you asked me to talk about g-20 agenda. i am delighted to have been invited by your organization. i see as a bridge between the europe and the united states. >> sometimes we tend to say we in great britain and you end europe. it is excellent that you have

institutions of the caliber and nature to make sure that people talk the truth and are prepared to debate and confront ideas and propose new concepts. now, turning to -- i have decided not to talk about currencies. [laughter] that is a letdown, i know. all was going to talk about the g-20 agenda, and i am sure you will have a few questions here in there. going back to where it all started, g-20 was just a gathering of ministers of finance, governors of central banks. the whole thing was created on the steps of the asian crisis. we had our gatherings and we had our brainstorming together, but

it was also much more than that. eventually, president george w. bush convinced -- waagreed thatt was necessary to have a smaller group of people at the highest level to actually deal with the crisis when it hit all of us. that g-20 at the time, it was in washington, then in london, and then eventually in toronto. that g-20 really was able to cope with the crisis at the time and was able to react, to be very proactive, to collect views and box, and it was really the first time that a group of leaders could actually address all the issues that were facing us.

the three key achievements at of the g-20 at the time, number one, rescuing the financial system that was about to go down the tubes. remember the liquidity crisis and the way in which all of them together with the central bankers decided to tackle the issue head-on and effectively rescue the system and inject masses of capital into its. that was the first achievement. the second achievement is that they decided together to address the issue of growth. it was not fragile growth, it was negative growth, and-in a big way, together with unemployment. they decided to address that particular problem, especially at the london meeting, with the decision to actually set up this framework for growth, which was really targeted at making sure

that the right policies were collected in as concerted of fashion as possible to make sure we had this sustainable, solid and balanced growth that everybody was looking for at the time. that was the second achievement. i would put as the third achievement the fact that the g- 20 managed to avoid the worst they could have happened, which would have been protectionism. clearly if countries had retracted -- decided that raising tariffs and closing down this was the way to go, we would have said something a lot worse than what we have seen up until now. -- would have had something a lot worse. the key achievements of the g- 20 were those. added that -- get to that you had the reinforcement of the institutions and the financial

stability board that was enlarged to include other countries. you should also add the chapter that had to give it developments and the methods of financing that was put together to support development in the least developed countries in particular. there goes my speech. when we looked at what we could do when we take the baton from our korean friends on the 12th of november, we have to take stop of what the achievements have been so far. we clearly have to also take stock of what the south korean presidency will have achieved. they are clearly moving in different directions that will bear fruit. i am sure about that. one will clearly be a stopping point for us, the financial safety net and the clear

objective to set up, including at the regional level, weighs four countries to actually be able to respond to liquidity crisis and the top of financial crisis that could hit and that did hit. second is certainly -- i will come to that and my fourth chapter -- this road for development. it is essentially a multi-year program that is intended to support the development of developed countries, be it with or without a completed -- if you are familiar with the rounds, everybody is keen to completed, but it simply does not happen. turning now to what we want to

achieve. nicolas sarkozy has actually indicated late in the summer what the may directions would be. drawing on this, what identified as one of the jobs that south korea wants to complete -- remember the financial safety net. that takes us to chapter 1 that we want to try to open, which has to do with the international monetary system. why should we deal with the international monetary system? simply because as it stands at the moment, it does not seem to be particularly effective. if you look at the variation of currencies that have taken place and more recently so than the last 10 years, if you look at the masses of liquidity that moves around without much

control in some cases, if you look at the capital flows in and out of developing countries in particular, clearly there is an issue. if you look additionally at the latest moves that have taken place, whether from brazil or japan for instance, or from china, you wonder what kind of coordination there is. without drawing conclusions from the start without being certain we will end up somewhere before the end of the year, because it takes time to get people to agree on such things as the international monetary system, but clearly we want to tackle three essential proposals. one is, we want to try to explore ways to protect particularly those least developed countries, and sometimes emerging countries from which there have been capital flows in and out,

depending on expectations and currency variations. that will be one avenue to explore. the second one will be diversifying. there is clearly a lack of diversification, which produces a level of risk that is associated with the currency variation. third, there is really a need to actually coordinate and coordinate better, because decisions that are made unilaterally will not be as efficient as if they were made in the past. that is my little chapter on the international monetary system with these three avenues that we want to explore. once again, it is not with preconceived ideas that we should set aside this, propose that come move to a new

currency. there are lots of our charges, and i am sure there will be plenty of academics to help us in the process. there will be central bankers that will have of you about it, and we have to bring people together with as little preconceived ideas as possible, but with the openness to actually create something that works better than what we have at the moment. that is my chapter no. 1. chapter no. 2 that has been identified by presidents are cozy as well has to do with -- viper residentsarkozy as well. has to do with commodity market organization coupled with a massive financial as asian, if that is a word that you can reject massive financialization, if that is a word you can

accept. when we say raw materials, we have in mind all sorts of things, but in particular, we are concerned about agricultural materials and agricultural products. there is a clear link between that particular topic. if you look at the evolution of the price of wheat and the evolution of the price of corn, just recently as the result of the massive fires that took place in russia -- i was in russia and came back yesterday. a colleague actually mentioned that the wheat crop alone will be down to 25% just as a result of the bush and forest fires that took place over the summer. that is going to have an immediate impact on the price of wheat. if you look at the dryness that

has taken place in the ukraine, will have difficulties there as well. it is clearly something that is going to stay with us. it is not merely a factor of the drought. it is going to be with us simply because of the volume of farming land that there is around the world and the population that is growing around the world as it does. it is an issue of the price setting market mechanism, visibility, and understanding of how market mechanisms actually work in those commodities, and a matter of how but derivatives and the financial instruments associated with the actual tangible work its with a multiple of 30-34, depending on the top of commodities we are talking about, is actually organized, understood, and can be supervised and regulated in the way we have begun to actually regulate the standard

financial instruments and derivative products. that is chapter no. 2. i hope that organizations such as the world bank, for instance, could help in the research, because they have conducted academic research on the topic. i know that the european commission would be prepared to provide help and support into that process. that is chapter no. 2. the third one, which is also critical, is how are we organize? what kind of governance to have? if you relate that to what i was saying earlier about how the g- 20 was effective in times of crisis, you can actually relate the two. how do we keep the momentum? how do we keep up?

