Following is a transcript of the press conference:

Joint Press Conference on Reconstruction Assistance to Afghanistan Tokyo, Japan, January 21, 2002

Caroline Anstey, World Bank: Hello, thank you so much for waiting. I apologize for the delay. Let me without further adieu introduce the representatives of the three major institutions that worked together on the needs assessment, Jim Wolfensohn, President of the World Bank, Tadao Chino, President of the Asian Development Bank (ADB), and, on the left, Mark Malloch Brown, Administrator of the United Nations Development Programme (UNDP). They are joined on the panel by a number of experts who worked on the needs assessment: Phillipe Dongier of the World Bank, Yoshihiro Iwasaki of the ADB, and Sultan Aziz of the UNDP. So, I will call on the three heads of institutions to make some remarks and then we will throw to questions. Mr. Chino.

Chino: It gives me great pleasure to meet the press at this very important occasion where people from all over the world are gathered to discuss ways to help in the reconstruction of Afghanistan.

This morning, we presented our Preliminary Needs Assessment for Afghanistan's Recovery and Reconstruction. This needs assessment was a collaborative undertaking by ADB, UNDP, and the World Bank.

Building on this coordinated effort, we will conduct a more detailed and comprehensive needs assessment after this conference. Sector teams will visit Kabul and other areas of Afghanistan to conduct site visits and participate in more detailed consultations with the Afghanistan Interim Authority, a wide range of Afghanistan civil society and nongovernmental organizations [NGOs], international assistance agencies, and other stakeholders. This comprehensive needs assessment is due to be completed by the end of April.

ADB is honored to play a crucial role in this important undertaking. We have waited for the opportunity to resume operations in Afghanistan, which is one of the ADB's founding members since 1966. I believe it is our responsibility to help the Afghan people realize their full potential for development.

Now, I would like to briefly highlight the four components of a development framework, outlined in the Preliminary Needs Assessment, that will guide the recovery and reconstruction of Afghanistan.

First, we believe that the reconstruction process should be led by Afghan men and women in all stages, from planning to implementation. This participatory approach is essential to ensure the necessary ownership of and commitment to the rehabilitation process. In particular, women have long suffered from social exclusion. As we have found in other post-conflict countries, women will undoubtedly make valuable contributions to the reconstruction effort and the sustainable social development.

Second, appropriate policy and institutional frameworks must be in place at both the national and local levels to support investments in rehabilitation and reconstruction. In particular, effective reconstruction is impossible without good governance. Transparency, participation, accountability, and the rule of law provide the basis for good governance.

Third, substantial institutional support is needed for local communities and emerging public institutions. This type of support will involve sustainable and substantial training and capacity building, and is an area where we will need the experience and expertise of bilateral agencies as well as NGOs and community-based organizations.

Fourth, it is essential that investments in rehabilitation and reconstruction promote human entitlements and social inclusion. In the context of Afghanistan, it is particularly important to emphasize support for and the protection of vulnerable groups, such as women and children, returning refugees, internally displaced people, and the disabled, by providing basic needs and employment opportunities.

Given these four components, I will now briefly focus on ADB's investment priorities. We believe that agriculture, infrastructure and social sectors are crucial for rehabilitation and reconstruction. ADB's immediate focus will be on the rehabilitation of irrigation systems and roads that can make a major contribution to rebuilding the national economy while creating local community employment. In the social sector, all services are in a state of collapse, and our first priority will be given to the restoration of basic education including non-formal education.

Funding requirements to support the recovery and reconstruction of Afghanistan are enormous. ADB is fully committed to doing all it can to secure necessary resources. Based on our preliminary assessment, ADB is considering assistance in the order of $500 million over two and a half years. Such assistance will be provided in the form of highly concessional loans from ADB's lending window called the Asian Development Fund and grant assistance.

In conclusion, I would like to emphasize how pleased we are that the day draws near when we can once again work together with the Afghan people for the county's development. Thank you.

Anstey: Thank you, Mr. Chino. Jim Wolfensohn, please.

Wolfensohn: I have not a lot to add to what Mr. Chino said about the report itself, just a couple of comments on this morning. I think that we underlined to the Afghan authorities that the important next step is the consultation with that group so that the Afghan authorities can in fact be in control of the plan and we can get the priorities established that they feel are necessary.

There appears to be a general agreement on the priority areas: capacity building, governance, education, health, infrastructure, and the relocation of those that are currently either refugees or dislocated in the country. This morning we heard of the paramount importance of security and also the critical importance of de-mining before we can get to the restoration of activities inside the country. At this morning's meeting there was a lot of emphasis put on the crucial need to have the immediate financial needs taken care of, including salaries and the immediate fast-producing projects, and while it is too early to indicate final numbers, from this morning, it does appear that we are well in sight of the short-term goals.

