Good governance and free trade to save Africa
Interview with Paul Wolfowitz
(La Stampa, July 06, 2005)MR. WOLFOWITZ: Good morning. I appreciate you all coming this morning, and I also appreciate people's patience. I know there have been a lot of requests for interviews, and it's been a pretty hectic time here, as you might imagine, and I thought we would squeeze this in as a group session before we head off this afternoon.
Let me maybe just by way of introduction say the moment I was nominated for this job, I was acutely aware of the importance of the World Bank to Africa and the magnitude of the needs in Africa. It's something I've been conscious of for a long time. One of the I would say pleasant surprises was discovering almost at the same time how much seemed to be moving in Africa; in particular, how African governments and African leaders in growing numbers were stepping up to their responsibilities to deal with their own problems, to tackle fundamental issues of development, including the very difficult issues of governance and combating corruption.
And that was made evident to me in that meetings we had here in the spring with the African finance ministers and then really demonstrated up close on my recent trip to Africa, to four African countries.
The other pleasant surprise is to realize that development and specifically development for Africa is now front and center on the agenda of the world's leading industrial powers thanks to the Gleneagles summit and thanks to the agenda that has been set for that summit, and I think what the summit presents is a real opportunity for the leaders of the developed countries, of those eight in particular, to step up to their responsibilities, to forge a new partnership with the developing world and particularly with Africa; to try to, in the case of Africa, begin to turn around a situation that is full of need but also, I think, has important ingredients of hope in it.
And that context, I think it's important to say that the general recognition from both developed and developing countries that is evident, for example, very clearly in the report of the Commission for Africa that Prime Minister Blair organized is the need to look at development in a very broad way, and assistance, official government to government assistance is an important piece of the picture, but it's only one piece and in some respects not even the most important piece; that other things have to go with it, including this very important agenda of improving governance and combating corruption but other things as well: improving the climate for the private sector, and we don't just by any means mean the climate for foreign direct investment, although that is a good thing to have, but even more importantly to improve the climate for the indigenous private sector, which has proven over and over again to be the engine for growth in successful developing economies and to expand opportunities for trade so that developing countries, including the poorest people in Africa, have the opportunity to benefit from the fruits of their labors by selling into the markets of the developed countries.
So it is a very broad agenda; requires a lot of work, and it is not going to be done with just one summit meeting, but I think the energy and impetus that can be derived from this summit meeting can be extremely valuable in the months and years ahead.
So I very much look forward to going to this meeting and look forward to a lot of work to do following up from it. I'm open to questions, and when you state your questions, if you wouldn't mind repeating your name and your affiliation.
Q: I have one question about the G-8 summit: with whom are you going to meet at the G-8 summit?
MR. WOLFOWITZ: We will be meeting with all eight of the heads of government and also representatives from a number of developing countries will be there, including the President of Brazil, three or four African countries, and a number of others.
Q: Thank you, Mr. President for this invitation. If I am not wrong, a few weeks ago you said that tyranny is an obstacle to fighting poverty. I'd like you to elaborate on that, I mean, to explain to us why do you believe that political reform and democracy could help in fighting poverty?
MR. WOLFOWITZ: I'm not sure that's an exact quote, but I do think that, and it varies from country to country, but I do think there is a growing recognition that there is not a sharp separation between economic development and political development. And a very good example, in fact, is the issue of freedom of the press, that to the extent corruption is an obstacle to development, and I think in general, it is; in many countries, it is a very severe obstacle. One of the best tools for combating corruption, in fact, is public exposure, and that obviously requires a press that is free to criticize.
So that is an example of where I think the connection between the two is frequently very clear, but it is not an absolute--you can't say one absolutely requires the other, but I think the two--what I have said, and I believe very strongly, is that economic development tends to support political development, and political development supports economic development, and it's artificial to make too sharp a separation between the two.
Q: What do you hope to accomplish in Scotland this week?
