Pledges made at an international donors meeting of $13 billion in aid to Iraq -- in addition to the $20 billion already promised by the Bush administration -- represent a "remarkable start" towards helping Iraq's recovery, says World Bank President James Wolfensohn.

In an October 29 address at the National Press Club in Washington, Wolfensohn said the amount pledged could be further supplemented if a "peaceful" Iraq became a significant oil exporter within a few years, leading to a willingness of commercial banks to lend to the country.

Wolfensohn said the October 23-24 conference in Madrid demonstrated high international interest in Iraq and its "potential."

The major issues facing Iraq now, he said, are the country's need to adopt a constitution, establish representative government, and ensure security.

The Bank has estimated that Iraq needs $36 billion in development funding over the next five years, Wolfensohn said. The Coalition Provisional Authority (CPA) has estimated an additional $20 billion is needed for security and to rehabilitate the oil sector, he said.

He added that if an elected government and secure environment are established in Iraq, the World Bank will pledge $3-5 billion to assist the country over five years. The International Monetary Fund (IMF) would provide $2-4 billion in balance-of-payments financing, he added.

Wolfensohn said he may go back to Iraq to assess conditions for World Bank staff to return. The staff were ordered to leave the country because of security concerns.

He said the Bank also "would like to be engaged" with Iran and North Korea.

A House of Representatives and Senate conference committee agreed October 29 to provide $18.6 billion in grants to Iraq.

WOLFENSOHN: Let me, in the time I have available, start with the question of Iraq, and then move from the question of Iraq to the broader issue of development in general, and the two subjects are linked. But let me start with the Iraqi issue.

I think you know that the Bank has taken a fairly active role in trying to put together a plan for the reconstruction of that country.

We have done it jointly with the United Nations and with our friends at the [International Monetary Fund]. And we have had the responsibility of pulling together a plan for reconstruction, which has been based on 14 separate studies that we have completed with our colleagues. These studies, as you might expect, have been on the sectors of the economy, which have languished over the last 20 years. And to the extent that they were affected by the conflict, sought to bring about the restoration of the services.

We looked at, first of all, the administration of the country, at health, education and employment, at the issues of infrastructure and agriculture, and, of course, private sector development. And to cut a long story short, in the process of doing that we had interviews with people throughout the country, and we concluded that order of magnitude for the next five years, there would be a requirement for investment of the order of $36 billion. That sum is not necessarily the needs of the financing, because it's conceivable that Iraq itself might generate some funding for the investment. But that is the target number. And in addition to that, the administration, the CPA [Coalition Provisional Authority] conducted separate work in relation to security, to the oil sector, and various other sectors and concluded that there was another $20 billion required for work in those areas, leading to the total of $56 billion.

And so it was that we went to the meetings in Madrid with a view to trying to ensure that there was an adequate amount of funding to proceed with this program and to engage so far as possible additional support on top of the $20 billion that had been promised by the United States, or at least indicated for recommendation at the Congress.

The meetings themselves I found to be really quite supportive, although some of the political differences remained, as you might expect, in terms of the vestiges of antagonisms as a result of positions taken in relation to the war itself, so that some of the European countries were less willing than others to provide assistance. And the net of it -- but they're all there. The net of it was that there is extreme interest in Iraq, interest because, A, of its -- the geopolitical importance of it; secondly, because of its potential. It is, after all, the second-largest oil reserve in the world. And it also has debts somewhere north of $120 billion. So the issue of raising money was linked to the question of debt relief, because raising money alone is not the answer if you have $120 billion worth of debt sitting on top of you. And so it was a point of interest for everybody to come to the meeting, and the net result of a minimum additional amount of 13 billion (dollars). And I say "minimum" because it was somewhat lower than the indicated promises of money. But conservatively, 13 billion (dollars) led to the announcement that a total of 33 billion (dollars) was available.

What I should say to you from my own experience and without at all being partisan is to have at the beginning of a five-year period already $33 billion indicated is a remarkable start.

