absolutelyBangkok archive · Politics
Originally published March 4, 2008
Meet
James D. Wolfensohn, the 9th president of the World Bank, appointed in 1995 by U.S. President Bill Clinton.
Since leaving his post at the bank in 2005, Mr. Wolfensohn remains committed to the eradication of poverty. He’s a restless world traveler fighting for just causes — “preoccupied with poverty eradication,” as Mr. Wolfensohn told absolutelyBangkok.com.
We recently met the financier and benefactor in Bangkok, where Mr. Wolfensohn was on invitation of the International Peace Foundation. We held an extensive interview covering some bits and pieces about Thailand, the troubled world economy, the fall of the U.S. dollar, the eradication of poverty, environmental concerns and the impending dominance of Asia.
Mr. Wolfensohn, you’re in Thailand — how do you judge the kingdom’s economic outlook?
I only know what I got since I came here. It’s got 5% growth and is on a positive frame. But it too needs to adjust to the new role of the giants in Asia. With the disproportionate powers in China and India, Thailand needs to cut out a niche for itself, with the special crafts the country has. Thailand has to find its special context to flourish in — if they have good leadership they can be successful.
As president of the World Bank you have observed Thailand over the years — what has changed?
I haven’t seen much of the country. When I’ve been visiting Thailand I’ve been visiting villages and slums. Once I was at a Four Seasons Hotel, but can’t even remember the name. I’ve seen women and slums and had the odd, expensive dinners with the government. Travel as the president of the World Bank is not a tourist exercise. I was always looking for problems.
What’s the image of Thailand to the outside world? Still the same? Lots of prostitution and coups?
The view is more of a country which has addressed some of the issues, like pollution control in Bangkok. People are very impressed with. But most foreigners don’t know much about Thailand. They have great respect for the king and have watched with some questioning the many changes in government and leadership. They are pleased with the move from the military to a civilian government. But you only have to be here five minutes to find out that things have not quite settled yet and that it’s not yet clear who really is in power. Newspapers at least report openly 48 hours a day. There don’t seem to be any secrets.
Moving to a larger stage: The world’s economy is in slight turmoil, at least the financial indexes are. What does the weak U.S. dollar mean for the world’s economy as a whole and for Asia in particular? Is the weak dollar an omen of things to come? Of a new order of the world’s economy?
I think the world until the last few years was a U.S. dollar based economy. The dollar was the store value and the currency in which people expressed economical activity. We have seen the rise of the euro and its ability to trade more aggressively against the dollar. Because now, you have a choice. That has meant that there has been a greater focus on the evaluation of the dollar, based on fundamental economics, if the U.S. is strong, and if those countries operating in U.S. dollars are strong or subject to weakness. It is clear today that the dollar has depreciated 25%. Therefore as a store value compared to other currencies and to gold the dollar is clearly under pressure. That’s the issue we’re addressing. The U.S. is about a third of the world’s economy — China and India and developing world account for less than 20%. What is changing on the planet is that you’re seeing a move to greater economic activity in Asia, in particular in India and China. So that once again we’ll see China and India among the top three or four economic countries in terms of their economic activity. By 2035 China’s GDP will be greater than the one of the U.S. China will already have more purchasing power before 2035. The world is shaken up by resurgent Asia. It’s a return to what has happened in 1500 and 1830 — when India and China were 50% of the global GDP. The world works in cycles, now we’re coming into phase of economic dominance in Asia. As a result of the rising middle class.
The Asian Development Bank ADB recently said that the alleviation of poverty in Asia had quite some success. That the ADB had to set new priorities, such as sustainable development and the protection of the environment. Does that mean that classic institutions such as the World Bank and ADB become irrelevant?
They may be relatively less important. Many people are taken out of poverty. But there are still have a couple of billion people, especially in Africa, who live in poorest conditions. Also in India and china.
Can you give me an honest answer on whether the World Bank has alleviated poverty?
The bank has made a contribution in alleviating poverty, both by monetary contribution, but more important by creating an environment that people can work their way out of poverty. Handouts are simply not doable. You have to create local conditions, and that’s what people want. Poor people want no handouts, but opportunities.
Where precisely did the World Bank achieve successes?
Anywhere where you see local work programs for women, micro-credit opportunities and the creating of infrastructure. But not just physical projects are important, there also needs to be manufacturing and trade. There is no single simple solution to alleviate poverty. And no single institution has enough money and talent to solve alone the problems of India and China. It’s just to stimulate the governments. The GDP of China alone will grow to 16 trillion dollars. The World Bank lends a few millions. On the other hand we had a very big influence in talking about equity and offering opportunities to poor people, such as with health care and the education system.
Where didn’t your programs work?
Anybody can claim success. But nobody can claim poverty is over. Otherwise I wouldn’t be preoccupied with poverty eradication. And you don’t have a lot of people talking about it. It is the duty to keep talking about it, and I know all the people and NGOs who’re talking about it. What you’re seeing today though is that young people are far more interested in poverty issues and environment. A broader array of leaders is coming from developing countries, and no longer only leaders from the rich countries.
Meaning that no longer only poverty, but more and more environmental issues are troubling the developing world?
The environment is a big question. The world was polluted by the rich countries. It’s not at all surprising that the developing countries add pollution. India opens a coal-fired power plant every week, and not such ones dealing with the pollution. You can’t stop progress. We’re still degrading our forests.
A more and more abused environment: Doesn’t that the increase the danger of a global recession? Or at least weaken the defense mechanisms?
Everybody would agree that we’re in a global downturn. I’m not smart enough to know if that’s a recession yet in the wealthier countries. At the moment China and India are still going ahead at 10% a year. It’s not global yet. The global GDP will be reduced from 4.7 to 4.1% — in my view though that’s still an optimistic expectation. All this means less exports for developing countries. But there is now a greater demand inside developing countries. It will not be as bad as a decade ago.
If you’d be the president of the bank again, what would you do differently?
I would start quicker than I did and with more sense of assurance on addressing environment, poverty, corruption, education and health. Those are all the issues that I attacked when I was there, but if I was starting again I wish I wouldn’t have to learn again after five years. But life is not like that. You don’t start with experience, you learn experience. The directions would be the ones I finished with. And the role of women is hugely significant in poverty eradication.
How do you repudiate criticizm that the bank — on occasions or often — pitched in for Western corporate interests over the interests of the bank’s client-countries? For instance with water privatization, user-charges for water consumption, etc.?
I think that’s quite foolish. I was never in 10 years affected by corporate pressure. I can say honestly in 10 years I never felt subjected by a corporate lobby. That may not mean that some directors at the bank had been influenced.
Thank you very much for your time and insights Mr. Wolfensohn.
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