What is important, I think, for all of us to understand is that early cash is critical -- early cash is probably critical in terms of peace and the establishment of peace -- and directing that cash to the issue of poverty is really central. This is a people that need hope, and the only way we can do that is working through the Afghan authority to produce projects and support that will give them hope. For all of us I think in this group, we very much recognize that the poverty issue is the issue of peace and we are dedicated to try and deal with it.

Anstey: Thank you. Mark Malloch Brown.

Malloch Brown: Thank you, Caroline. Let me first, just on behalf of all of us, thank our colleagues, Phillipe Dongier, Sultan Aziz, and Paul Dicky of ADB, who is not on the platform, for writing this document. I know that for you journalists a deadline numbered in weeks rather than days seems a huge luxury, but actually assembling this needs assessment in the time period that the team had, and behind the three team leaders was a group of 60 people from three organizations who were working on this, is extraordinary. I think they could not get a higher vote of confidence than the fact that the numbers they have laid out, after this very rushed period of work, were the basis on which governments pledged today. And, as Jim has just indicated, they have passed out top of class because it looks as though we will have met the first year needs and be doing very well on the medium and longer term numbers. It is up I think to the co-chairs to make the announcement on that in due course, and there are many more governments that will be pledging this afternoon, but I think it is a great endorsement of the work they did.

Second, however, what was also very clear, and what we had always said about this document, was that it was the beginning of a process -- not the end of one -- and that it could rough out the basic sector-by-sector costs, but we would then need to come back to this with much more detailed follow-up work with the Interim Authority and with the other donors that are interested in participating in the different sectors. I think the second very positive important lesson of today was the way the Interim Authority and Chairman Karzai really stepped up to the plate to take ownership of this and said they wanted to put together a comprehensive approach in Kabul to follow up and really make sure that everything that was done going forward reflected their priorities and their leadership of the process.

Now, throughout this, going forward we are going to face this constant tension between speed -- the need to really demonstrate quickly a peace dividend that we are meeting the needs of people with some real results quickly, which show them that their new government is working for them -- versus the need for reflection, debate and real ownership of the priorities by Afghans themselves because, after all, this is a government which has not yet been in power a month, and so things are happening at lightening speed. But, I think what the document does is identify some first priorities that we have to got to move on at once, of which the first, as we heard echoed by everybody this morning, is security, security, security: the ne
ed for policing in the neighborhoods, the need to move on de-mining, the need to create the situation in which refugees can come home through disarmament and the establishment of basic security for people; and second, meeting the cost of government. It would be a perverse outcome if we built roads and put a UN, World Bank, American or Japanese flag on them, built schools, but we had not given the resources to the new central government for it to be able to demonstrate to the people of Afghanistan that it was the source of benefits and welfare and good things in their life. It is 20 years since they have had a central government that did those kinds of things for them; and as half of Afghans are under 20 it means that half the country cannot remember a government that served them and was not just a source of violence and confusion in their lives. So, resourcing the government has emerged as a high priority for us and one we are pressing to make sure happens.

That brings me momentarily to the Interim Fund. This is a fund that UNDP has been running to make sure that salaries are paid in this first start-up phase. And I am very glad to tell those of you who do not know that the first salaries arrived at the central bank in Kabul on Saturday, which will allow the Interim Authority, a month after it took power, on Tuesday, January 22, to pay the salaries of the civil servants of Afghanistan after a period of six months in which people have not been paid. So, I think it is a real demonstration of the donors and international community's support to making this government succeed.

Beyond that, you have got the documents in front of you. You see the importance, the emphasis on what we might call "schools, fields, and jobs": the need to get kids in school by the time of the school year in March, a similar deadline for getting seeds out so that we can really move ahead and try and break this drought-cum crop failure with a better agricultural season, and the need behind all this to get the economy going and shift the political economy from where the most important economic asset you can have is a gun to one where the tools of peace from ploughs to computers are what people value and see as the source of their well-being and welfare going forward. Let me stop there. Thank you very much.

Anstey: Thank you. Mark. Let's throw open to questions. We are preparing a transcript so it would be helpful if you could announce your name and media organization. Yes, the gentlemen in the back, yes sir. There should be a microphone coming to you.

ITAR TASS: Yes, I have a question to Mr. James Wolfensohn of the World Bank. In what form do you think Russia can play a role in the reconstruction of Afghanistan?

