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New World Bank Chief Zoellick Tasked With Reputation Repair

October 10, 2007 at 6:20 PM EST
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GWEN IFILL: Robert Zoellick’s first 100 days at the World Bank were spent overcoming the final 100 days of his predecessor, Paul Wolfowitz. His first task: to calm the waters at the world’s largest poverty-fighting institution.

ROBERT ZOELLICK, President, World Bank: The purpose of the World Bank is not about charity. The United States has been a strong supporter of the World Bank since its inception. The bank’s reliance on markets, investments, sound policies, good governance, and partnerships for self-help are in keeping with the values that Americans esteem.

GWEN IFILL: Wolfowitz, one of the architects of the war in Iraq, ruffled feathers at the bank with a hard-charging campaign against corruption and graft. He also was accused of conflict of interest for arranging for his then-girlfriend to move from the bank to a senior position at the State Department.

Zoellick arrived in June. Since then, the 54-year-old former deputy secretary of state and U.S. trade representative has traveled to Asia and Africa, seeking to restore confidence in the bank’s mission.

Founded in 1944 to rebuild a destroyed Europe, the World Bank now lends $24 billion a year to countries in Africa, Asia and Latin America.

Speaking in Washington at the National Press Club today, Zoellick said the bank’s chief goal is to embrace globalization, without leaving the “bottom billion” of the world’s poorest behind.

Calming the waters at the bank

Robert Zoellick
World Bank
I think it's been no secret that dealing with the issue of corruption is a very tough one, because, at the start, our projects have got to have full integrity, because we're involving money of taxpayers and bondholders and others.

GWEN IFILL: And Robert Zoellick joins us now.

Welcome.

ROBERT ZOELLICK, President, World Bank: Thank you, Gwen.

GWEN IFILL: Shortly after you took office, as I just said, you said that one of your chief goals was to "calm the waters" at the World Bank. A hundred days later, have you accomplished that?

ROBERT ZOELLICK: Well, I suppose that's for others to judge, but I've been very pleased. I think people have helped me a lot, in terms of learning the issues and trying to steer a course for the future. And what I think we've been able to do over the past couple of months is to both sort of get things back on track, but also, importantly, chart a course for the future.

So this speech that I gave today was to set out six strategic themes. I worked with the board over the past couple of months to get a record contribution of $3.5 billion to a fund for the poorest countries, called IDA. And that's more than doubled what we did last time.

And we also cut some of our loan prices for the borrowing countries. So we've shown some action at the same time that we're mapping out a course for the future, and at the same time, as you mentioned, the difficult issues of corruption and governance. We've had Paul Volcker present a report, which we're now going to follow up on.

And one last thing, I was just very delighted, in the past week or so, I was able to draw to the bank someone who had been here for 21 years, but then was the finance minister in Nigeria and made a great mark, Ngozi Okonjo-Iweala. And so that's a combination of things that I hope gets us moving again.

GWEN IFILL: You mentioned the Paul Volcker report, in which he said there were severe strains on the World Bank and, in fact, that perhaps everyone there wasn't on board in trying to get to the bottom of these corruption issues. What do you say to that?

ROBERT ZOELLICK: Well, I think it's been no secret that dealing with the issue of corruption is a very tough one, because, at the start, our projects have got to have full integrity, because we're involving money of taxpayers and bondholders and others, and we have to make sure that that money is well-spent.

I think there's a good sense in the bank that corruption steals, most of all, from the poor. It's the powerless who really have no recourse in dealing with these things.

And one of the problems that I discovered was there was an internal investigatory unit that was doing very good work, and this is what Paul Volcker identified. But some of the connection or the follow-up with the rest of the institution wasn't, and still isn't, what it needs to be.

So I really haven't encountered people shying away from the issue, although it's never easy to deal with these topics with partner countries. But there's no doubt that we have to continue to stress it, because it's the core of development to have good governance.

Recovering stolen assets

Robert Zoellick
World Bank
As everybody can see, the Chinas and Indias of the world, their issues don't stop at their borders. They're increasingly players in Africa.

GWEN IFILL: But how do you balance out the needs of countries who are home to the world's poorest people against the sometimes-plundering behavior of the people who lead them, when it is their internal politics, after all, that's driving so much of it?

ROBERT ZOELLICK: Well, I'll give you a good example. Shortly after the Volcker report came out, I went up to the U.N. and announced an initiative that we've developed to help recover stolen assets. And so this is an issue for leaders, whether some of the former leaders of Nigeria or Marcos in the Philippines or others, that have taken away billions from these countries.

And part of the challenge is to help developing countries be able to use international legal rights to be able to get at them, but also it's a challenge for developed countries, because some of them, frankly, didn't make it easy to get after the funds.

There's now an international treaty that allows people to cut through a lot of the red tape, and so we're serving as an intermediary in this process. That's one step.

The other thing is, frankly, the best thing you can do to beat corruption is to have transparent processes within countries. People don't like to see their own money misspent. So we try to work with governments to make sure that their budgets are transparent, that their policies are clear for people.

But then I also do believe we also continue to have to focus on our own behavior. There's no room for stealing money from the poor; that's for sure.

GWEN IFILL: Well, let me ask you about another part of the world, which is what you call the middle-income countries, some of whom are great beneficiaries from the World Bank, China, India, Brazil. There are some people who say that they don't really need to be getting the money that they're getting, the aid that they're getting from the World Bank, because they have their own resources. What do you say to that?

