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Speeches & Transcripts October 3, 2017

Speech by Kristalina Georgieva, 2017 Robert S. McNamara Lecture on War and Peace at the Harvard Institute of Politics

President McNamara set the World Bank on the course to eradicate poverty.  Bob Zoellick had the fortune, the duty, to deal with the most severe economic crisis since the Second World War, since the Depression, but also since the War.  And in that sense to make sure that the Bank remains true to its core mission.

So when we look back, when President McNamara finished his service in 1981 poverty in the world was so dramatically high.  At that time 1.9 billion people -- 42 percent of the 4.5 billion population of our planet,  -- lived in poverty.  And here today poverty has shrunk so significantly to 800 million people out of the 7.3 billion population.  We now live longer lives, we are healthier, we are wealthier.  Some of us in this room because of advancements in technology are going to live to be 120, which sounds great until you realize you have to work until you're 100 to get your pension. But when we talk about this trend of reduction in poverty and the average improvements in life, it is worth pausing and remembering, as my professor of statistics used to say about averages, you put your head in the refrigerator, you put your feet in the oven, your temperate is average, but you are dead. Behind the averages, we ought to recognize that there is a very ugly trend in far too many places, and it is where extreme poverty is actually growing, and in some countries growing dramatically.  And we can see the reasons for that in front of our eyes.  The first and most significant, and also most cruel, is that the footprint of conflict has grown in the last decade.  When I was Commissioner for Humanitarian Aid in the first five years of this decade I had a front row seat in the most dramatic emergencies on this planet, from the earthquake in Haiti to wars in Syria, Yemen, to famine in the Horn of Africa.  And what was obvious is that where there is war, misery and destitution follow.  In 12 countries the share of people living in extreme poverty has gone up.  In 18 countries the share of people living in poverty has gone down or remained the same, but the number of people living in poverty has shot up because of population growth.

That takes me to the second reason why extreme poverty is on the increase.  And it is population jumping in places that can least afford that increase.  During one of my visits to the Sahel I was talking to people about an impression I had of Kenya around population growth.  My country, Bulgaria, and Kenya in 1960 were right next to each other in the population tables.  Kenya had 8.1 million people, Bulgaria had 7.9 million.  Today Kenya has 47 million people, Bulgaria has 7.3 million.  So we have a demographic problem of our own.  I told the government of Niger that I cannot imagine my country today functioning with 47 million people.  And if you look across the countries where population growth is in the 3 percent range, many of them barely can get up to 3 percent economic growth.  What does that mean?  They're destined to have an increase in extreme poverty.

And then comes one of the most dramatic challenges that we all face, climate change.  It hammers poor countries disproportionately hard.  If you look at extreme weather, time and again it devastates already impoverished populations, whether it is the famine that this year affected South Sudan, Somalia, Yemen, the northern part of Nigeria, or the devastating monsoons that hit India, or the impact of Hurricanes Irma and Maria. Time and again it is the poorest people that are most severely hit.  You take a middle-income country like Antigua and Barbuda, they're wiped out.  You look at Dominica, it lost 200 percent of its GDP in 24 hours.  And then comes the most painful of drivers of extreme poverty for those of us who work on development because it is induced by bad governments and corruption.  Zimbabwe has no reason to be poor, Haiti has no reason to be very different from the Dominican Republic, but they are because of bad governance.

So when we take the word fragility, yes, it can be everywhere.  In 2011, when Japan was hit by a triple disaster, they had to receive humanitarian assistance from the rest of the world.  But countries that are wealthier with better institutions can withstand these shocks much better.  Poor countries, fragile countries cannot. 

So what is it that we need to do?

For us in the Bank it means four very important actions we are taking, some of them actually originate from the time Robert McNamara defined the mission for the Bank to eradicate poverty.  The first and most critical one is to concentrate on fragile states, concentrate on the most vulnerable with everything we have.  This year we were very lucky to receive the largest ever increase for the International Development Association, our fund for the poor, $75 billion.  In comparison, when Bob was the President of the Bank the replenishment of IDA was $50 billion and that 50 percent jump is for one reason only, so we can do more where it matters the most.  We are significantly increasing funding for fragile states.  Most importantly, we are increasing our presence in fragile states and our staying power in fragile states.  We usually imagine World Bank staff like the Dean; suit and tie, walking the high corridors of power.  What we have now, more and more, is staff who actually put on their boots, roll up their sleeves, they are in communities, they make everything possible for communities to be empowered, to be able to get their voices heard in the high corridors of power, to get the World Bank to be an ally of the most vulnerable, the most destitute.

