World Bank is doing all it can for crisis-hit Indonesia

By Dennis de Tray

JAKARTA (JP): Jeffrey Winters' attack on the World Bank published on this newspaper yesterday is stuck in the past at a time when Indonesia and all who wish it well urgently need to focus on the present and the future. To overcome its crisis, Indonesia needs solutions. We at the World Bank are heavily focused on providing them.

We are playing a major part in helping many millions of poor Indonesians to survive. We are doing all that we can to see that they continue to receive food, medicine, schooling and other essentials. We chair the group of international donors who a few weeks ago committed $US8 billion to help Indonesia through the next year.

We are closely engaged in advising the government on the measures it needs to revive the economy and ensure that when Indonesia recovers it is equipped with the reforms necessary to ensure that never again will it face the crisis it is currently enduring. We are working at full speed to help Indonesia devise a national anti-corruption strategy as a key means of achieving recovery.

I say all this right up front because to read Winters' article, you would learn nothing of these contributions, or of a few other things I want to say. We at the World Bank do not pretend to have all the answers, or to have emerged from a thirty-year commitment to the economic development of Indonesia miraculously and uniquely unscathed by the culture of corruption that pervades this society. We, too, have learnt a lot from the past year, and are constantly seeking ways of doing better.

But let me say that no one can take away the fact that in the course of a single generation the World Bank was the major international contributor to Indonesia's dramatic reduction of poverty, an achievement on a scale that no other country in modern times has been able to match.

Moreover, we played a leading -- let me dare to say the leading -- role among international institutions in warning the previous government of the need to enshrine good governance in the economy. For many years we advised the government to take action against corruption as a serious impediment to sustainable economic development.

We raised this issue directly with successive ministers responsible for the economy. We raised the issue on a number of occasions with the then president, Soeharto. We advised in successive country economic reports prepared for the government that it should pay close attention to the need for good governance, transparency and accountability in managing the economy and its national institutions.

Our message was not taken seriously until nearly three decades of high economic growth came to a sudden and shocking end a little more than a year ago. In the new political environment that prevails today, we are for the first time able to work with the government and civil society to get things right.

And let me emphasize that while we are tremendously proud of what we have been able to do for Indonesia, we are merely partners. As the president of the World Bank, Jim Wolfensohn has said, we are not a world government, we are a financial institution.

As a member of the multilateral system, as a United Nations special agency, our constitutional role is to lend to, and advise, the governments of member countries. Our central brief is to do all we can to reduce poverty around the developing world.

It is an enormously complex, challenging and often misunderstood task. But what is important to know after Winters' outburst is that the World Bank does not act as an imperial power. It only lends to its member governments at their specific request, and only within the boundaries of affordability.

The development projects and reform programs the Bank finances do not belong to us: they are owned by the government. It is the government that is responsible for ensuring that the money it borrows is spent for the purposes intended and that it is protected from leakage through bribery and corruption.

This is not to say that we take no action ourselves in this regard. We have always audited, reviewed and monitored our projects to try to safeguard them. We have the strongest and strictest procedures of any development institution. We are continuously seeking ways of strengthening our controls. Here, let me say to Winters that it was I who initiated the "secret memorandum" on leakage as part of my drive to find ways of taking action.

But our problem in Indonesia, and here let me take Winters to task after what he has written, is that it has proven virtually impossible to secure evidence to support the numerous allegations of leakage made over the years. We have investigated every allegation. We have urged those who have made them to come forward in public so that legal action can be taken. We have routinely checked the projects we finance in search of any impropriety.

But in only a very small number of cases have we succeeded in acquiring the proof necessary to act, and in those cases, I would stress, we have taken immediate action to cancel the contracts or portions of loans affected. Winters, it would seem, is upbraiding us for failing to take the law into our own hands. This we cannot and will not do.

The lesson in Indonesia is that when a system of corruption has developed where bribery is conducted through envelopes stuffed with cash, there is no trail to follow, no bank account to monitor, no paper transaction to use as evidence. This is precisely the kind of problem we are now urgently helping Indonesia to fix.

For Winters to advise Indonesians to default on their loans to the World Bank is to invite them to cheat themselves out of the massive program of aid and advice that the international community is bringing to bear on finding solutions to the country's problems.

The writer is Country Director for Indonesia at the World Bank.