MR. WOLFOWITZ: Well, there's a lot to be done. First of all, there was a very important debt initiative that was started at the G-8 finance ministers' meeting in London but which needs additional work to be completed, since after all, the G-8 countries are only about 70 percent of the total group of countries involved, and getting a commitment from the heads of government at the summit, I think, will be very important to sustaining that and taking that forward.
There have been commitments by various countries to increase levels of assistance, development assistance in general and assistance to Africa in particular, and again, having those confirmed or hopefully even perhaps expanded on at the summit will be valuable. And there may well be impetus given to specific initiatives of the sort that could be very helpful, and I think I want to wait and see what they come out with before I say which ones I would particularly like to see.
I do think it is important as we talk about specific initiatives, whether it be in health or infrastructure or education, all of which are areas that definitely deserve emphasis, that at the same time that we focus on these particularly appealing sectors that we also recognize that the need for what, in this institution, we call a country based approach, which is to say you need to look at the whole system; you can't--to take a simple, crude example, you can't just expect, let's say, to improve education by putting money into schools if you don't pay attention to roads and water. All of these things exist within a country-based system, and it's important to look at them systemically.
In fact, I might say--I don't know if the summit will endorse it, but, I mean, to the extent to which we can get donors, both multilateral institutions and governments, to recognize the need for an integrated approach, the recognize the importance when so many people are interested in doing good works, and it's a welcome thing, that it's very important to coordinate between those efforts, not only so that there's not duplication but so that you don't have 10 projects that assume a road is going to be built and no one is building a road, to just take one simple example.
Q: You said it's not going to take just one summit to deal with all these issues. And given the fact that the Millennium Development Goals will not be reached in Africa, you are still very optimistic to go to the G-8.
MR. WOLFOWITZ: I believe that the energy and impetus that can come from this summit can be very valuable, and yes, it's true that--I mean, we wouldn't be talking about needs in Africa if everything were going swimmingly or smoothly, and certainly, one of the disappointments is that for a lot of African countries, they are clearly falling behind on achieving the Millennium Development Goals.
On the positive side, and I think it's important to emphasize this, some 15 African countries have achieved strong positive growth rates over the last 10 years. There has been success in a number of these countries at achieving the goals, including poverty reduction, and I think one of the things we need to look at is how to reinforce those successes and also how to help the countries that are falling behind.
But the increased attention to Africa and the increased sense of responsibility from African governments is definitely, I think, a new ingredient and a positive thing to work with.
Q: I think you want to go to Africa because it's probably cooler there than here.
[Laughter.]
How do you sustain the momentum? After the summit, the G-8 presidency shifts. Even though nominally, it's the next year, but for practical purposes, it will be Russia's turn, and Russia will probably not be focused as much on Africa as the UK was. So how do you sustain the momentum? And I understand you were supposed to meet in London--I don't know if you did or not--with the Russian finance minister, Mr. Kudrin. What was the meeting all about, if you could talk about that?
MR. WOLFOWITZ: I had an excellent meeting with Minister Kudrin, and we talked about the Bank's relationship with Russia, which is largely one of what we would call in the Bank a knowledge relationship and providing what I understand is valuable advice and technical assistance.
And I must say, as someone who has been following the Russian economy for 15 years and remembering some of the extremely pessimistic predictions of 15 years ago about what might happen to Russia, it's actually very good to see Russia doing well, and I don't think it's only because of improved oil prices, although that certainly helps.
On the question of follow-up from the summit, I don't think these efforts are simply summit efforts. There has got to be a lot of work at the ground level. I would say one of the most important things that the Bank is already working on is developing an Africa action plan for the World Bank to build on the fact that there is a substantial increase in resources for the International Development (Association) or IDA.
In fact, that was already agreed in the IDA14 commitments, and it will effectively be increased by the additionality commitments that are a part of the debt cancellation agreement. So we are working hard at creating a framework in which that assistance can be used effectively to demonstrate that assistance can be effective, because I do believe that what we're talking about here in the words of the British Prime Minister is a deal for a deal. It's not just assistance by itself. It's assistance in return for performance, and as the leading multilateral development agency, the World Bank feels a very strong sense of responsibility to be able to help deliver assistance in a way that does produce performance and convinces the donors that it has been effective.