We also have embraced something that I believe is absolutely paramount if we want to deal with fragility on a scale.  And it is gender equality, more power to the women.  I remember another President of the Bank, Jim Wolfensohn, once we had a very difficult problem turning to me and saying, Kristalina, so much work to do and so very few women to do it.  And it is time and again, any place you go, you give women access to finance, ownership of land, the right to vote, and very good things happen.  My favorite memory as a commissioner for humanitarian aid, we were providing small monthly funding to women so they can buy seeds and tools and basically sustain their families.  I was on a visit to a village, meeting with the men and women.  And I asked the men, how did you feel when we gave the money to the women.  And one of the men said, ‘You know, I didn't like it at all, but if you were to give me the money I would have bought a bicycle and we would have been starving’.  So gender equality is fantastic economics, it contributes to more peaceful societies, and it is trimming down this incredible population growth.  You get girls in school, you keep them there, they graduate, marry when they are mature, have fewer children, contribute to their economy.  All in all you have a much better chance to fight poverty and build resilience in societies.

Let me ask you a question -- how was your day today?  Good?  Great?  Okay.  On this great day of ours 41,000 girls somewhere in the developing world got married under the age of 18, many of them against their will.  Eradicating early marriage, this one step alone, would bring probably about $2 trillion in economic benefits.  And people smarter than me say that the whole swing of things around gender equality, if it was to be achieved, would have meant around $12-28 trillion more GDP on our planet.  Let's assume this is wrong, let's assume it is $10 trillion, it is $5 trillion.  We need just about that to make sure that all needs of the most destitute people are met.  So that is for us a hugely important thing.

So we focus on fragile states and empowering communities, and especially women.  The second thing we focus on is overcoming a theology we had in humanitarian and development action for quite some time, which goes like this:  when there is an emergency it is for the Red Cross and the humanitarian community to come save lives, then they withdraw and then the development people step in.  No more.  One, emergencies are protracted or repetitive: crises last a long, long time.  Take Syria, seven years of war, formerly a middle income country, now has more than 60 percent of its people living in poverty.  How long will the war last? We can only guess, but say it lasts only a day from today, to reconstruct this country it would still take a long, long time.  If the development community is to wait until the war is over, and then steps in, we would lose valuable time and very likely we may even lose the people who roll up their sleeves to try to rebuild their country.  While the humanitarian operations are in place we ought to be there.  We are now in Yemen, we are in Somalia, we are in Iraq, we are in Afghanistan, we are in Mali, we are in all these places working together with the humanitarian community.  They have more tolerance for insecurity, they are in very dangerous places.  We have a better understanding of long-term sustainability.  We can tolerate poverty alleviation actions better, use money more wisely.

The third thing that has changed dramatically for us is how we approach climate action.  We have been on the forefront on climate action for quite some time.  We started when it was not yet fashionable.  It was actually in my office at the World Bank in 1990, when we invented carbon trade.  The very first prototype carbon fund was done at the Bank.  And at that time people were saying ‘What's that, it's never going to work’.  It does work.  But more importantly, we have been trying to bring the whole world up on climate action, except that we have not been focused enough to take forward climate action from the perspective of the poorest and most vulnerable.  And what does that mean?  It means that on mitigation, for poor people, this is access to clean energy, but much more importantly adapting to climate change is what poor communities and poor countries need.  And yet today we account for mitigation higher in climate action than we account for adaptation.  There is a bias toward mitigation, which of course is overall a very good thing for the more developed world, but it is a terrible thing when we talk about Niger, or Chad, or Mali.  Correcting this is crucially important.

Let me finish with one thing that for us at the Bank in this world of fragilities, most important, more important than anything.  You would be surprised that I would even say more important than even gender equality.  And it is the success of collective action.  Working together, working as one community.  I cannot think of any problem that is related to fragility that a single country can solve on its own, not one.  So here are our choices:  there are two; one is realistic and the other one is fantastic.  The realistic choice is extraterrestrials would come from space, make us work together.  And the fantastic is we people will do it ourselves.  So we see it as our mission at the Bank to actually swap the places of those two and make sure that we together -- we together -- make what Robert McNamara dreamt of, a just world where -- he called it absolute poverty -- does not exist anymore, and that is the world I'm sure we ask ourselves we all want to live in.

Thank you.