Wolfensohn: Well, they know the country very well, and they have obviously up to now played a significant role in terms of the last phase of relationships. It would be my hope that they could use their experience now to turn to reconstruction. And, of course, if they are prepared to make a financial contribution we would be delighted.

Anstey: Thank you. Yes, the women on the left.

Rebecca Mac Kinnon, CNN: Chairman Karzai made it very clear that he is committed to being an anti-corruption leader, and that he is very much aware of the need for effective governance if the aid is to get to the people who really need it. Yet there are a lot of reports coming from the regions around Afghanistan of aid that is already going to Afghanistan getting redirected by warlords, stolen, people being killed for grain, and indicating perhaps that even though the central government might be quite committed to quite honestly using all this aid money for the purposes intended that when it gets down into the provinces that may no longer be the case. If any of you could comment on your confidence in the interim government's ability to enforce making sure the aid is getting to where it is intended, and, if you do have any concerns about the provincial leaders perhaps maybe having different priorities than the central government?

Anstey: Mr. Chino.

Chino: Thank you very much. As you all know, this morning Chairman Karzai was stressing the importance of anti-corruption and he said that anti-corruption was a top priority for his authority.

Number one, two and half years from now there will be a general election and the formal government will be formed. That will be the start of a real good governance; I think that will provide for the opportunity to strengthen real good governance.

Number two, for example, the trust fund, which will be managed by the World Bank, ADB, and UNDP, and the Sri Lanka Development Bank, will be managed on the basis of international level of monitoring and auditing. And, for example, procurement using this money will based on the severe guidelines of these institutions.

Number three, I think a community-based approach will be taken in the recovery and reconstruction in the country. And the community and NGOs will be monitoring, and that will be one of the very important factors which ensures a minimum of corruption. These are the points that make me optimistic about lessening corruption. Anyway, I think we should do as much as possible in the coming two and a half years.

Anstey: I think Mr. Malloch Brown wants to add something.

Malloch Brown: I think there is a chicken and egg quality to this because, as I mentioned, we are trying to meet the first paychecks of civil servants, who had previously not been paid for six months. So, of course, civil servants who are not paid, the temptation of corruption, their inability or unwillingness to exert their authority over local warlords, all of that becomes a vicious circle. But a donor community which is willing to resource central government, take a bit of a gamble on central government being able to reestablish itself is I think the virtuous circle you can create. But it is certainly one where we are not going to go into this naively; we are going to give the support to central government, but, as Mr. Chino said, we are also going to have a strong regime of audit and financial controls to ensure that international donor resources are appropriately used.

Anstey: Yes, in the front row here on the left. Yes, sir.

Yomiuri Shimbun: During the morning session the Japanese Government, I understand, pledged US$500 million for the coming two and half years. And with regard to the U.S. Government, US$298 million. Now, I would like to ask you, with regard to your evaluation of these figures, from the three organization heads please?

Anstey: Jim, why don't you go first?

Wolfensohn: Let me start by saying that the Japanese contribution was for two and half years. The United States contribution of US$296 million was for one year, with a strong endorsement by Secretary Powell and Secretary O'Neil that they would seek continuous support at around those levels. So, in terms of my own record keeping, which I have on a little yellow piece of paper, I am making the assumption that there will be continuity in the American support, which was vigorously expressed this morning. So, I think, for the first year approximately US$300 million from the U.S., which would be US$750 million if you were to extend it for a two and half year period, is a reasonable contribution. I think the Japanese contribution is also a reasonable contribution. And you should remember that this was the first pledging session this morning.

What we were anxious to do was to ensure that between the major donors, which include the European Union, which as you know came in with US$500 million in the first year, and the Bank itself, my own institution, which came in between US$550 million and US$570 million for the two and half period, it looks as though we are approaching the needs. In particular, I think what all three of us are anxious to ensure is, particularly in this first year and in the first months, that we get the necessary funding available, so they can get started. So, it is not for me to contrast Japan, U.S., and the European Union. Let me say simply that I think we are in striking distance, and I think my colleagues would agree. But that is for the Chairman to make an announcement on later today.

Chino: Well, we had a pledge of very strong support and I think these figures demonstrate this. Very continued support has been expressed and this is most encouraging. In the case of Japan, despite the very tight fiscal situation that Japan is in compared to other countries, this large amount of financial contribution has been committed to and this shows the enthusiasm of the Japanese Government to Afghanistan, and we evaluate that very highly.

Anstey: Mark.