Q: A follow-up, sir: are there any plans for your visit to Russia or the region anytime soon?
MR. WOLFOWITZ: I'm making a lot of travel plans, and it's hard to balance them all. I'm very eager to visit Russia among many other places, but I don't have a specific plan yet.
Q: Specifically on Africa, I have a two-part question; I guess in some ways, it's related: what is your concern about the ability of African governments to absorb huge inputs of money without corruption, without--and making sure, I mean, I think for the credibility of this aid program with publics, with governments, it would have to be seen that money was well spent and not going to, you know, people's bank accounts in Switzerland. Are you concerned about the ability of Africa to absorb these big influxes of money?
And second of all, you paint a fairly optimistic of how things are going governance wise in Africa, but I must admit, while this is going on, we've seen, for example, in recent weeks horrific things going on in Zimbabwe and virtually not a peep coming out of developed countries in terms of stopping this type of action.
And it does reflect, I think, you know, the public's reaction to aiding Africa when you see, you know, displacement of population because of the, you know, actions of sort of an autocratic leader, which seems to be more or less allowed to go ahead by African leaders themselves with very little criticism of Mr. Mugabe. So it's a two- pronged question.
MR. WOLFOWITZ: I think what's going on in Zimbabwe is terrible, and it is terrible from many points of view, including it is having a terrible effect on Zimbabwe's economic development prospects, and I think people should speak out about it. But I think they should also do so in a way that makes it clear that it is not the standard of the continent, in fact, it represents, I think, very much the old way of doing business. And as I said, the 15 countries that have achieved sustained positive growth have been doing it because of very different policies, policies that provide incentives for the private sector, policies that deal with corruption and improved governance and policies that make very effective use of the aid that is available.
And I think we do have to move with some care, at the same time with some speed. The IDA, or the International Development Agency, allocates its assistance now on a performance-based standard that is intended precisely to take account of how well countries have been using the assistance they have had in the past, and I think that's an important part of making things work.
I think it is also important, as much as you may want to mention Zimbabwe, I think it is important to say in the case of a country like Nigeria that this government really seems to be stepping up in a very courageous way to deal with issues of corruption, and you can see that in a number of serious criminal prosecutions that they have conducted, in increased transparency about the use of revenues. I think there is still more work to be done, but the progress to date I think has to be counted as very significant.
In that respect, I think it is very important for governments of developed countries to recognize their responsibilities as well, and in the case of Nigeria, I am hopeful that they are close to an agreement from the Government of Switzerland to return some several hundred million of stolen wealth that former dictator Abacha put in a Swiss bank account. I think that is an important part of combating corruption, and I think dealing with the corruptors, who frequently come from the developed world, is part of the developed world's responsibility.
These are not issues that will be solved overnight or solved at one summit meeting, and obviously, it is good to raise people's sights; you have to be a little bit careful about raising expectations too high, but I would rather have people looking up and moving forward than concluding, because of some bad cases, that nothing can be done. I believe a lot can be done.
Q: Mr. Wolfowitz, among the proposals to come up with additional funds to increase aid is the introduction of a global ticket tax. I was wondering what your view on that is.
MR. WOLFOWITZ: I think the current formula that the French have proposed would be a voluntary contribution, actually, I think, principally focused on high-end tourism, as I understand it.
And I think that as President of the World Bank, I am always interested in initiatives that can raise the level of resources available for development and am certainly interested in looking at, if there were an agreement on some such system, ways in which the resources raised could be applied most effectively. I think that's one of the challenges. We have seen a big outpouring of voluntary contributions for tsunami reconstruction. That in itself is a challenge to the development community. I was in New York at a meeting with President Clinton a few weeks ago, and he made the point, which I agree with very strongly, that the development community has a real challenge with contributions that have been made for tsunami reconstruction to make sure that people see that those contributions are producing effective results, so that when we go back to ask for more for some other purpose, people will be willing to contribute.
