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Russia: World Bank President Cautions Against Accusations

The head of the World Bank was one of the first global leaders to begin speaking out against official corruption several years ago. But as allegations of Russian corruption and money laundering swirl, RFE/RL's economics correspondent Robert Lyle says that James Wolfensohn is urging western leaders to be a little careful in pointing fingers:

Washington, 22 September 1999 (RFE/RL) -- When Australian-born, American investment banker James Wolfensohn was named president of the World Bank nearly five years ago, he quickly earned a reputation as the first person in his position to make tackling corruption a major goal of the bank.

So journalists gathering for the annual IMF/World Bank meetings in Washington Tuesday expected strong words on the allegations in the news media of massive Russian corruption in moving money out of the country through some western banks.

First, however, Wolfensohn used the biblical injunction of cautioning that only those without sin be the first to make aspersions:

Wolfensohn said: "I guess there was even corruption in the U.S. once and a few other countries, and so I think we have to be pretty careful about criticism. We have to be pretty careful about the way we extend the arguments."

Let there be no misunderstanding, said Wolfensohn. He and the bank consider the allegations of corruption extremely important and Russia must tackle the problem seriously and vigorously, he said.

However, he added, it is also important to remember that Russia has only been trying to change from a command and control economy to a market economy in a democratic system for ten years -- a very short time for such a major shift.

The bank and the International Monetary Fund have, from the beginning, Wolfensohn said, been focusing on rebuilding the basic structures of Russia:

Wolfensohn said: "What we've been doing in Russia over the years, particularly in the last three or four years, is working on structural reform. And we've made quite a lot of progress, whether it be in pensions or bankruptcy laws or justice systems. And each one of those changes we have negotiated, have had to go through the administration and the Duma and quite a lot has been done. I don't think we should just wipe off the developments of the last few years."

The bank, which has lent $6.7 billion to Russia in the past decade, has so far found no evidence that any of it's funds were misappropriated or specifically drained off through any money laundering activities, he said.

Still, said Wolfensohn, audits continue and if any evidence of theft or money laundering is found, the bank will announce it publicly.

What is important for the rest of the world, said Wolfensohn, is to remember to keep what he calls "a bit of balance in the assessment" of Russia's situation. Corruption must be rooted out, he said. The bank and the fund are not going to make wild loans or throw money away in Russia either, he said. But there are many other equally important issues facing Russia's people:

Wolfensohn said: "One of the other issues is that 45 percent of the people in Russia now live in poverty, which is up dramatically from 10 years ago. And so there are obviously things that are wrong in Russia. I spend a good deal of my time trying to fix it. So it's not that I am disinterested or lacking balance in terms of the situation in Russia."

Ten years ago, said Wolfensohn, Russia and the West were in the middle of the Cold War. Trying to help Russia regain a sense of balance in a market economy is not something the West and the international financial institutions can now simply turn their backs on:

Wolfensohn said: "I do think we should understand Russia in its context. And it's context is that in 10 years it's a country in which it's been trying to make a move that it has not had ever, which is a form of democratic government and a system in the market economy. And I don't think success would be to force it back into a planned economy. I think success would be to try and help it through."

Without question, Russia's situation -- from poverty to corruption -- will once again be on the central stage as the world's senior finance officials and bankers gather in Washington over the next two weeks for the annual meetings of the fund and bank.