that is a question that needs to be asked and the question that needs answers as well. if you leave out of the equation, so many countries that represents probably those 15% of gdp, but clearly want to be at the table, in you have an issue that needs responses. it is a dilemma, if i may say. one of the reasons the g-20 was so efficient has to do with the size, a level at which it is organized, and has to do with the process by which decisions were addressed, prepared, and communicated. clearly, we don't want to lose that. we want to keep the momentum and we need to keep the efficiency.

yet we want to improve the representation of the organization. together with the issue of governance and efficiency of the g-20, we also need to think about all the other stars that are lined or disinclined around the g-20. here, clearly, i have in mind the international labour association, the imf, the financial stability board, which all have different constituencies. some of them have a completely different institutional background and roots. the wto has sovereignty of its own, in away, and has the ability to pass judgment, settle

disputes, and make sure they are in force. other organizations are probably closer to u.n. organizations and how you organize to make sure there is a minimum of consistency and coordination between them. it is something that diplomats can talk about forever without ever agreeing, and where i would hope that we help in the process, trying to streamline and better organized the coherence of this organization. i am not suggesting we will close that chapter, but in all those three chapters, you find are relevant section that has to do with the developing world. if you look at the international monetary system, there is the whole issue of fragility of the developed and some of the least emerged compete in the

country's that suffer from the inflow and outflow of currencies. the second chapter has to do with commodity prices. the volatility of raw materials affects them much more so than it affects developed countries. if you turn to the third chapter about global governance, here again, we have an issue about the appropriate level of representation for the least developed companies. that takes me to the fourth and last chapter, which has to do precisely with development. we will pick up the baton from where it is and where our korean friends will leave it with this multi-year program for development. clearly, we need to have not just a crisis program, which was the case in 2009, but we need to have a long-term program that is

not only based on these financial instruments that have been significantly improved by the imf. we need to have credit lines. we need to have lending terms and conditions that are conducive to development. there is the whole issue of best practices as far as supporting the development of those countries that need it most. that is going to be the fourth chapter, and one that will require everybody's support. as you know, there are tents here and there to shortcut the multilateral systems that are in place to support development. are they appropriately run, with some degree of conditionality is? sometimes it is questionable. it is that chapter that needs to be addressed as well.

i think and have covered my four chapters, and i would just like to take one minute, because i am sure that in the group you have people that might be interested with the french economy. you mentioned that we are at a very interesting point in time. i would like to just say that while we did suffer in 2009, and while our economy went down by 2.6%, which was relatively mild compared with the average- negative growth in the eurozone, we have been back up for four quarters now. we believe that we have turned the corner, because the economy grew at the pace of 0.7%, which

is really an uptick from the third quarter. our growth forecast for all of 2010 was revised upwards, in line with the imf forecast, which is 1.642010. my forecast for 2011 is a little bit higher than that of the imf. it is 2%, and i do believe that if we couple the three engines that have actually started, the domestic consumption, which never went down for any quarter, including during crisis time, and that tells you a lot about the shock absorbers that the french economy has, and obviously the economic policy that was put in place. the second engine that thank goodness has now started, is private investment. we had clearly investment went

down, but thanks to public deficits that were amplified during the end of 2008 and the beginning of 2009, we of public investment to carry the burden. now the private investors are back, and we had private investors contribute up to 1.1% to grow during the second quarter. exports are also back a little bit, not to a great extent, but it is a positive contribution to growth again, where it had been- quarters in aix row. i do believe we have turned a corner. unemployment has begun to go down as well. at best times is around 7%. at worst times it is 10%. there is a very solemn -- solid

system of recording. you hardly have anybody left out of the system. the rate of unemployment is very representative of the effect of unemployment in the country. sometimes people will drop out of the system because they stop being indemnified and they stop receiving welfare. it is not exactly the same in our french system. it is one of our good shock absorbers and hard times. unemployment which went up at the highest of the crisis is at 9.3%, and we expect 9.2% shortly. it is declining at a slow but steady pace. one of our key targets, together with supporting investment in the private sector, from next year on board, or public deficit

which was scheduled to be at 8.2%. we had begun the forecast with a 0.5% and then it was revised down to 8.2%. it is likely to close at 7.7%. we will keep our target of 6% next year and arrive at 3% in 2013. that is pretty much where we are. i don't want to bore you in terms of so many numbers. i am sure that some of you members in the audience will want to ask me questions. if i know the answer, i will give it to you, if i don't, i will not. it has been a pleasure. thank you. [applause] >> you have been taking lots of

notes, so you should be first. >> a question on currencies. during the meeting with french ambassador's during the summer, sarkozy said thathos france had already begun the process with china. do you have specific ideas, or are you just going to see what is possible, just to start the discussion? >> as i said, we don't have preset goals, other than the ones i have mentioned to you, which has to do with protection, diversification, and coordination. those are the general principles that should be addressed, but we don't have any preset outcome redesigned or preconceived ideas. it is daunting enough not to

enter into the process with a map that is already drawn. what we really want to do is consults in as broadway as possible, including academics that have been working on it, institutions that are focused on the issue, economist, central bankers, former central bankers, and in the glow of suggestion and information will be welcome in the process. we will make it as interactive as we can. >> i think you are aware that you are considered somewhat of a hero among many international civil society groups with your support of financial transaction taxes within the g-20. i wonder if you could speak a little bit to us how you see that being in the agenda in 2011. >> you are quite right. there is a whole chapter i have