You don't have to -- nor has there been any case that I know of -- to be able to raise an indicated amount of the totality of the need for five years, because a lot can happen in five years.

And in fact, under one set of conditions, if Iraq were to be peaceful, if oil were to flow in double the quantity, if the arrangements on debt were such that it was either removed or brought down to a very convenient level, it's conceivable two, three years out that commercial banks would lend the money to Iraq.

If you could set a set of circumstances which would be your dream circumstances -- that it had no debt, a lot of oil, and peace -- chances are you could raise any amount of money for a country that the second-largest oil reserves.

But somewhere between today's situation and that situation will be what emerges over the next two or three years. And it is my judgment that in a couple of years' time, there will be another funding, as we've done in all other cases, and we will come back, and in light of the conditions at that time, one will determine how much more money is possible.

So it's not an issue where you can say it was a failure or a success. In my judgment, it was more than a success in terms of what we need to get going for the next couple of years, particularly as the United States has indicated a $20 billion cash infusion for two-thirds for the things that we did and one-third for the work that was done by the authority.

So it was a -- from a financing point of view, I think you can say that good progress was made.

The issues which overhang the whole situation, of course, relate to the carrying-through of the measures that are envisaged by the U.N. resolution and envisaged by the authority itself to get a constitution, to bring about elections, to have representative government and to move the authority to the Iraqi people. That is one immediate objective.

And the other objective, of course, which will have a big effect on the ability to do that, is in fact the security situation, which is brought to our attention, unfortunately, daily by the events in Iraq.

So the meeting, from a financial point of view, I think, was quite successful. The interest was considerable. But there remain the overriding questions of security and the future transference of power, which were not the subjects of discussion at the meeting in Madrid. They are certainly the subjects of discussion in your various journals, and I get my information from you and from what it is you write.

So I've told you all I know about Iraq, and you can tell me what's going to happen in Iraq. And that'll be a fair exchange.

But the role of the Bank is considerable, because we have a lot of experience. In fact, for those of you that don't know, the Bank was named the International Bank for Reconstruction and Development. It is called the World Bank, but its official name is that.

And of course, it started 60 years ago, after World War II, for the purpose of reconstruction. In fact, one of our first loans was to France, and the next one to Japan. So a number of these countries have come a long way, with our assistance, and they, of course, now pay my salary. So I have to be very respectful of these rich countries, including the United States, which at all stages has been a donor, and which has been very supportive, as you know, with 18 percent currently of the votes of the Bank, which now has 184 shareholders that own the institution. Some people think that the Bank is an American institution. It is not, it is an international institution, much like the United Nations. But the influence of this country is considerable and, I must say there, quite positive.

The issue of Iraq, of course, dominates the press, but the issue that we deal with is not just issues of reconstruction. The issues that we deal with are much broader, and I'd like to try to convince you that they, too, deserve some recognition and some interest and, indeed, some sense of urgency. And it is not just because I have 10,000 colleagues that work on this in more than a hundred countries, or that we have as our objective the issue of poverty eradication. That is our task. Our task is to seek a more equitable world. That was the mutation of the task of the institution after its central role was reconstruction. And under a series of U.S. presidents, actually, we moved to expand our activities, including with the International Development Association [IDA] under President [Dwight] Eisenhower, to make loans at the poorest countries on concessional terms.

And so we have really two branches of what we do. One is the lending to the countries with incomes above $850, which we do more or less on commercial terms. They're not very profitable terms, but they are at about half a percent over our cost of money. And we have another series of loans that we do every year for 20 to 30 years at no interest, which is the sort of thing that most of the people in my organization, and I guess most journalists, would also like to have. But we do it to the poorest countries, and we do about 4 billion (dollars), or a total of 8 billion (dollars) a year, of that sort of lending. So we're an institution of considerable size. The combination of loans of the IDA and the Bank, well over $200 billion, we do of the order of $20 billion a year. And that gives you a sense of what we are.

