World Bank press briefing on Kosovo

Doug Henwood dhenwood at panix.com
Sat Jul 17 12:25:07 PDT 1999


[Excerpts from a WB press briefing on war reconstruction. The full text is at <http://www.worldbank.org/html/extdr/extme/005ts.htm>. I love the assertion that most residents of the Balkans lack the initiative to rebuild destroyed houses.]

MR. POORTMAN: You're right about what you mentioned. The strategy that the Bank has now formulated internally, and which was presented, at least in an informal sense, to the Board, was one that is very much of an emergency nature and something that will guide us for the next 12 to 18 months, very much in light of the evolving developments in Kosovo and wanting to make sure that we go through the initial reconstruction phase. But, before getting engaged in a longer term engagement, so to say, we would like to see what the developments are and reconsider and reconsult with our Board of Directors and our own management. If you talk about a financial envelope, I will give you a number. But I first want you to listen to some of the caveats.

Part of the fact that Kosovo is not a member, Yugoslavia is not a member, and therefore Kosovo is not and cannot be a member of the World Bank Group, and since there will be difficulty in lending to a nonmember, particularly because there is no particular government that would guarantee the repayment of our financial assistance, Bank assistance will have to be on a grant basis.

As you know, and many of you know, grants are not readily available within the World Bank Group and need to be specially voted on by our Board of Directors and subsequently endorsed by the Board of Governors. So what we have suggested is that, in their decisions about the allocation of that income, a certain amount of money might be set aside for a grant program of assistance to Kosovo.

The numbers that we're talking about initially--and again, very much subject to the approval of our Board of Directors and the Board of Governors--is in the order of magnitude of $25 million for our financial year 2000. That means between now and the end of June, and possibly provided that, indeed, the net income position will allow that, an additional $30-35 million for the financial year thereafter.

So what we're currently thinking about is something in the order of magnitude of $60 million over a period of 18 months. That will get us then out of the emergency mode, so to say, and then, when we formulate our longer term strategy for Kosovo, however, we will come back to this issue. But that is what we're talking about at this moment.

Let me also mention to you that we hope that this funding will allow us to do a similar thing we did in the case of Bosnia Herzegovina, which is that this would be put in a trust fund, and we would ask other donors to contribute to this trust fund, thereby making the total pool of resources a little larger. We have done that rather successfully in Bosnia Herzegovina, so that would actually add then to the overall envelope that we would be able to direct towards Kosovo.

[...]

QUESTION: My question is about the reconstruction of Serbia. Does your plan also cover the reconstruction of Serbia, because Serbia is also damaged by the NATO bombing. So if your plan covers Serbia, too, how would you deal with the opposition of the United States if you don't cover Serbia?

MR. LINN: Thank you very much. Let me take that question to start with. First of all, I think it's very important to recognize that the overall regional development and integration in Southeastern Europe can only proceed in the medium term successfully if, indeed, the Federal Republic of Yugoslavia is integrated into the region. This is for the purpose of trade; it's for the purposes of the overall integration of the region and long-term stability. So from our perspective, it would be highly desirable and, indeed, necessary, for long-term regional development and stability, that Yugoslavia also become an active and integral part of the economy.

In the immediate future, we will focus our attention on Kosovo. There is at this point strong support in our Board that we see for this support of this particular entity, even though it and Yugoslavia is not a member. At this point, we don't see a support at our Board for extending this beyond Kosovo. When and if there is such support, we will certainly do the very best to extend support.

You have to recognize, however, that before we are likely to be able to do so, we would have to address the issue of nonmembership and the important requirements that Yugoslavia will have to meet to be able to become a member of the World Bank, including that it first has to become a member of the IMF.

[...]

MR. O'SULLIVAN: These are very, very key questions, and I think a lot of people are giving a lot of thought to how to deal with them.

Now, start with the housing. What's very interesting about Kosovo compared with other countries is the extraordinary dynamism of the people there. They're already rebuilding their houses without waiting for donors to come and find some way of organizing it. What I mean is if raw materials are available, if wood is lying around, if housing tiles are about, they're just picking up hammers and they're rebuilding the roofs, they're putting tiles back and trying to create again the lives that they left behind several weeks ago. So with this enormous dynamism, we can see, I think, a very different situation in Kosovo compared with, we can say, some other countries in the region.

[...]

I think microenterprise, of course, will be an unusually successful operation in Kosovo, more so even than some of the neighboring countries, because they are very entrepreneurial people and we expect that they are very imaginative, and we think that they will find some very good programs. It will take a little bit longer because we have to have very tight checks and balances in place before we can launch schemes like that, but through solidarity groups and other ways, I hope that we can emulate some of the successes that we've had in Albania and Bosnia where we have repayment rates in excess of 99 percent.

[...]

QUESTION: For comparison purposes, what was the total spending on the emergency phase in Bosnia-Herzegovina from the Bank and then from the donor countries? My recollection is that it was much, much later, but I may be confusing emergency with longer-term.

MR. LINN: Chrik or Rory, I think, your best comparison of particularly the emergency phase in Bosnia in the initial maybe year or so, and then the medium-term program, how does it compare with what the Bank is currently making available and what is being thought about more generally?

MR. O'SULLIVAN: Well, let me just say that in Bosnia, you know, there are so many different figures floating around as well. But if you look at the estimated damage to infrastructure, the estimated damage was always put at about $20 billion. The reconstruction program--that was the amount of funds that we needed to invest in order to start having in place a self-sustainable economy to a reasonable extent--was $5 billion. That was the size of the reconstruction program over three to four years, and this amount has now been pledged and the program is probably 75, 80 percent through. So we're talking in Bosnia about a $5 billion program. That's basically the size of it.

MR. LINN: Just for comparison, though, can we say anything what was made available in the first, say, 12 to 18 months? Do you recall what was the program for that period?

MR. O'SULLIVAN: Yes, in the first 18 months, it was approximately $1.8 billion. It was an initial pledging of $600 million in December 1995. That was right at the beginning of the whole process, and that was followed in April of '96 by a further 1.2, to bring a total of $1.8 billion. It was a very substantial amount.



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