not addressed at all, which has to do with -- that is actually part of chapter 4, but i will come to that in a minute. there is a whole chapter on financial regulations that i should have mentioned. i did not, because i really tried to focus on these new topics in new avenues that we believe need to be explored. clearly, the whole chapter of financial regulations and all those -- how would i put it? issues left out from the g-20 momentum. i would put in that category checking that we are actually delivering on the promises of pittsburg, of london, of washington. i would put pittsburg as the leading set of targets that have to be achieved. making sure that everything, all

we promised we would do in terms of regulation and supervision will have been delegated. following up on an uncooperative jurisdictions will also be on our list, and we will product -- press for the report by the compact root during the year 2011 to ensure that the exchange of information addendum to non double taxation treaties are actually ratified, implemented, that there is actually compliance with the madness that have been made under the 500 agreements that have been signed in the last 18 months. turning to your question, i was thinking to myself that we should rename this and call it financial transaction contribution. i know the word taxation does not sound right. and no one country where the

word taxation is sort of presented. so financial transaction contribution i think would probably be a nicer way to christen this initiative. but clearly, it is one that president sarkozy, chancellor merkle, and most recently the european commission endorsed the project. we hope many more will agree that it is more about innovative financing ways to actually finance the combination of development on the one hand and climate change on the other. we'll have plenty of time to disputed development and climate change. cannot on one hand say we need $100 billion, and by the way, $30 billion in 2011 under the agreement that was sort of agreed in copenhagen.

turn to our budgets and say no, there is nothing left, because we have to cut our public expenses rather than raise new taxes. we need to find alternative sources of financing. france is of the view that the financial transaction contribution would be a good avenue. we were comforted by the imf study on the matter. the imf did produce a steady, did restrict the scope of the bases on -- from which the contribution could be made because it is easier to identify the clearing points. but yes, we believe very strongly that it is one of the

innovative financing topics that needs to be explored. >> de think perhaps too much is being expected of the g-20, that is being perhaps over burton, given its relatively recent founding -- that it is being perhaps overburdened. in that sense, realistically, what contribution kennedy 20 make -- what contribution candied g-20 make toward realigning exchange rates? is already heavily burdened, it seems. >> i would contend that if is not an obstacle to efficiency. both you and i have gray hair, even white hair, actually, we

should not lead us to assume that young institutions or young people cannot actually deliver and contribute to proposing ideas and improving the way in which we operate together. the issue of secretaries is a real one because of the rotating presidency. the fact that there have been a six-month presidency, one after the other, france will be in presidency for 12 months in a row, which will give us a little bit more time to actually invest resources from our national budget, actually, to make it effective. will that lead up to us having

more resources? i don't agree on the youth issue. we are clearly having to work to pick up the work where it stands and then allocating resources to support the system is an issue. i don't know what the ideal forum would be to actually discuss effectively currencies. i am not sure that 20 is absolutely the right number. i would draw a line between the institution where it is appropriate to reach a consensus and agreed on the appropriate body to actually deal with the matter.

>> i am a financial correspondent at radio hong kong. in terms of just the dynamics of the g-20 process, isn't it difficult to have meaningful interaction among the leaders when they are they are really just one day and there are so many people who want to speak? in that context, you have a meeting planned for the g-8 and the g-20 in mexico, the next round. is it a good idea to have the g-8 and g-20 together? will the g-eight fadeaway and just keep d-74 finance? if i could just shift to the euro, there were obvious tensions in early may between germany and france on greece and

the stabilization fund for europe. i wonder if those tensions have been resolved, and if you feel three months after the fact that things are going as you had hoped they would? >> on the first question, i am not in mexico for the moment, i am in france, and we are trying to allocate the right time and place for the appropriate meetings. the scheduling of all that is not just protocol or etiquette. it is what will make more sense? what will be more efficient, and in which order should we run meetings so there is input from one route into another, and so it actually rolls to produce results. it is not so much a question of

making sure that everybody has his territory. otherwise it will turn into a turf issue, who is in, who is out, who is excluded, and all the rest of it. there is a line of proposals with a view to avoiding the type of turf issues that it could lead to. on your second point, there was a lot of tension in europe and in the eurozone. i am not about to forget the weekend of the ninth and 10th of may, when overnight we had to sort of put together this package of 700 billion euros to

set up this new financial instrument. that was not considered in the european treaty. it is extraordinary that this was feasible, doable, and that we could actually manage it. and know that for the observer sitting on the fence and looking at this bunch of europeans trying to agree on something, it looks funny, and it looks slow, but it is quite incredible that you have 17 sovereign countries with their respective flags, national anthems, foreign services and all the rest of it. for them to ashley agreed that they are going to pull resources, set up a financial facility that will be used, contrary to one of the treaty provisions. don't forget that under the lisbon treaty, we had eight no bailout law's. in other words, but we did was

transgress -- we had a no- bailout clause. greece had already transgressed in of way, but we had not gone as far as we did with the european facilities. with greece, we had a contractual relationship where toh of the state's lends greece to support it. with the european facility, we set up something that was slightly different. it was an intergovernmental fund that was set up as a special entity with a board and with the ability to collectively go together to support a country that would be in difficulty. so course there were tensions, because we were not happy to see what had happened with the statistics in one country or

another. we were not happy to see that the deficit had to be updated every three weeks or so. but we managed to find countries where the treaty would have allowed us the strength and political will to close ranks and put in place something that is extremely unusual and which actually could be used as one of the format when we talk financial safety nets at the european level. that is effectively what was put in place. but what a weekend that was. >> if i might ask a follow-up question.

in your mind, with the european financial stability eventually involved in two european monetary fund -- evolves into a european monetary fund? >> that would be quite a logical evolution, wouldn't it? we will see what the future has to offer. i was particularly pleased to see that the facility was frank aaa by all three rating agencies. -- was ranked aaa. beon't think it would without consideration, put it that way. >> how worried should we be, how worried are you about the consistent trade and large trade surpluses of germany and china?