Now, what are we doing? The center point of what we're doing is to try and address the question of global equity -- and, in our view, the question of global peace and, in our view, the issue of stability on our planet and, in our view, perhaps the most important issue that is facing us today. Iraq is of obvious importance and it is of immense importance and it's urgent, and it's visible, but there is another dynamic going on which is, in our judgment, equally important, and unavoidable.

The dynamic is very simple. First of all, the static situation. You have 6 billion people in the world, of whom 1 billion live in the rich countries, including our own. That 1 billion has 80 percent of the global GDP [gross domestic product]. Global GDP is something off of $32 trillion, and that 1 billion has $26 trillion of that income -- plus or minus a few dollars. The other 5 billion have 20 percent of the income. They have 6 trillion of that 32 trillion. So you have one-sixth of the people controlling 80 percent of the resources, and you have five- sixths controlling 20 percent of the resources. That is a fundamental imbalance to start with.

There has been improvement in recent years, as the level of poverty has started to reduce, as illiteracy has started to be improved, as life expectancy has been improved. In fact, in the last 40 years we have added 20 percent globally to life expectancy, and it took us a thousand years to add that 20 years beforehand. So there is some movement. And there is movement on democratization, there is movement in terms of the way in which people have voice, the way that they can express themselves. There's movement, may I say also, in the very important issue of freedom of the press and the role of the press and the role of commentators in terms of opening up society.

So it's not without improvement. But it was of sufficient importance that at the year 2000, when the General Assembly met, with all the heads of the world, the conclusions that they came out with were not general conclusions; they came out with goals for the millennium. And they were all related to this imbalance between the rich and the poor countries. They came out with what are known as millennial goals: to halve poverty by 2015, to get all the kids in school, to improve maternal mortality -- infant mortality, to deal with the question of the environment.

And they were doing this not as a matter of show, but because they felt as global leaders that the most important set of considerations was this issue of global balance and global equity. And they said, many of them -- I re-read a lot of the speeches. And they were doing it for various reasons.

One, that it seemed morally right. If you have half the world living under $2 a day, and if you have a billion, 200 million people living under $1 a day, if you have 2-1/2 billion people that have no access to sanitation, if you have a billion people that have no access to clean water, 150 million kids not at school, it's perfectly reasonable as a global leader to say there is a moral case to do something about this in a world that's becoming richer. So some of the leaders took the view that it was because of morality, and what is right.

Others said, "Well, it is true that that is the case, but we also have to recognize that the world's a different place than it was in recent years." And surely that was reaffirmed on September the 11th.

For many, including in my generation, we grew up thinking there was a wall around the rich countries, and outside that wall were the poor countries, the developing countries.

The real meaning, in my judgment, of what's been happening in globalization is that we have now recognized that this wall doesn't exist. We're linked by trade, by finance. Financial crises move very quickly, without reference to this wall. They're linked by environment. They're linked by drugs, by crime, by migration, which is becoming a central issue of the day, by terror.

There's no way of avoiding the fact that we are in a different world and that considerations are now planetary, which is what was said at the Millennial Summit, and that people at the summit were saying we can't forget poverty, even if it's outside our borders, even though our domestic political base is essentially domestic. I very much doubt that we'll hear much in the next presidential debate about the issues of development. And as in the last development debate that [Public Broadcasting Service Anchor] Jim Lehrer was chairing, I chided him because I think two minutes were taken in the three debates on the issue of development. And the only reason that that question was asked is because at dinner I browbeat him to ask the question. And so it was dispensed with very quickly.

And it's not a popular issue, because the important issues of today are jobs, the level of economic activity and local considerations, because these other considerations are not seen.

In fact, although I've been in the practical world of Wall Street, most of the people think I've become some sort of soft dreamer, or some Green has got to me, or something's happened, that I've changed, and that what I discuss, you have to listen to because you're here for the next 20 minutes, but really you can't wait to get out of here. And that is the usual experience I have, certainly, in New York with my former friends.

