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Writings & Speeches

Remarks: On Bob McNamara
World Bank, March 19, 2003

By Gene Rotberg

I have been asked, on several occasions, the difference between Jim Wolfensohn and Bob McNamara – two quite Messianic figures. I think perhaps the difference is quite straightforward. If Martin Luther King had gone to Harvard Business School, he would have been Jim Wolfensohn. If Martin Luther had gone to Harvard Business School, he would have been Bob McNamara.

 We have heard tonight what Bob did to address world poverty. I would like to talk about his attitude toward the institution – the World Bank. He insisted on integrity, professionalism, and its non-political nature. He insisted the Bank staff do what was right and best for the constituency the Bank represented, irrespective of our own personal views, or the countries from which we came, or our own ethnicity.

In Bob’s eyes, there was only one constituency that he worried about and which he worried us about – not the stockholders, not the bondholders, not donors to IDA, not Part I or OECD countries, not the staff, not board members, not NGOs. Our constituency was the poor who lived in degradation, amidst corruption, disinterest or persecution. Our constituency was those who had no hope, no future for themselves or their children, whom he saw in speech after speech—as the precursors of disenchantment, depression, war, coups, civil disobedience, terror, violence. Most of all he saw the wasting of the human spirit with all of its terrible consequences. The purpose of the Bank was simply to address that problem.

And in doing so, he was fearless and adamant about the integrity and objectivity of the Bank. Uganda, under Idi Amin, a brutal dictator, was not meeting its debt service to the Bank. Bob found that unacceptable. Idi Amin was brutalizing its citizens, driving out the Indian population from positions of authority, was terrorizing his community. So Bob sent Purvis Damry, the Indian Secretary of the Bank, to visit Idi Amin in his tent and insist that the Bank be paid. When Saudi Arabia was flush with oil money and during a multi-country war in 1973 between Arab states and Israel, Bob asked me to get a visa, go to Saudi Arabia and negotiate the terms of a $1.0 billion borrowing from Saudi Arabia. When it was suggested to Bob that might not be a wise choice, given the fact that I was Jewish, he insisted that I go; that if I were not given a visa, he would not “permit” Saudi Arabia to have the honor of lending to us. Since we were an independent, non-political, objective, international organization, it would be unthinkable for Bob to reconsider who was going to negotiate. (As it turned out, I received one of the most gracious welcomes anyone could expect by the Saudis.) Bob insisted that we pay Iran the interest on our borrowings from them even in the midst of the hostage crisis and the freezing of Iranian assets in the United States. After all, he had signed the loan agreement which obligated the World Bank to meet its debts. And, again, we were an objective, independent, non-political institution. He always put himself on the line to support that concept. In a broader sense, he was counter-phobic. He insisted on driving himself to do things that subjected himself to criticism or controversy—the first loan to Vietnam, the population speech at Notre Dame, an anti-apartheid speech in South Africa, a poverty speech at the New York Bond Club. It was almost as if he were an Albigensian—looking for and subjecting himself to attack and penalty. He was Martin Luther. It was as if he needed to defend himself in adverse environments. He asked the staff to do the same. Bob rarely spoke to the converted.

My comments here cannot be concluded unless I offer one further anecdote attesting to Bob’s well-known, publicized and alleged penchant for quantification and numeracy. One day he asked me what interest rate we paid on our bonds. I told him 7.33%. He then asked the rate for U.S. Government bonds. I said 7%. The 33 basis points simply reflected our credit standing as compared to U.S. Government bonds. Bob then asked me what were the specific reasons for the 33 basis points’ difference. I replied:      

1. “Unlike the U.S. Government, we don’t have the power to print money to meet our debt service obligations.
2. We don’t have taxing power.
3. The Federal Reserve cannot use our bonds in open market operations to change interest rates.
4. Banks can’t use our bonds to meet reserve requirements.
5. Neither the Federal Reserve nor the U.S. Treasury can lend us money; that is expressly prohibited by the Bank’s Articles of Agreement.
6. Even the U.S. callable capital, but a fraction of our outstanding debt, is not appropriated.
7. There is no value in the callable capital of those countries to whom we lent money if they defaulted on our loans.
8. We lend primarily to countries who are not creditworthy and can’t borrow anywhere else.
9. We lend to corrupt countries and to dictatorships of both the far left and far right.
10. The U. S. Treasury says there’s a capital shortage in the U.S. and our borrowings pull savings out of the U.S. for the benefit of French telecommunication companies who win the contracts.
11. We’re considered foreigners, leftists, do-gooders, wishy-washy liberals interested in distributing wealth downwards.
12. We’re generally put in the 2% bracket for permissible “alternative investments” for investment of insurance companies and pension funds.
13. They read your speech, Bob, that we are not run like a bank, but like a development agency.

Under the circumstances, Bob, we are lucky we only pay 33 points over U.S. Government Bonds!” Bob looks at me and then asks: how many basis points for each of those items. I say, “Bob, I can’t do that – it’s all inter-related – it can’t be separated. Why do you want to know.” Bob answers, “I really don’t want to know. I just want to know if you thought through the problem and which ones you can work on to change.”

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