>> there are two things i would like to mention in response to your question. one is, in both cases, but more so in the case of china, we see that the pattern of growth is beginning to change. when you look at the domestic consumption, the regional hubs that are being created on the ground in that part of the world, you clearly see a shift in evolution that is happening and that coincides with the recommendations that were made by the imf and that we all collectively endorsed at our last meeting. that is happening. the second point i would like to make is that the framework for growth which was put together at

the london meeting, it was decided and framed and put together and reviewed in toronto. we need to continue using it. we need to refine it, make it more operative and more policy- based, so that we effectively act together. what was very comforting at the time when all the action plans were abrogated is that there was a level of consistency. we have not yet moved to the level of policy sharing and policy compliance. i would hope that we can move in that direction. >> i am very pleased to hear the folks you are giving to the g-

20. it is gratifying that the focus is on poverty and the poorest communities. my question is about the time frame. korea talks about a multi-your action plan being developed for november. you talked about initiating discussions without a perceived -- without preconceived outcome. >> i was talking about that on the international monetary system. on the development plan, it is not without time frame. we will take the time frame that has been put together by korea, and we need to roll with it and roll it out, if it is a question of rolling it out. trust nicolas sarkozy.

>> you mentioned policy compliance and coherence in the european context. it is my understanding that koreans are also hopeful that countries will inscribed various medium and long-term policy commitments in seoul. there has always been difficult to going be on transparency and towards pure pressure and getting people to comply with what was written down on a piece of paper. given the european experience in trying to do that in a more coherent unit, the have any hope of getting this done in the g- 20? any thoughts about how to ratchet up the pressure on that issue? >> i think your point is very well taken. governments, countries, people only knew if they are driven by their self-interest.

it is very difficult to actually achieve something higher and better than that, unless that collective endeavor actually brings results and benefits to the individual organization, the individual undertaking, the country's objectives. we need to really associate the two together. i would not downgrade that to the country. i think there is public pressure and public opinion in the area of financial regulation, which has been extremely helpful. i hope it continues to express views and actually support the process of change we would like to embark upon. [applause] >> madam minister, thank you very much both for the remarks

and your willingness to take such detailed and probing questions. we at carnegie have been trying to provide a forum and a modest way for discussion and advancement of the g-20 agenda. you have made an enormous contribution to that effort today. thank you very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> c-span coverage of campaign 2010 continues tonight. live at 8 eastern, democrat ted strickland faces john casek.

later we will bring you the georgia governor's debate from atlanta. obama is campaigning with governor martin o'malley at a local university. that is tonight on c-span. tomorrow on "washington journal," bob woodward stops by to discuss behind-the-scenes obama white house negotiations on the wars in iraq and afghanistan. it is the subject of his latest book. join the discussion on "washington journal" on c-span. a senate armed services committee report contends that some contractors paid and aren't afghan war lords and strong men

to provide security in afghanistan. committee chairman carl levin spoke to reporters about an investigation into private security contractors in the country. he speaks for a half-hour. >> afghan war lords are linked to murder, kidnapping, robbery, pro-taliban and anti-coalition activities. it describes the failures of some security contractors to adequately vet, train, and equip their employees. it discusses contractor personnel using drugs, being issued and serviceable weapons, and leaving their guard posts unmanned. all too often our reliance on private security contractors in afghanistan has empowered -- let

me start over again. all too often, our reliance on private security contractors in afghanistan has empowered warlords and power brokers operating outside afghan government control. there is significant evidence that some security contractors even worked against our coalition forces, creating the very threats that they are hard to combat. these contractors threatened to the security of our troops and risk the success of our mission. that was the assessment of lieutenant general david rodriquez and major general nick carter, the commander of regional commands out. both shared with me when i visited in afghanistan in july.

according to the armed contractor oversight division as of may 2010, there are 26,000 private security contractor personnel operating in afghanistan on u.s. government contracts or subcontracts. almost all those personnel are afghans and almost all of them are armed. the investigation was bipartisan, and i want to thank senator cain and his staff for their work. i want to thank my extraordinary staff for their work. staff reviewed hundreds of thousands of documents, conducted more than 30 interviews with u.s. military, private and is a moving contractors. the report we are releasing today includes an extensive discussion of to department of defense security contracts in

afghanistan. the first is an air force subcontract which began in the spring of 2007 and was performed by a private security company called armor group. armor group is a subsidiary of british company called g4s. the investigation revealed that armor group relied on a series of boards to provide men for its guard force at the airbase. the company called those warlords mr. pink, mr. white, mr. white 2. those names were drawn from a movie called "reservoir dogs." the sister company was called

armor group mine action. those groups were variously implicated in murder and robbery. mr. pink killed mr. white 1. they were found to process landmines and large amounts of ammunition and more determined by the u.s. military to be in league with the taliban. mr. white 2 was actually killed in an august 2008 raid by u.s. and afghan forces on the a taliban meeting held at his home. that is somebody who has been paid but u.s. taxpayer dollars. the second contract discussed in the report was performed by a company called eod technology.

eodt is registered as a foreign corporation in tennessee like armor group. it relied on afghan powerbrokers to supply men for their guard force. those men included the following. one individual who military personnel said played both sides, and whose son, according to u.s. military reports, is both suspected of being an agent of a hostile foreign government and has been involved in killing interpreters working with the u.s. military. a second individual who u.s. military report said raise money and recruited personnel for the taliban, and a third individual who u.s. military reports also identified as working with a hostile foreign government. so we must shut off the spigot of u.s. dollars flowing into the pockets of warlords and power

brokers to act contrary to our interests and to contribute to the corruption that weakens the support of the afghan people for their government and for our effort. in addition to those two contracts, we look at documents associated with more than 125 other department of defense security contracts in afghanistan. the investigation uncovered systemic deficiencies including security companies failing to vet guards or conduct weapons training or provide guards with working weapons. we uncovered evidence of a security company owner arrested for ties to terrorist organization, another security company to use rocks to simulate personnel, and 1/3 to simply walk off the job -- a third who simply walked off the job.