But the truth is that this is a very serious issue and that if you're talking about stability and if you're talking about the future of our planet and if you're talking about the future for your children, you can't think about the wall. And you have to recognize that whatever we say about globalization, we are linked in a way that we weren't as kids.

As I look around this room, there are many contemporaries, but I'm sure few of you got educated on Islam, got educated on China, got educated on India, got educated on Central Asia, got educated on the fact that two of the countries in the world today, India and China, represent two-thirds of the global population. You're probably not aware that 590 billion of external reserves are owned by four countries, but significantly China and Korea.

These balances have changed dramatically. We're not dealing with it in our education system, and we're frankly not confronting it.

I said this was the static because the next years are even more significant. In the next 25 years, that 6 billion grows to 8 billion, an order of magnitude, 2 billion people, depending on who you read on demographics, it's between 1.5 and 2 billion people, because they're not sure of the timing. But let's say 2 billion are added to the planet. So we're a planet of 8 billion, and only 50 million of that 2 billion are added to the 1 billion. Europe, as we know it today, will be smaller. The developing world will be 2 billion larger. And the real issue is, as we see it, what then happens with the distribution of earnings, what happens with the issue of poverty, what happens with the issue of stability? And that is a train that is coming down the track which cannot be stopped.

It's not that I'm here special pleading for my 10,000 colleagues who work at this, or that because I want a subject to get invited to speak on. This is the issue of peace and stability, what you have to think of when you think of getting the heads of extremist organizations and locking them up. The fundamentals are the issues that we need to address. And frankly, the role of the media is enormously important in trying to inform and develop an understanding on the part of the population that is more global than it is today, not putting aside -- because you cannot realistically -- domestic issues, but understanding that domestic issues cannot thrive without understanding of international issues.

At Monterrey we had a meeting following up the Millennium Summit, in which it was agreed that the developing and the developed countries each had responsibilities. The developed countries -- or the developing countries had to get their act in order, they had to build their governance, they had to have legal and judicial systems to perfect rights, they had to have a financial system that worked, and they had to fight corruption. And they signed up to this, not us imposing it; it's what they said, and the Africans, in a special thing called NEPAD [New Partnership for Africa's Development], have agreed to do it on their terms, not because we insisted. And the rich world said, "If you do that, we'll help you build capacity. We'll give you extra money in development assistance, and we'll open our markets for trade."

Well, Cancun, unfortunately, did not fulfill that promise. And the development assistance, while increased in this country by President Bush by an amount of $5 billion over the next three years, will bring us, if we're lucky, to a level of around 0.24 percent of GDP, when -- (inaudible) -- probably around 10 or 15 percent.

And we are dealing, then, with another imbalance, in which we see in the use of our resources really improbable concentrations of interest.

Now, our globe spends $800 billion a year on defense. We have just seen $150 billion in our country on Iraq. We spend $350 billion, both publicly and through tariff, on agricultural assistance. The total of development assistance on poverty is $56 billion -- total. If you came from Mars, you'd think we were all mad as we looked at the allocation of our resources. And yet, the arguments that will now occur relate to whether we should increase by half a billion or a billion allocations of resources to AIDS, to development, when we're spending 800 billion (dollars) on defense and wars and 350 billion (dollars) on agricultural subsidies.

It's a curious imbalance, and it's an imbalance which we're doing for the cost of our kids. If we want to have a future that is stable and peaceful, I would just urge that all of us give more attention to this surrounding issue. It's a question of equilibrium, it's a question of peace, it's a question of stability, and if I can go back to those leaders at the millennial summit, I would say it's also an issue of morality and an issue of what's right.

So I thank you for the opportunity of speaking, and I look forward to questions. (Applause.)

QUESTION: We'll start with the Iraq questions. The -- if you could start out by talking about the 13 billion (dollars) that was pledged in Madrid, much of that money comes from World Bank and IMF [International Monetary Fund], which is largely funded by the U.S. Are you disappointed not to have a larger coalition of donors in terms of how much is being contributed?