Q: Ahead of the Summit, the G-8 countries have insisted on aid and debt relief. Do you wish they had put the emphasis more on trade liberalization, which the African countries apparently say they need more than aid?
MR. WOLFOWITZ: Well, certainly trade liberalization, in particular in the agricultural area, is something that I think needs to be very high on the agenda. As I said, the Commission for Africa Report, like many other assessments of the challenges facing the developing world today and particularly in Africa, underscores the fact that what is required is a very broad approach and one that gives the developing countries, including certainly the countries of Africa, the opportunity to create jobs and to be able to export the products of those workers, of those jobs, to whatever markets are best suited for them. And there are a lot of artificial barriers in the developed world that prevent a number of industries, especially in the agriculture area, from thriving in places where I think they ought to be competitive.
So, yes, I think it should get a very high priority.
Q: I am just wondering, from the position of President of the World Bank, how you see President Bush's increased commitment to Africa and also the criticism that it might not be enough. How do you evaluate that, and what do you think could be your role in pushing for more aid with all the developed countries?
MR. WOLFOWITZ: Well, as I said before, I don't work for the U.S. Government anymore, and it is not my responsibility to defend them or explain their positions.
I welcome the fact that there has been an increase in U.S. development assistance, and specifically in U.S. assistance for Africa. I would like to see more as I would like to see more from many countries.
I think as the World Bank, we have, I think, both an opportunity and an obligation to try to convince the taxpayers of the United States and of other developed countries about their obligations and their responsibility to contribute to development, and I would say to help persuade them that it is not just a matter of a low obligation--although I think that's a strong one--and I think that has been very evident in a lot of the demonstrations of recent days, but it is also a matter of self-interest. It is not healthy for any part of the world if a whole Region like Sub-Saharan Africa is left out of the development process.
But the other side of our responsibility, I think, is to demonstrate that increased assistance can be used effectively. There is skepticism, in some cases, justifiable skepticism, that large increases in aid won't necessarily deal with the problems of poverty, and I think by themselves, they won't; but I think in the right framework, in the right context--and that context includes all the things I mentioned--trade, governance, private sector development--that increased assistance can make a difference, and part of our job is to demonstrate that that's true.
Q: What do you think--the President just announced that he wants to add $1.2 billion for malaria, for example, and it seems there are so many problems with Africa. You have malaria, you have AIDS, you have poor roads, infrastructure problems, education problems, debt. What do you think is the single most important thing that can help Africa now? And, just related to your last answer, what do you think is a good level of percentage of GDP that a country should dole out in international aid for the richest country, like, for example, for my country of Germany?
MR. WOLFOWITZ: Well, a lot of countries have committed to the goal of 0.7 percent of GDP, and I think that's a desirable goal. When we ask what is the most--I think your question was what is the most important single thing--and I think my answer would be there isn't a single thing, and we have to somehow get the balance right.
Malaria is a very important problem, and I think it is good that people are recognizing now that in some countries like Burkina Faso, which I just visited, it is a much bigger challenge and bigger problem than HIV/AIDS, which got a lot of attention in the last few years.
But when people here at the World Bank talk about a country-based approach, what they really mean is you need to look at all of these different challenges in the context of an overall country framework. The balance is going to be a little different from one country to another. As I just mentioned, in Burkina, malaria is the biggest health problem; in another country, it may be HIV/AIDS. But more importantly, you can't tackle either of these problems without attacking issues of child malnutrition and prenatal care for mothers and better education, and in turn, that requires looking at the infrastructure system, and all of it requires government institutions that are capable of delivering results as opposed to simply skimming off money.
So it really does require a systemic approach, and that is why on the one hand it is important to call attention to priorities, but it is also important to remember that your first priority isn't the single most important thing. It may be the first priority, but if you don't get the second and third and fourth and fifth priorities in a balanced program, then everything may fail.
Thank you very much.