conclusion no. 1, the proliferation of private security personnel in afghanistan is inconsistent with a counterinsurgency strategy. another conclusion, conclusion no. 2 -- these are the formal conclusions of our committee. afghan war lords and strong men operating as force providers to private security contractors have acted against u.s. and afghan government interests. conclusion for, failures to adequately vet, train, and supervise armed security personnel have been widespread among deferment -- department of defense private security riskactors, postinposing a grae to u.s. and coalition troops as well as to afghan civilians.

these are not abstract issues. they involve the security of our own troops as well as the success of our mission. just one example, in february of this year, a squad of u.s. marines was out on patrol when it came under fire, killing a young marine lance corporal. once the shooting stopped, the marines detained the men who had fired at them. they also sees some opium. it turned out that the shooters were actually security guards working for an afghan company on a dod contract. the men later said they had not been trained to use their weapons. one said he had not even fired a rifle since the 1980's when the russians occupied afghanistan. tragically and sadly, they were working for a u.s. military contract. failing to fix this problem is

going to put more of our troops at risk. is not a risk that any of us are willing to take. in july, my staff briefed our findings to the two military task forces that the dot has set up. task force 2010 and task force spot like to have been charged with looking at contrasting brass -- practices that run counter to our counterinsurgency strategy. i am very grateful to secretary gates and to the department of defense for their support throughout this investigation. secretary gates recently wrote me that the committee's report "has helped the department of defense understand the nature of

the problems associated with contrasting in afghanistan." a copy of his letter is available to you. our military leaders from general petraeus on down are working hard to get a handle on contract in. the department has taken steps toward addressing these problems. the two task forces i've mentioned are up and running. earlier this month, general petraeus issued guidance on the use of contractors and other steps that are being taken by the department of defense are outlined in secretary gates' october 5 letter to me. it is critical that not only our department and our commanders take action but that the afghan government take action. president karzai has called

private security companies an impediment to the growth of afghanistan's police force and army, and last month issued a decree that he wants to get rid of most private security contractors in the next four months. in recent days we have seen reports that president karzai has begun to move to disband some security firms. i would caution, however, that what we really need now is a considered realistic plan, not just to phase out security contractors, but to integrate the thousands of armed men who work for them into the afghan security forces. we don't want to simply leave thousands of unemployed armed men out on the streets that are qualified to do security work for the garment itself. finally, i want to emphasize a point that has been raised by some.

most of the contractors that work for the united states -- are honest, hard-working people who support the mission. the report clearly demonstrates that we need to change the way we do business in afghanistan to make sure that those are the people, the honest people who want our mission to succeed. that those are the people we are working with. . .

the success of our mission depends upon us facing this problem and fixing it promptly. general petraeus has said contracting has to be the business of the commanders on. this is not a matter that can be left to local personnel. these at people who are undermining our own mission and this is something that will make it more difficult for us to succeed. our commanders in the field know that and assured us that they are now taking strong steps to change the situation. general petraeus issued a directive that will hopefully make a major change in the situation so that we will no

longer use taxpayer funds to pay for contractors to do things that ought play into the hands of the enemy. this is a matter of tremendous importance for the success of our mission. ibm great flow over secretary gates -- i am grateful to secretary gates. when we briefed the task forces, they indicated that our work will be a great assistance to them in terms of their work and the people who now have to change the way in which we hire

contractors and researched their personnel, those people are appreciative of our work because we have laid out various ways in which activity below the top corporate level unintentionally will play into the hands of our enemy. that is what this report is aimed at stopping. i will now open it up to questions. >> my guess is that secretary gates agrees with you but this is not practical. >> what is not practical? >> reducing the number of contractors we rely upon. can we do this without the contractors? >> we have to reduce our contractors. i think that secretary gates

would recognize this. obviously, we need people to provide security. they have got to be part of a group that is coordinated by and overseen by and directed by authorities. they cannot be running around loose working for straw strong men that are on their own and working for private militias. they are not operating in our interest. we need to shift them so that they are in control of legitimate contractors or the afghan government. we need to move many of them to the police and we need security.

we have to reduce the number of privately organized recommended guard personnel who end up either working for the enemy or undermining our own mission by sloppiness or reckless behavior and in addition to reducing those numbers, we have to make sure they're not in fact working for our enemy. >> have you been working with the department of defense? >> we have task forces that are fully supportive of what we are doing. tel petraeus is testifying in front of us. he will change the way that this

operates. -- the general petraeus is testifying in front of us. we need these people in control of the afghan government or under proper control of properly hired and that it contractors. we are working with the defense department and we have briefed them and the task force on this material. also in terms of the detailed in these reports which gives examples of how private security forces have undermined our mission so that they can try to address those specific types of problems which exist and which we have demonstrated. >> there is the classic

protection, people get paid to reduce the attacks that are happening. if you disrupt that, don't you risk making a security worse in afghanistan? >> there is a risk. the current situation has huge risks which is unacceptable. the question is, how would do you reduce that risk? the decision is whether or not to utilize a strong man or a war lord or whatever. this has to be made at the highest level. this cannot be made casually by someone further down in the chain of command. there will be times when our top level people will want to take

some risks and utilize that which is not ideal. this decision cannot be made casually or at a low level. when that decision is made, there will be examples of when this is made because this is not an ideal situation. when that kind of compromises made, it has to be made by someone who is a top commander. >> we sat through a similar briefing in which you said the corruption and fraud and criminal activity was rampant so you moved legislatively to correct that. i am wondering if that has not been on this situation. why have we seen this occur

again? >> because this is afghanistan. in afghanistan, they faced at situations than they face in iraq. you cannot automatically say the kind of problem is corruption here, corruption there. the sources, the origin, the remedies will be different country to country. >> how much responsibility do you think congress has in terms of pressing for a quick result in afghanistan and putting time pressure on the forces there to get things done, get it done fast, get in and get out? >> the pressure we are putting on -- i believe that the

president's decision to have a time to begin to reduce our troops is a vitally important decision. this is the right decision. i happen to support this decision. i gave a speech on that the other day. having that in july 2011 is important in terms of the pressure put on the afghan government to clean up their act to address the corruption issue. i'm not sure if that is the time line you are referring to. there might be someone to get out of afghanistan and some of quickly to make progress in which case that means to encourage short cuts. >> in terms of the coalition