WOLFENSOHN: Well, I'll answer specifically. The World Bank is going to come up between 3 (billion dollars) and 5 billion (dollars) over five years, under certain conditions of recognition of the de facto government and security. The same would be true of the Fund, which will be putting up balance of payments funding of between $2 (billion) and $4 billion. And so, you have, give or take, another 7 (billion dollars) or 8 billion (dollars), depending on how you count the reduction in the overall number from others.

I was not disappointed. I mean, you cannot expect that countries that are fighting vigorously at the U.N. about the conduct of things will come and open their checkbook when their foreign minister or president is regaling against the administration, and they give you money. I mean, no thinking person would expect that that would happen. It didn't happen. But we, nonetheless, managed to get a total of 13 billion (dollars). And I must say to you that on top of 20 billion (dollars), that's plenty to get started in a very effective way.

And the most important thing is that it's not us that should be directing this, it's the Iraqis. This has to be an Iraqi activity.

If it's not, A, it'll fail, and secondly, be wrong. (Laughs.) And I would say that the thing that impressed me most was the quality of the Iraqi representatives that we had there, who seemed very clear in what they want to do.

Q: Do you expect those countries to come around, and can you have a meaningful rebuilding of Iraq without countries like France, Germany and Russia?

WOLFENSOHN: Well, I expect them to come around when they solve the political issues, which, thankfully, are beyond the role of the World Bank. But you could easily reconstruct Iraq if you have, first, the Iraqis and $33 billion. That's -- that is not -- I don't think that's a problem. But if you don't have French bridges and German bridges and Russian bridges or them investing in the oil fields, some people might be quite happy. (Laughs.)

Q: What role do you see Asian nations like Japan and China playing in the reconstruction?

WOLFENSOHN: I think quite a lot. Japan was one of the largest indicators of support, 1-1/2 billion in advance and more than twice -- well, twice that in terms of available funding. Japan has always played a major role in reconstruction. And more recently, China has played a major role. On my recent trip to Central Asia, I was amazed at the number of Chinese construction companies and manufacturing that are there. If some of you had been there, you -- you would see that. So I think both of those countries will play a huge role.

I think you should know that China, as part of this whole exercise, is assuming a very different role than previously. Today it has 4 percent of world trade against the U.S. 13 percent. And by 2017 they'll be the same. By 2020 China will be 14 percent, and the United States 11 (percent). So as part of this whole thing, you have to see a dynamic, which is very strong in favor of China, and also, I think, a resurgence in Japan.

Q: How much of the money pledged in Madrid was from loans, and how much from grants?

WOLFENSOHN: Well, you have to start with the 20 billion, and you can probably tell me what's going to happen in the Congress on that. [A House of Representatives and Senate conference committee agreed October 29 to provide $18.6 billion in grants to Iraq. The administration, I think very correctly, is looking to ensure that it's grants. And the Bank and the Fund cannot make grants. So you take us out, and I suppose the rest is -- no one has officially said this because we are trying to check on it, but my guesstimate would be that certainly more -- well over half would be in grants of the monies that they have already. But that's a soft number. I don't -- I don't honestly know.

The thing you find when you do these fundraisings is that there's always a speech, and then there's the detail. (Laughs.) And we're not going out trying to get the detail. And as soon as we know it, we'll announce it.

Q: Do you agree with President Bush's contention that 20 billion from the U.S. must be grants, not loans?

WOLFENSOHN: Well, I don't want to enter the domestic debate, but I'd have to say that if -- if you start with trying to reconstruct the country, which is your objective, and you start with a minimum of $120 billion of outstanding debt already, plus maybe 30 or 40 billion that will be on reparations as possible claims, and you set against that a GDP [gross domestic product] of $12 billion to $15 billion a year, you're looking at a debt-to-income ratio that's ten times. We get worried when it's seven-tenths, or when it's one time.

So, the notion of trying to help the country by adding debt is not something that I think stands up. And if the United States is trying to help, which I know it is, my judgment would be that it would be far better in grants. But let me say again, I am a poor civil servant and I shouldn't enter these debates. (Laughter.)

