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

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.