ROBERT ZOELLICK: Well, the first thing is it turns out that about 70 percent of the poor -- measured as, say, under two dollars a day -- are in China, India, and these middle-income countries that are served by the World Bank. So if we're going to get at the problems of the poor, we have to deal with those countries.

But, second, there are problems like climate change, where if you just look at the situation in China, in 2005, the Chinese were building new coal-fired energy plants, about one every two days, with, say, 100 megawatts. So if we're going to get issues like climate change and energy in the developing world, we're going to have to work with those countries.

And, third, you know, as everybody can see, the Chinas and Indias of the world, their issues don't stop at their borders. They're increasingly players in Africa. And it's my sense and experience from my government service that we're most likely to be able to work with them on some of those challenges, like corruption in governance in third countries, if we're working with them in their own country.

And so one of the things that I find ironic about this question or criticism is that, if you look at the world of diplomacy or trade, which I just was in for the past six or seven years, everybody's trying to figure out, how do you fit in these countries? How do you make sure that the Indias, the Brazils, the Chinas become what I refer to as China's responsible stakeholders? So it would be a mistake to push them out of the structure here.

Nongovernmental organizations' role

Robert Zoellick
World Bank
So our role at the World Bank is, in part, to provide financing, but increasingly it's to use the knowledge and experience that we've gained and the cutting-edge work to try to coordinate some of these efforts.

GWEN IFILL: Can I ask you also about this, what we see as a great growth in nongovernmental organizations, private foundations, people like Bill Gates, who are going abroad and spending billions of their own dollars in trying to address some of the problems which traditionally the World Bank has been the one to take on? How do you coordinate with those organizations, or do you coordinate with them?

ROBERT ZOELLICK: Well, we have to, Gwen. I just had a conversation on Friday with one of the heads of the units of the Gates Foundation, and we're doing some very interesting projects with them on everything from trying to create a new green revolution in Africa for agriculture, to using technology to help with microfinance.

So you're right. I think one of the challenges for the World Bank is that, you know, we're no longer this behemoth institution that it was created 60 years ago to steer reconstruction development. We have to change to the changes in the world.

And what people in this field call the aid architecture is fragmented. So you have funds that focus on HIV-AIDS and malaria, and that helps organize money. You've got foundations. You've got private sector. I find people in the private business community that want to help on these things.

So our role at the World Bank is, in part, to provide financing, but increasingly it's to use the knowledge and experience that we've gained and the cutting-edge work to try to coordinate some of these efforts.

So you mentioned I was in East Asia. I was in Cambodia in August. We are a rather modest financial player among many others, but we play a key role in trying to work with the country to coordinate these efforts.

Because one of the challenges is, if you're a small country and you've got 50, 60, 70 donors, how do you make sure that they all fit together? We believe national ownership is vital if you're really going to make the success of these projects deliverable, and we play that role.

GWEN IFILL: But if you are a nation such as China, with resources, or you are an organization, a private organization with lots of funds, why coordinate with the World Bank when to do that you then also have to buy into the strings that may be attached?

ROBERT ZOELLICK: Well, you know, part of the challenge is you've got great diversity out there. So the way that you operate with China is a totally different way than you're going to operate with Cote d'Ivoire, and Ghana is different than a country that is, say, coming out of some conflict situation, like we deal with in southern Sudan.

So of course we have to customize our services. But it's interesting. Take a country like China. Increasingly, what they are using the bank for is this knowledge and experience in things like some of the environmental issues. So as they realize they've got to combine growth with environmental safety, they have projects with us that deal with, say, the challenges of urban growth in an environmentally sound way.

And there's other projects we might deal in the health area. The Chinese health system has basically collapsed.

So many people refer to the World Bank partly as a knowledge and learning institution. And part of our challenge is, how do we combine that with services that are faster, better, and cheaper, so that we customize this work and be a player in a network of services?

Helping build securities markets

Robert Zoellick
World Bank
It's no longer a world where we sort of sit here in Washington and people come and say, you know, "Can we have a loan for this project or that project?"

GWEN IFILL: You say that's what you would like to see happen. Do you have any indication or any feedback from these organizations or these nations that they want you to take on that role?

ROBERT ZOELLICK: Oh, yes, that's the key point, Gwen, is that we have to become much more sensitive to them as clients and partners. So it's no longer a world where we sort of sit here in Washington and people come and say, you know, "Can we have a loan for this project or that project?"

You know, one of the things that we just announced in the past week was trying to help set up local currency bond funds. So this isn't using dollars or pounds or euros or others. These are helping people create securities markets with their own local currencies.

And we're using some of the innovative financial tools that, frankly, I've been working on with Wall Street for the past year or so, and trying to adapt them to their needs. And there's a very strong audience on that.

So, again, part of the point is, you know, when people think of the World Bank, they often -- they think about it in it's a sort of way of reconstructing Europe and Japan or some of the development projects of the '60s. It's a transformed environment.

We have a private sector side, IFC, that is very innovative and creative, and it adds about another $8 billion or $9 billion of services a year to the ones that you mentioned. We've got IDA for the poorest countries, and that deals with grants and concessionary loans.

And then we've got the traditional IBRD lending, and we also have some called MIGA, which does risk insurance. And part of our challenge is, how do we connect these together so that the whole is greater than the sum of its parts?

And it goes back to your first question. There's a lot of potential here. But the institution had some troubled times. I found that, as we focused on these challenges, people are coming together.

GWEN IFILL: Robert Zoellick, president of the World Bank, thank you very much for joining us.

ROBERT ZOELLICK: You bet, Gwen. Thank you.