Q: How much of Iraq's $120 billion debt should be forgiven, and to whom is it owed?

WOLFENSOHN: Well, $40 billion of the debt is owed to what's known as the Paris Club, which is a group of leading trading nations. But at least $80 billion is on top of that to countries that are not part of that club, including some Arab countries, and including countries in the former Soviet Union.

As to what will happen, in Dubai at our annual meeting in September, the G-7 [Group of 7 -- Canada, France, Germany, Italy, Japan, United Kingdom and United States] said let's get the Paris Club to take the lead, and let's try and bring everybody else on board by the end of the year 2004. And I would think now that there will be quite a lot of arm- twisting going on in the course of the next year, quite a lot of dealing, which was already starting in Madrid -- "If I have to give this, can I have access to this?" It's a bazaar, really. And the maximum that's ever been given so far is two-thirds of outstanding debt in the former Yugoslavia. But it will need to be at least that to give the country a real chance of getting back to equilibrium. So I think that a target of something north of two-thirds is the one that people will be looking at.

Q: Given the bombing the other day at the Red Cross, and earlier at the U.N., will non-governmental groups [NGOs] be chased out of Iraq, and how will the World Bank function in Iraq?

WOLFENSOHN: Well, I don't know about other non-governmental organizations. I've read the press today about some indications. I think the tragedy of the attack on the Red Cross and on some NGO workers is really a tragic thing, as was what happened at the U.N. headquarters with Sergio de Mello [former top United Nations envoy in Iraq]. And in our case, we also lost somebody and had three severely injured.

I think that we'll be following what [U.N. Secretary General] Kofi Annan announced at the Madrid conference, is that we need to really do a thorough assessment before we get a lot of people back. Former President [Marko] Ahtisaari of Finland just came out with a report, as you probably have read, on the U.N. situation and in terms of what was done on security.

I worry about this, of course, a lot. I've told our American friends that if they need me and one or two of my senior colleagues to go back to have meetings in Iraq, I have no problem. But it's very difficult, as head of an organization, to say to 20 young people, who were just married, "I'd now like you to go back to Iraq" and run the risk that the day they go there, 10 other people are blown up, and when you get out in the field, you have no security.

So I think we need to deal with the security question, not because I'm a coward -- (chuckles) -- and not because I'm interested -- not interested in Iraq. But that issue, I think, has to be dealt with, and it will apply in greater or lesser degree, I believe, in all the NGOs.

It's not a question of not supporting Iraqi reconstruction. It's a question of whether it's right to send people back in when there is that degree of risk. And certainly the U.N. has decided that you need to reduce the risk, and I agree with that.

Q: Did the tragedies of September 11th take any steam out of the protests against the IMF and World Bank?

WOLFENSOHN: I don't know whether -- well, I would say probably in part yes, because I think there became a recognition that this thing is beyond rhetoric now. It's a really serious game. And maybe the issues of culture, the issues of development, issues of extremism in all its form (sic), issues of hope and opportunity are real issues. They're no longer things you philosophize about.

And I have found in the last two years significant increase in the interchange that we have with civil society at a much higher level. Just yesterday I met with -- for three and a half hours with a team of people from round the world.

And below the demonstrations, there -- I would say now there is great sense of interdependence. We're working with the World Wildlife Fund. We're working with even Greenpeace. We're working with Oxfam on education. And I think the reason is that all of us are dead scared that the world is not taking sufficient interest in the issues of development. And I think it's the adversity -- and the recognition that it can affect in this case our country, but essentially sending a signal to the world -- has brought about at the senior level and at the serious NGO level a much greater sense of interface. It does not mean they're not critical, does not mean that we agree on everything, but it does mean that we're united.

And I've seen a somewhat diminution of public demonstrations, but I never count on that. It's not difficult to go out and make a fuss, and I would expect that for the rest of my period in office, I will continue to have a fuss made. It's just I hope they don't -- they keep throwing pies at my face and other things. (Chuckles.)