forces, this is internal, not professional, they want to succeed as quickly as they can. >> have you briefed these findings to the department of state? are you familiar with the department of defense technology? are you all so familiar with the group that is a subsidiary of blackwater? >> this has been briefed to the department of defense and this is being shared by them and will

be by us. this is a decision which has to be made after looking at all of the evidence. that evidence will be described by my staff. that fits into the kind of detail that they should consider deciding whether to to give this contract to anyone. >> pain people who shoot at us sounds like a pretty serious scandal. should anyone be held accountable for doing that or should anyone be fired. there are a lot of military scandals and a lot of mistakes were made kind of thing and we move on but no one has been held accountable to me, should they be? >> we do not get into the

accountability of any higher levels. >> with a company like pharma group, this is the second time that they have been engaged in activity that has undermined the mission. should they be allowed to hold another u.s. contract? >> i think the prior activity of any contractor is a factor of whether they should be considered as to whether or not they give a contract. this is not for prefer us to intervene into the specific contracts and whether or not they should be given another contract or not. obviously, i am highly skeptical of giving contracts to companies who have either been negligent or reckless or sloppy in terms of who they hire to do their work, whether or not they believe in the people that they hire, whether or not they have stirred up the requirements of the contract and i would be

skeptical of giving a contract to any contractor that had engaged in activity that was negligent or reckless and it is not a purpose for me for us to attempt to go contractor by contractor as to whether or not that contractor should be given future contracts. the information which is essential to the decision is laid out in this report for the proper officials to consider what they look and whether or not the contractor should be given subsequent contracts. >> this is calling on today although some of what you have talked about are those contractors in 200720082009, the

risk to our troops and our strategy going on right now and that is correct. there are those that are still on their way and those that are about to be awarded. there are those that were not properly implement those contractors and they would continue the risk of those contractors being implemented today with contractors who have shown sloppiness or negligence in terms of implementing those contracts and also it is important in terms of bringing the full picture to emphasize that our commanders are aware of their responsibilities now to do something about it. they are reporting as to why this should all be that way, our commanders are satisfied with the status quo. i have talked to general petraeus about this matter and

they're committed to the change in the status quo in afghanistan because of the way that this endangers the troops and endangers our mission so i have a lot of confidence. secretary gates and tenor petraeus will do what they said they will going to do. i appreciate their open acceptance of what we have done here. there are some agencies and people in the bureaucracy that might persist in this kind of the report and that was not true in the case of the department of defense of course, the reduction is minimal to properly respectful and this is not a case which has a major reduction by the department of defense and the commission is not only there but this is also real and from imports of taking on responsibility and a petraeus says that this is the commanders responsibility.

the arne duncan cannot just go to a lower level people. these are to people that cannot implement them properly. i will put my confidence in secretary gates and general petraeus and to do what they say. it will take events of all of the work as gone into it. my staff has made a point about this. >> what about the shooting down of the contractors in afghanistan? >> i don't know the answer to your question.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> campaign 2010 continues live at 8 eastern. the ohio governor the fates of the former republican congressman in toledo. more live coverage at 9:00 with the nevada and governors' debate between democrats and republicans. later, in the georgia governor's debate from atlanta, then president obama campaigning today with the maryland gov. martin o'malley, you can see that tonight here on c-span. this weekend and through december, the landmark supreme court cases on c-span radio. >> what our belief is that you may not publicly desecrate a flat regardless of the motivation for your actions,

flight burning and the freedom of speech saturday at 6:00 eastern on c-span radio in washington, d.c. at 90.1 fm. the supreme court has started the midterms and highest court in c-span's latest book. reporters who covered occurred, in a views with justices. this reveals unique insight into the court. -- reporters who covered the court. the state department announced in a program to distribute mobile phones to women in developing countries. one in the effort is the wife of the former british prime minister tony blair. she and others spoke to

reporters about the program for half an hour. >> could afternoon, this program is a joint effort of the development fund and the shrieve blair foundation to promote the -- and the -- blair foundation. to announce is the senior adviser for innovation and the secretary of state. >> hello to all of you.

as you just heard, secretary clinton announced that the united states is joining in a partnership with cherie blair and the goal is to empower women. the potential for applying this technology to transform the lives of four women in the developing world is unlimited. we have seen in the past the power of the green revolution to agriculture, the power of micro credit and to raise the economic standards. today, through the application of mobile technology, we have

just begun to tap the potential for this enormous tool that we have already seen in many ways what it can do. it is being used to keep literacy. there was a head of an ngo spoke about how efforts to promote literacy in senegal where tremendously latest because of the incentives that mobile technology provided to the poor women in terms of texting and the kinds of dramatic changes they have seen in rising numbers of literacy. being used to promote lidle health information. -- it is being used to promote a

vital health information. there was a recent incident where a physician not to attend a berth in afghanistan in minutes of time which could have resulted in a different kind of outcome. because of what the technology provided, he was able to assist in a birth. this is the country that has the second-highest maternal mortality rate in the world. in the united states, there has been efforts over many years through the association's here of the industry to provide this as a tool that enables women to feel more secure. this is being used for economic empowerment. another one of the speakers today was a poor farmer from

india who talked about how she uses the phone in ways that have dramatically changed her life, increased their profits, she can stay in better touch with her customers. also to find out where the markets are so she is not going from market to market. this short circuits a lot of activity that might otherwise provide her with costs instead of raising income. of course, you all know about the potential for mobile banking. kenya is one of the prime examples but there are growing efforts and we have not even begun to see what the possibilities are there. we know that investments in women are among the most effective and investments that

can be made in global development and enabling them to access this new tool is vitally important. there is a gender gap which you will hear more about in cellphone usage particularly in low and middle income countries. part of the announcement was about how we're going to close the gender of digital divide is the potential of poor women is going to be realized. cell phones can become a powerful equalizer of opportunity. secretary has been promoting public partner -- public-private partnerships. all of the elements come together in today's announcement as a result of the commitments of the mobile technology companies, usaid, the

