29 March 1999

Mr Paul Collier
Development Research Group
The World Bank
Washington DC 20433

Dear Mr. Collier,

I have received, on my return to Penang from Geneva, your letter dated 19 March (signed on your behalf by one of the Bank's staff members), and acknowledge the apology for your actions as Chairman of the panel in the WTO's Trade and Development Symposium.

We will, as requested, send your letter to the NGOs that signed the statement. We will also request them to post it together with our response to others to whom they might have sent the statement. Beyond that it is not feasible for us to act as a conduit to channel that apology to other participants at that meeting. It would have been most appropriate if your apology for your behaviour as chairman of the panel had been delivered in person at the symposium on its second day, or is now addressed to all the participants, and particularly the delegates and officials from the African countries, and more generally the developing countries. It was not only the NGO participants who were hurt by your remarks.

I note that the apology in your letter covers any offences your action in the panel may have caused, and not for the views you expresed. Your letter states that your intention was to stimulate discussion and debate on the issues "which are dear to my heart and which I consider to be absolutely vital for the overall prospects of the developing countries."

You are of course entitled to your personal views and to hold them "dear to your heart", and this could even have been tolerated if you had merely offered them in the beginning as your own opening remarks to the session. Instead you made them at the end as a Chairman' s summing up, and gave no opportunity to any one to respond to you. More seriously, since you are a Director of the World Bank Group, promoting your own personal views in this way is also quite another matter, as it reflects on the Bank itself.

Sadly, the views that we found to be offensive were not confined to what you said whilst chairing the panel, but carried over later to the discussions you had (after the session had ended) with several of the NGO representatives and myself. We found the conversation very unsatisfactory, and even added insult to the injury already suffered, especially to the African NGOs who were in the group.

Consistent with your views expressed as "summing up" by the chair, you insisted in this conversation with the NGOs, that the problems of African countries (and presumably of other developing regions) were of their own making, that they have been able to make their own economic policies freely by themselves, that the World Bank (and IMF) did not have influence over their policy-making, and that in any case the World Bank and IMF policies did not have adverse effects on economic prospects in developing countries.

We found this position, to put it mildly, rather surprising, given that the World Bank President Mr. Wolfensohn himself has committed the Bank to a joint review (with NGOs) of the Bank's structural adjustment policies (including in Africa); that the Vice-President for Asia, Mr. Severino had opened a World Bank regional seminar in Bangkok last month (in which I was a speaker ) by stating that the Bank feels humble in not having predicted the Asian financial crisis nor the course of subsequent events, nor did the Bank have clear remedies; and that the Bank's Chief Economist, Mr. Stiglitz, has recently been critical of the "Washington Consensus", i.e. the policies which the Bank itself had been party to and pushing on the developing world and which many of them had subscribed to under the Bank's tutelage.

The views that you presented at the WTO Symposium, namely, that Africa itself was to blame for its marginalisation, that it should not request special and differential treatment in the WTO (a key principle which, by the way, is integral in the WTO workings and to many of its agreements) and that it should agree to a new Round of negotiations to appease forces in the US and developed countries which are becoming more aggressively protectionist (and in violation of the WTO rules), were most shocking not only to the NGOs present but to the large majority of developing country participants, and even delegations from several developed countries, many of whom had approached me subsequent to my oral presentation (of a summary of the NGOs statement) from the floor on 18 March. Some of these delegations supported the NGO statement during the official meeting.

Your letter states that as Director of the Bank's Research Group, you will be helping developing countries deal with trade reform and participation in the multilateral trade system, and that you have launched a research and technical assistance program to provide information and build developing country capacity. Frankly, we are very concerned to hear that you will be directing these efforts of the Bank.

As we have said earlier, your personal views (held in the academia) are one thing. It is quite another to have them, and evocate them in such a messianic way at the symposium, when you are a World Bank senior official. For, if the information, research, training and capacity building that your Group will impart to developing countries are based on the kind of approach, content and prescriptions that you gave a glimpse of in your remarks of 17 March, then in my view (and that of many others), your program is likely to cause a great deal of harm and damage to the interests of developing countries. As I am sure you will agree, training and capacity building are only a means and not an end, and if carried out wrongly, would divert the recipients away from the desired objectives of understanding and participating meaningfully, and in their own interests, in the trade system.

We have already had reports from NGOs in some of the countries where your training program is organising seminars etc, that the World Bank's officials are advocating that developing countries give up their special and differential treatment in the WTO. And incidentally, such actions would in fact come in the way of implementing the Bank's "social safety net" concept in the Asian countries hit by financial and economic crisis like Indonesia and on which the Bank's Chief Economist, Mr. Stiglitz, has been saying that since a "needs test" cannot be easily administered in such countries, there should be public subsidy of food and other products consumed by the poor. Developing countries can do so only if they have recourse to the S&D provisions, and even then only when the IMF/World Bank structural adjustment policies relax the limits on government spending.

All in all, we remain deeply disturbed by the explanations of your actions at the WTO symposium, but continue to hope that the approach to the Bank's policies and programs that Mr. Wolfensohn and Mr. Stiglitz appear to be promoting will chart a more acceptable course in the future.

Yours sincerely,

Martin Khor

c.c. : Mr Renato Ruggiero
        Director General
        World Trade Organisation