The second thing to say is that if someone comes and says "Jim
I'm in trouble. I've got all these debts and I can't send my kids
to school and I can't do lots of things. Will you lend me or give
me ten thousand dollars?"

If the guy's a gambler or a womaniser or whatever or on drugs or
has no sense of money the chances are you'll say, "Look I'll try
and do something for your kids, but until you improve your ways
I'm surely not going to give you $10 thousand because it will
just go out the window."

Countries are the same. Corruption exists. Bad management exists.
Inadequate assessment of social responsibilities exists. The
purpose of the period of time so that countries can use their
debt relief is simply for that purpose. It is to ensure there is
sensible management and it can take six months, it can take two
years, but at a point of three years a decision is taken and we
start then in an alleviation programme. That is the reason for
the time limit and it is not because of any reason to try and
ruin the initiatives that we start. 

And the last thing that I would like to say on this debt question
is, insofar as the bank is concerned and so far as the countries
are concerned there is a limit to the extent that we and they are
prepared to forgive debt. 

But I have said on many occasions, and I repeat it to you now. If
my owners who are the 180 countries want me to forgive debt, in
the bank which has a balance sheet of 150 billion dollars I can
forgive 23 billion dollars. Why? Because the only capital I have
is $23 billion. I have to borrow the other 130 billion so I can't
not repay the pension funds, the church commissioners, others who
have invested I hope in World Bank bonds because they won't be
very happy. I'm happy to do it, because I'm then out of business
and I don't have to put up with these sort of videos.

The second thing I can do is to forgive the debt to IDA. IDA is
the International Development where we get funds from the
governments given to us. We have 70 billion outstanding. I am
very happy to forgive that but then how do I land further funds
for countries to keep up IDA, unless the governments are prepared
to fund it. And I can tell you from three years' experience, the
governments are depending on the earnings of the bank and the
repayment of debt for between 50 and 60 percent for the funding
of future IDA programmes.

Let me forgive it, let me forgive it. Get rid of the bank. Get
rid of IDA. Get rid of the fund. And then where are you? I have
no objections. I'm 64 years old and I rather hanker for a little
peace. But before you level your accusations against us, look at
the economics. Look at the whether the government would give us
additional moneys. Look at the realities of what you are
suggesting. 

If I forgive anything I have to halve the size of my balance
sheet. I cannot do $75 billion worth of business because I cannot
borrow the money because the money I can borrow depends on the
capital I have. You would know that from simple 'Economics 1'.
But I'll do it.

The more positive thing that I would suggest as I conclude is
that instead of fighting each other and leveling accusations, we
focus on the kids that are dying, and on the children who are not
being educated and on the horrors of poverty together.

Together we can do a lot. We have expertise. You have expertise.
We know a lot about development. You know a lot about people and
communities. You have the best distribution system of any NGO in
the world. You are out there in the field with your flocks, you
and other religions. And we can both service the poor better
together and we can influence governments better together and I
believe we can make a real possibility that our children will
have a better chance of living in peace and prosperity if we work
together. That is the reason I flew over.

And I very much hope that in the subsequent discussions that you
have on this subject you will recognise that I believe in God,
secondly that I care and thirdly that our objectives are the
same. Thank you.

For further information, contact:

   Lambeth Conference Communications
   Canterbury Business School
   University of Kent at Canterbury
   Telephone: 01227 827348/9
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