state department. the kind of partnership that has been announced today, there is great hope that we will be able to close that gender digital divide the next several years. i will end their and turn this over to my colleague and he will provide you with another dimension. >> thank you. i wanted to provide a little bit of context to today's announcement as well as give some interesting data about why. today is another example of what the secretary of state is pioneering in 21st century statecraft. she talked about a world where we were no longer bound by vast distances or national

boundaries, where information communication technology is allowing communication, commerce, collaboration to take place in ways that never had previously she spoke at great length about how technology is an on ramp to mundanity -- modernity. for every 10% increase in adoption of mobile telecom, there is a corresponding 14% increase in gdp. the day that she became secretary of state, there was an estimated 14.1 mobile handsets on the planet, today there are nearly 5 billion. -- 14.1 million mobile handsets.

a gap exists and persists. if technology is an on ramp to modernity, the access to these tools and the effective skills to use them, we need to bridge the gap. a way to bridge the gap is through the kind of partnership that was announced today between government and industry. you will hear more about the industry groups, the industry association helping to bring this together. this covers 115 countries. this says a lot about the secretary's leadership in that in launching this, we are starting with a global footprint of 115 countries. thank you, and i look forward to any questions that you have.

>> good afternoon, everyone. this is very exciting for me. i think today has been an extraordinarily exciting and significant day. this is significant for many reasons. firstly, significant because of the potential for scale in what we have launched today. about a year ago, we were talking about the gap that there is between the rich and poor in access to technology. there is a gap and sometimes it is seen as pint in the sky to bridge that gap. actually -- pie in the sky to bridge the gap. actually, the mobile phone is the way to bridge that gap.

this is vital to us and also vital in the developing world. you can see people using their mobile phones all over africa, all over india. and yet, the poorest of the pork to not get equal access. by this, i mean women. this is extraordinarily important that women get a fair share of the technology. when i first voted talking about this in the united kingdom, one of the women journalists said, we all knew that cherie blair is completely mad. really, in africa? how could that possibly be true. today, an illiterate widow in india came to the state

department and stood up and spoke in her own language about how and mobile phone has transformed her life as a lead tech farmer. ---- a lily pad farmer. today, the story about what happened in afghanistan, she did not tell you about the girl who nearly died in childbirth. it was actually the grandson of the taliban leaders. he would have lost his grandson if it had not been for the company's building a cellphone facility in that area. suddenly, he realizes that next

time they can make the phones available to the community, he will not see this as an alien thing that will impose something dangerous, he will see this as what it is, a life saver. a very significant moment for an individual and child that actually has a very significant movement for a much bigger community. this is also because of the partnership that this represents. this is a partnership between industry, the mobile phone industry. 20 of the big mobile phone players in the world signed up to make technology available. this is a partnership with non-

governmental organizations. i have my own organization which concentrates on women's economic power. there are many who already have schemes and ideas which they are communicating small communities and small groups. this enables those ideas, those that can use the technology and it can become bigger on a much bigger scale. this is a cooperative adventure that is concentrating not just on women's economic empowerment but on health, literacy, finance. the partnership -- behind that partnership stands the u.s. state department for blending

their weight and expertise, they are lending their incredible clout behind this program. i have no doubt that the 300 million women across the world who identified as having the possibility of getting access to mobile phones which at the moment were being denied it, the 23% gap between women in africa and men in africa gaining access, the 24% between women in the middle east and men in the middle east and access to mobile technology. the 37% in south asia, i have no doubt, that with a combination of partnership between the industry, between the government, between non-

governmental organizations, that we will reach our goal of reaching 150 million women over the next three years. i'm really excited that you are here to get this message out to a much wider audience and thank you for coming. >> representing the mobile industry, we know how transformative mobile phones can be. one of the things that we embark on on this journey with the che rie blair foundation is that we did not understand that there was a gender gap. we know that development markets have enjoyed the mobile phones.

there is the ability to move money, the security, the safety, the ability to communicate with their friends and family and so forth. it was very interesting that with cherie's help that we were able to see that there was a gender gap. the estimate was 100 million women. women that should have access to phones did not. when you understand the transform the nature of that phone, it made no sense that these women did not have them. i think that that was the turning point for us to say that we have to change that. we cannot have those women not have access. because what we know is that the mobile phone is a great leveler in terms of people bringing up

to a competency of economic and social benefit. we know that this is a great in a blur and they start on a journey and that journey starts in a very small way. it could be just knowing that their child is safe. it moves one day to where they are actually learning. or doing the unthinkable or what is unthinkable for them, starting a business. war in the case of the lady -- or in the case of the lady who is growing lilies, transformed her business. we are not talking of something that is abstract or something that cannot be put into real terms. this is profound stuff. for our industry it became very

important that we cannot look at the that the gender gap and not do something about it. i am delighted that we have assistance to get that message out. i want our community -- we have representatives from nokia responsible for low-cost mobile phones, they embraced this. we are on a real turning out to connect. what we have said, we have set a goal. we will aim to connect 150 million men and women. we have 20 of the leading companies in the mobile space that have committed this. you can tell i am committed. i have a huge team of people

working on this. i think that we will make a difference. i look forward to coming back to you one day. i am delighted to be at the state department speaking. i hope to come back and show you statistics that we are making a difference. thank you. >> any questions? >> i is curious what role government has played in this movement? >> there are issues where governments can't be an impediment in giving access to this technology. in pricing, for example. there are costs that accrue frequently in terms of regulatory costs or tax schemes that could be done away with to

make this a real dual approach for women. -- doable approach for women. diplomacy factors and considerably -- factors in considerably. they need to recognize the benefits that would accrue to the country's people of some of these impediments were taken away. another area is trading and enabling an environment that makes it more possible for the industry representatives to come in in the environment. by creating an enabling

environment to address some of the cultural norms or some of the other kinds of social issues, it makes it easier to ensure that there will be greater usage, success after opening that market. there are a number of things that the government can do and part of our coming together is to make sure that this is the best way that we can. >> i live like to add. this is something that the secretary announced. this was the winner of the apps forafrica -- apps for africa contest.