Malloch Brown: Yes, I mean, similarly, I think that everybody has performed to the top level of expectations we had for them as donors coming into it. Japan has lived up to our hopes for it as host and leader of this process; but, others have also come out at the very top end of what we might have expected. So, all around, I think a lot of hard work by a lot of officials in governments to make sure they really have found every resource they could to push their numbers as high as possible has paid off.

Anstey: Thank you. Yes sir.

Hans van der Lugt, NRC Handelsblad: In yesterday's press conference of the four co-chairs, only the EU said it was willing to also put money in the trust fund. The US, Japan, and Saudi Arabia all said they preferred bilateral trade. Could I have a comment on that, because as you mentioned several times, there is a need to pay salaries and this will have to come out of the trust fund I understand? Please comment on that.

Anstey: Jim?

Wolfensohn: Well, I do not think that we are finished on the issue of the trust fund yet. I think what the three of us have been doing this morning is to indicate that we have to get running costs for the government. The Afghan authorities have made that very clear. I think that there was this morning a clear understanding that there is going to be a mixture between bilateral and trust fund contributions. And so I do not regard the issue as closed; I regard it as an issue that is currently being debated. The reality is that we have to get the funding for the Government. Since that is the reality, I expect it will happen.

Anstey: Yes sir, on the left.

NHK: As there was a previous question on the accountability of the Interim Administration, I would rather like to direct these questions to the donators. As there was a question about co-existence of bilateral aids and trust funds, how are the donators going to avoid overlap in aid policies? One school is made by one flag, another by another flag, on road by one country, and another by another. How are you going to avoid this inefficiency?

Wolfensohn: Well, first of all, the donors have got to want to do it and I believe they do. But secondly, we will be presenting tomorrow a program resulting from a thing called the Global Gateway, which is a computer-based system that will have a transparent presentation, if the authorities elect to use it, of everybody's work so that you will have a real time listing of the efforts of everybody, that is, bilaterals, trust funds, NGOs, and civil society. And that can be up and running in a very, very short time.

So, the mechanics exist to have latest technology in terms of managing and coordinating the practice. The only thing then that is needed is the will. It is our hope, given transparency and given, I believe, the likelihood that the Afghan authorities will want to do it, that everyone will be willing. It is by the way in everyone's interest not to keep falling all over each other. So, my guess is that reason will prevail and we will have a system. And the system is already developed, so it can move immediately.

Anstey: I think there was a question at the back? Yes sir, in the sixth row there.

Yomiuri Shimbun: I would like to speak in Japanese if possible. A question from a different perspective. When we talk about support and assistance to Afghanistan, in the Johannesburg G-8 [Group of 8: Canada, France, Germany, Italy, Japan, Russian, United States, United Kingdom] meeting, what will be the positioning of this Afghan issue? Ten years ago, for the Agenda 21 for the global environment, one of the major challenges yet to be answered was the issue of assistance to developing countries. You are going to reinforce your assistance to Afghanistan, but would there be any impact on the assistance to other developing countries because of this?

Anstey: Mark, do you want to take this?

Malloch Brown: Yes, Kofi Annan, this morning in his statement pleaded with donor countries not to allow a diversion of existing scarce resources to other developing countries to go to Afghanistan. A number have observed that we are all determined to resource the reconstruction of Afghanistan appropriately, but it would be an enormous perversity if the resources to rebuild Afghanistan were taken away from Africa, a region which has suffered tremendous depletion of development resources in recent years.

I think the truth of the matter is that the timing of the Afghan crisis, coming as it did in the last quarter of last year, it was after most donors had developed their development budgets for this year. So, in the short term undoubtedly, there is some diversion of resources from other purposes. But, we in the UN, and I know I speak for the World Bank and I am sure for the Asian Development Bank too, want to use not just the conference in Johannesburg but the conference before that on financing for development in Monterrey, Mexico, to argue for a sharp increase in development resources to tackle global poverty. And we very much hope, that after 2002, the funding of both Afghanistan, that other additional support to weak states in the world, will be additional to current levels of ODA [official development assistance].

Anstey: Thank you. We have time for one more question. Gentleman here in the third row.

Q: We are speaking about aid to Afghanistan. And you experts, I guess had very little time to make assessments, and the bottom line of today for Afghanistan. But what is the upper line? What is the goal of your assessment? What are you going to want to see in Afghanistan after the $US50 million dollars are granted to this country.

Anstey: Mr. Wolfensohn?

Wolfensohn, World Bank: Well, the first thing is we want to see peace and we want to see an opportunity for the Afghan people to fulfill themselves. With a life expectancy of 44 years, with only 38 percent of boys in school, with 3 percent of girls in school, with women having been pushed out of the society, with limited roads, with only a third of the people having access to water or less, there are many goals that we would like to see. So, I think our hope is to have a functioning and viable society led by Afghans, who by the way have a very long experience in administration and in business and in running their country. They have been disrupted.