Q: (Chuckles.) Well, we didn't have pie for dessert. I'll have it noticed. (Chuckles.)

WOLFENSOHN: No, I know. (Chuckles.)

Q: Does equalizing world economies mean lower standard of livings in developed countries?

WOLFENSOHN: Absolutely not. And I think -- I mean, this is a subject for a much greater debate, but I don't think there's any question. Certainly our studies indicate that if you were to deal with just the question of agricultural subsidies, you would have a pickup in terms of global GDP of about $500 billion, of which 200 billion (dollars) would be in developed countries. The importance of it is that it would also lead to 300 billion (dollars) in developing countries. And that would be in substitution of development assistance and in support of growth in those countries.

And the issue of growth is central to everything that I've spoken about today. And the way you get growth is not by putting up walls; it is by having a freer global economy and doing what you need to do to deal with the effects of it.

If you do it and don't adjust, then you have problems. But if you do it and adjust to it, there is every conceivable bit of evidence that it leads to an increase in both trade and in economic development. And we have dozens of studies to demonstrate that.

Q: What can be done about the high-paying blue collar and white collar jobs that have left this country because of globalization?

WOLFENSOHN: Well, I think you've got to replace it with other jobs, different jobs. And the same is happening now in Mexico. We've lost -- I was told just this morning by the head of the ILO [U.N. International Labor Organization] that 250,000 jobs in textiles have moved from Mexico overseas, largely to China.

And the way in which you deal with that is by creating different sorts of jobs. This is not something that is new, it has happened through time; that you get movements to factors of labor and to factors of production, and that when this happens, you adjust and you come up with different jobs. It needs retraining, it needs social safety nets, it needs a way in which you can adjust and use the capacities that you have. But our country has always been able to do that, and I hope it will continue to do it.

So my answer, my short answer is, again, that with a period of adjustment, general economic activity increases with openness of trade. And any time that we have tried the reverse, it has not worked.

Q: What is your opinion of President Bush's dollar policy, and has that helped or hurt the global economy?

WOLFENSOHN: Well, I'm not sure I understand the policy completely. But I think it is one where the market is going to set the rate of exchange. And we have seen very large changes in the strength of the dollar in the last year. But that is a way of making the United States more competitive in terms of exports. If you have a cheaper dollar, the chances are you can sell more in dollar terms externally.

But the issue of the strength of the dollar is not just an issue, which is decided in the Treasury or in the Federal Reserve, it is a function of the budget deficit, it's a function of competitiveness of our country. And it's my hope that a combination of these things can lead to a reassertion of dollar strength. But in the meantime, exporters are benefiting, importers are not benefiting, and if you travel, it's a bit more expensive.

Q: In their race to the bottom, so to speak, to find the lowest wages, have multinational corporations contributed to global poverty, and what are you doing to work with them?

WOLFENSOHN: We're doing an incredible amount of work now on a subject which is defined as corporate social responsibility. And the ILO, which I met with today, and private organizations and employers and multinational corporations have, I think, recognized very clearly that going in and trying to rape a country, and to use and then get rid of labor without regard to labor standards, or engaging slaves or child labor is not something that actually makes good sense or is appreciated by the consumer. So, we have seen a huge pickup in the work that we've doing with the private sector; that multinational companies should be used as instruments of improvement of work in countries, not as instruments of trying to rape the country.

And most corporate executives that I know I think are now thinking that the maintenance of standards, be they environmental or human, or in terms of social work, is not just a matter of charity; it's also self-interest, and it also strengthens the position of the company in those countries and is actually pretty good for their business.

Of course, in some countries -- of course, in terms of the consumer, the consumer is also now insisting that in many countries, proper protection of human rights, recognition of environmental standards, should be done in order that the product should be labeled and properly purchased in this country. So, I think that dynamic is moving forward in a way that is realistic -- it's based on self- interest, but I'm very -- I'm personally very impressed by the number of corporate leaders that are now talking in these terms.

Q: What is the World Bank doing in terms of population control?

