ISLAMABAD, Aug 17: The argument in the US that Pakistan needs resources because it is an important ally in war on terror might not continue, said World Bank president Paul Wolfowitz while discussing a wide range of issues with Pakistani editors here on Wednesday.

While stating that he was aware of the caveats about sustaining growth such as “the strategic circumstances might go away,” he said relations with Pakistan would not go back to 1990s when Pakistan was in isolation, still “Pakistan will increasingly have to raise resources internally.”

When asked about his own list of priorities as the WB chief, Mr Wolfowitz said in his opinion his predecessor James Wolfensohn had left the Bank ‘probably’ in as stronger a position as any of his predecessors.

“I’d like to focus equally on poverty reduction. When I ask my staff what they would most like to keep and most like to change, one of the things everybody agrees on keeping is poverty reduction. Within that framework – my first priority has to be to focus on those countries that seem to have been left behind, particularly Sub-Saharan Africa where the needs are just enormous.

“My second priority is to see what the Bank can do in rapidly developing countries such as China and India – and perhaps Pakistan is getting into that category – where perhaps for the first time in human history hundreds of millions of people have been able to lift themselves out of the poverty. It is a remarkable achievement – one that is very important to sustain. The Bank’s role there is changing, it’s relatively small but I think it is important to keep that relationship with countries in this category – Pakistan is on the edge there, I hope it’s entering that category permanently.

“Third priority is to sustain and strengthen the role of the multilateral institutions. There is a lot of debate about the effectiveness of multilateral institutions – a lot of compromises have had to be made. We have 184 shareholders so you cannot allow one of them to have their way. So an effective organization under these circumstances is quite an achievement. It’s an institution that has an important role in issue such as energy development, global health issues, etc. I tend to think of priorities very much in terms of individual countries where help is needed and where it could be effective.”

Discussing Pakistan, the WB chief said he had watched this country from afar for a very long time because it’s an important country, “for reasons not entirely of your making - it’s not a good neighbourhood you’ve lived in - you have not been able to realize your potential.”

In his opinion Pakistan’s progress can have a very positive effect on this part of the world. This is the second largest Muslim country and Pakistan can be a very important example for 1.2 billion Muslims.

He said development was very much a story about glass half full or half empty; and as a realist he would see whether the glass was emptying or being filled. “I think it is filling up here.”

On a question about the general perception that the World Bank sets the agenda rather than seeks the recipient country’s input, Mr Wolfowitz said he believed policy and development agenda had to be a two-way street between the WB and the countries they were lending to.

However, he pointed out, “we don’t go to a country as blank slates and we have ideas since we have shareholders that we are responsible to and at the end of the day we have to say that the World Bank money is being used wisely.”

He said the Bank’s mission was poverty reduction, but you could not do that without sustained growth. The more the benefits of growth can be realized across the population the sooner the more people will accept sometimes difficult policies such as charging for electricity.

Answering a question whether the World Bank was dissatisfied with energy sector reforms, Praful Patel, the chief of the World Bank mission in Pakistan who was accompanying the WB president, said that no one, including the president of the country, was happy with the pace of energy reforms. He was quite clear that Pakistan would not be able to sustain an 8 per cent growth rate if the energy sector was not fixed.

When asked there were reservations that he (Mr Wolfowitz) would bring his personal politics to bear upon the policies of the World Bank, Mr Patel said: “You might be surprised, but that issue never came up once during his travels through Africa.”

“I have always believed that economic development and political development are mutually reinforcing streams. We can think of one very big country that made spectacular economic progress more than political change but even China has changed. I think as countries grow and develop their political institutions need to grow. It is important that different institutions have different missions.

“I think sometimes in the past people used the argument that we should stay out of politics.”

But, he said, it was difficult to draw a line when talking about issues of governance, accountability and freedom of the press.

“But I do think accountability and governance are very important to development. So on the one hand we shouldn’t be intervening in the political process and we shouldn’t be having favourite leaders, but I think the growth of responsible institutions is important in the economic strategy.”

When asked what if the governance issue was used by the Bank according to the political directions of the western capitals, he said: “We cannot dictate the political future of a country. We have the responsibility that Bank money is used efficaciously and not wasted in corruption.”

He said a certain separation between development and politics was possible – and one should try and keep water development separate from politics. “I think that is a beautiful paradigm.”

In reply to a question about land reforms, Mr Patel said he knew land reforms had been very effective in Taiwan and Korea, however, he was still forming an opinion on it.

He termed land reforms to be of critical importance to increase growth, but he saw no movement on this issue in Pakistan. He said if there was one development issue caught in politics, it was that of land reforms in Pakistan.

About Pakistan-India relations, the WB chief said improved relations between the two neighbours would cut down on their defence expenditure and boost regional trade that would help sustain the growth rate. Giving the example of Taiwan and Korea, he said countries couldn’t move out of poverty without sustained growth.

When asked his views about the Iran-Pakistan-India gas pipeline, given that the US which is the biggest shareholder of the Bank has expressed reservations on this project, Mr Wolfowitz said: “From an economic development point of view it will be good, that’s obvious.” However, he refrained from discussing it any further, saying “we’ll have to see how it goes. I have to tread a little softly here.”