But, our major effort is to help them restore a culturally safe Afghanistan -- safe for their traditions and their practices. The only other thing I would say, and then pass to Mr. Chino, is that in terms of the funding and the levels of funding, I think all three of us believe, that the events of 11 September have made, what appeared to some people to be overseas commitments, or charitable commitments to overseas development, or fringe commitments, into domestic issues. And if the world has not learned after 11 September that poverty, wherever it is, is a domestic issue for the developed countries, then we are in deep trouble. And I think Afghanistan is the first step at which we can expand our development assistance and support, and have the world recognize that instances such as this are no longer part of that 0.23 percent of GNP or 0.5 percent or 0.7 percent of GNP [gross national product] going to overseas aid. But, they are, in fact, domestic issues that we have to worry about. And if we do not get this right we will not have peace and we will all be in trouble.

Anstey: Mr. Chino?

Chino: With regards to the upper lines for these needs -- no upper line. We will try to provide more accurate estimates in the comprehensive needs assessment.

Anstey: I did miss the woman in the third row, so that will be our last question.

Financial Times: I just had two quick questions. Just to clarify on the US$500 million from the World Bank, can you more specifically define concessional assistance? And also clarify this concessional assistance is going into the trust fund, of which I guess the World Bank is the fiduciary agent, or whatever the right term is.

And the second question would be, regarding the, I think it was yesterday Mr. Malloch Brown said, only 25 percent of the money that you expected to come into Afghanistan would be going into this fund. So, how does that effect the computer system, which will be overseeing the fund, are you not concerned about the possibility of money going where it should not, given that the computer system is supposed to be obviously overseeing that 25 percent only, if I understand correctly? Anyway if you could correct my misunderstanding?

Wolfensohn: On first question, I will pass to Mark. For the US$50 million to US$70 million will be grants, and I hope they will be relatively quick. And the US$500 million will be on IDA [International Development Association, the World Bank's concessionary lender] terms, which is 40 years, no interest; 10 years no repayments, which has a very strong concessional element in it. And, we will have to decide how much goes into the trust fund, but so far as I am concerned, the trust fund is the number one priority. We have got to keep the country moving, and I will be telling that to my board. But, I would expect that we will have a number of projects as well.

Anstey: Mark?

Malloch Brown: Let me just say on the numbers, it gives me an opportunity to say that, the reason today has been such a success is not least because the two multilateral development banks have come through so strongly. You know, when they pass the hat down the table, and say, "How much are you each doing?" I sink down in my chair because, obviously, as the UN we are not able to put in the kind of resources that these institutions have put in, and we really praise them for what they are doing.

On this issue of the size of the trust fund, let me be clear, when I say 25 percent that is not a judgment about what is best in terms of size. It is a practical calculation based on what someone else mentioned, which is when a number of the major donors have indicated that they do not plan to use the trust fund, or only use it at the margins, you are left with a smaller pool. But the fact is that some of the strong but smaller donors -- the Nordics, the Netherlands, as well as the international financial institutions -- recognize that in a situation like this pooled funding in order to meet unmet priorities and the recurrent costs of government, is absolutely indispensable for a successful, agile operation, which is keeping government on the road, and meeting unmet priorities. So, if it is more than 25 percent I will be the first to be thrilled.

On the second point, about the tracking system, please understand that precisely because we could only engineer a scheme where pooled money in a trust fund was a minority of the overall funding envelope. The tracking and information management system about projects, covers the totality of development activities. Again, we are trying to get the best of both worlds here; we are recognizing that big donors to sustain public support back home, believe they have to undertake a lot of bilateral activities. But we want, and the Afghan Interim Authority wants, them to work within a single comprehensive framework. Which means that the Afghanistan Authority set the lead in identifying both priority sectors and priority projects within those sectors. But all of it is costed, and is felt to be macroeconomically sustainable, and that then within that bilateral sub-contract certain activities -- that they do not stray outside the agreed framework. And then the reporting system reports on thewhole thing, both what is being done, different rates of implementation and status of implementation, so that we, in a sense, get that comprehensive, combined impact, as though it was just one commonly funded program. So we have here a scheme, which is if you like, multi-bi in its design.

Anstey: Thank you very much ladies and gentlemen, we have to let our principals go. But, if you have any drill-down questions I am sure our co-authors of the report or experts will be in the room for the next couple of minutes.