WOLFENSOHN: Well, the first thing that we're doing is trying to educate women. The biggest thing I think that we can do, and have done now for quite some time, is the issue of enfranchisement of women. There is no doubt that women's education, women's opportunity, is the greatest antidote to relentless poverty increase. In relation to health services, we're very active. In relation to birth control activities, we are very sensitive -- sensitive in this country. The Congress in this country is sensitive about the subject. They are sensitive to issues of abortion and other intrusions on lives of people. But we are basically trying to do it on the basis of education, on the basis of family planning to the extent that we can do it safely, encouraging governments in other countries to deal with it, and privately conferring with religious and other organizations about the issues of both birth control and the related issues, which I have not touched on today, in terms of AIDS and the transmission of sexually transmitted diseases, and in particular the issue of AIDS, which is another subject.

Q: That's my next question, as a matter of fact. What is the World Bank doing, since AIDS is certainly a contributor to poverty?

WOLFENSOHN: Well, it's a huge issue. As you know, there are 42 million cases of AIDS in the world, 30 million of them in sub-Saharan Africa, 12 billion elsewhere, 14 million orphans, 3 million people contracting it every year. It's a lousy -- a lousy situation. And we have taken, I think, a frontal initiative. We have put in and allocated close to $2 billion already. We have local programs in communities and in poorer countries that I have visited. We are the largest single contributor on the AIDS question. We have a very large team that's working on it in Africa, in the Caribbean, and significantly, in China, in India, in Russia, Ukraine and other countries that are particularly vulnerable. I spend an awful lot of time on the subject. I don't know why I'm not wearing my AIDS button, because I usually do. But for us, it's a hugely significant issue.

We're also working with the Global Fund for AIDS as managing the financial aspects of it, in which there's another $3 billion. And we are passionate advocates of the issue. This is -- as I said yesterday to a group of African ministers when we were talking about the economics, I said we cannot talk about this until we talk about AIDS. And you cannot. The issue of AIDS is an issue of growth, it's an issue of stability, and it's under-appreciated. And we're not putting enough money into it.

Q: What are the prospects of resuming lending to Iran and North Korea?

WOLFENSOHN: Well, they are two different countries, actually -- (chuckles) -- at the moment. The answer is that we would like to be engaged in both countries.

The level of devastation in North Korea is enormous. It is one of the poorest countries that you could find. And it's going down, not up. On the other hand, it has significant political inhibitions, which are obvious to all of you, in terms of our starting programs in North Korea.

I started with the last president of Korea -- South Korea, and we are trying to build a knowledge base, but our entry will depend on the politics.

On Iran, it is also something that will depend on the politics, but the level of devastation is not the same. The level of governance is certainly much higher, and Iran will move forward, I suppose, with or without us. But we are trying to build relationships with Iran. I think you know the situation is complex between the two essentially schools of governance, the more extreme and the more moderate. We're trying to support more moderate actions, and we are doing some few projects there in relation to social programs.

This is not uncontroversial. Our board is significantly supportive of this, but the United States at the moment is very guarded. But it's a situation that changes frequently, and it would be my hope that we could, in fact, learn more about Iran and build links with Iran, not on any political basis, but in order to really add to stability.

Q: In the 2000 presidential election, you actively supported Mr. Gore. What about this time?

WOLFENSOHN: Well, in the 2000 presidential election, I actually didn't actively support Mr. Gore. He is a friend of mine, but I'm not allowed to actively support anybody. And so you will not find that I gave a penny. And -- so I didn't. And this time I won't either. I think that's probably a complete answer. (Laughter.)

Q: And the last question is, do you want to be reappointed when your term expires? And would a Republican president appoint you?

WOLFENSOHN: Well, I'm sure everybody would reappoint me. (Laughter.) I mean, they're so -- the Republican administration is so wise that it could not but reappoint me if I wanted it. But I haven't made a decision yet as to whether I will. I'll have to see -- see how well all of you treat me in the press. (Laughter.)