many people do not take part because they don't realize that there are helpful things for them. that is why we are encouraging people to develop technologies that will obviously be in the self-interest of those we are trying to reach. development dollars can help address some of the issues. >> one of the barriers is the attitude about women in poverty. do you have any specific programs that you are launching through the private sector to deal with that? >> one of the things that we heard from an operator in afghanistan is the targeting of tailor-made programs that address those needs and out in each market you will need to

shape the way that you not only provide the phone but how it will be used, how you create plans and unattractiveness that allows the women and a certain market or building. this will vary country by country. our role is to share best practices, provide tool kits. one of the things that the gentlemen today said is that this is not competitive. they are absolutely willing to share. the minister from liberia was there and asked could she received the benefits of that for our country and of course we made the point that we will share this with the operators of liberia. this is not a competitive practice, we will get things right to the people who need it and moved it in the market.

people want the phone. you know how you go into a place and you want to give people something and they say, i don't want it. maybe i will not use this in quite the way you want me to use it. the examples she was talking about is that she had a donor in a cynical and the issue was that they would build a library. they learned how to text and a

gain language skills by the mobile phone. that was very attractive. what you end up having is that they want the phone, our challenge is to get the phone to them. there is no doubt that they will make good use of that phone. >> when you talk about the cultural practices, nothing succeeds so much like success and when people see that this actually brings the positive improvements for individual families and individual people,. some of the stories we heard today were using individual in it and groups, they get the phone, then other people want the benefit. senator paul was an example. using the mobile phone can allow you to reach out to people who cannot otherwise be reached.

the example that should get was about how they have set out -- set up an sms network and they talk to leaders around the country to whom they can send messages. through that, they could send messages about getting children immunized. through that, they can send messages to say, we are delivering to your village mosquito nets to help protect mothers and children. they were able to deliver 75,000 mosquito nets around a cent of all because they were able to send out messages to get the word out which then cascaded down locally. before that, they had to send people out on bicycles to the

individual villages. you can imagine how much longer that would take. when you see that as a kind of information you can get, of course you would want more. wouldn't you if it was a matter of life and death for your child? >> will they be using these phones free of charge and will they have to pay? >> the first matter is access. this is not about on the ship this would be great if they could all take this. this is really about giving them access. each operator will determine the best way to do that. one had a program where they had significant discounts for women. it became very attractive for them to participate. i think each operator will find a mechanism that works in those

markets. even if the phone costs 15 u.s. dollars, that could be way beyond the capacity of that woman or family to afford it. you can have multiple sims and people will plug in their personality, their number. they take this and they can put it into the phone. that can handle three of them. in essence, the phone now has three personalities of that one card. >> the fact that sell phones can't be economically empowering to a woman -- it can

be economically and powering to a woman. in many cases, purchasing a sell some -- purchasing a cell phone becomes your business and she sells the time at a very small raid but enough to cobble together a better income than she has ever had. there is a lot of entrepreneurial things that can be done. some of the commitments actually involves training, micro credit access, etc. this is a larger pool arrangements. -- pool of arrangements. >> any other questions?

okay, thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> starting at 8:00 eastern, we will have the ohio governor debate. then we will see barack obama campaign in this martin o'malley. the national charnels hot line released this account for the house and senate. the hot line predicts that republicans will pick up 31 seats. they need 39 to gain control of the house. that will capture control of the senate with 50 seats. the democrats would control 49 seats including the two independence to caucus with the democrats. you can see elecampane programming at c-span.org/

politics. this weekend and through december, listen to landmark supreme court cases. >> you may not publicly desecrate a flight regardless of the motivation. >> flag burning and freedom of speech. this weekend, c-span 3, american history television, takes a trip to richmond, va. also, songs that uplifted soldiers' spirits during the time of lincoln. how harry truman's containment

policy resulted in decades of tension between the u.s. and the soviet union. all weekend and every weekend on c-span 3. >> hey, students. make a video on washington d.c., through my lands. make a deal on an issue, as then, or topic that help you understand the role of the federal government. upload your video to c-span by 2011, 2011, and you can have the chance to win $5,000. the video talking their competition is open to all students grades 6-12. >> the international monetary fund and world bank are holding meetings in washington this

week. one of the main issues being discussed is the value of national currencies. the president and members of congress say that the chinese currency is undervalued and this makes american goods more expensive in that country. >> good morning, all of you. we tried to -- the way we go to the annual meeting.

the recovery clearly is going on but as everyone knows, this is still very fragile. this is because it is uneven. when you look at asia, when you look at south america, you see a very high rate of growth and in this part of the world, the crisis is considered over. when you look at africa, where the rate of growth is going back to something like 5%, you look at what happened in the past where africa was catching up with the rest of the world. this time, this is coming back in africa.

europe is still sluggish and that is >> part of the concern that we may have. this is delayed big part of the global economy and a part that does not go very far. -- europe is still sluggish and that is still a big part of the concern that we have to. as you know, -- is not one of a double dip. we cannot believe that this recovery will end in a double dip. this risk of a double dip still exist. this has some probability to materialize. there are the downsized risks.

there are four challenges which in my view are the main risks to the recovery. one of them has to do with sovereign debt. there are still problems in the fiscal system the ability of some countries where the crisis started within high level of debt. we are in favor of medium-term consolidation but it doesn't mean that in the short term all and every country will have to tighten the fiscal puzzle. this depends a lot on their own situation. i hear sometimes the people say, well, the message is not really clear and understandable because you say that this is different. we say different things because

countries are in different situations. advice that we give to greece is not the same that we can give to germany. in the medium term, everyone has the problem of fiscal consolidation and to announce the way they want to go back to a more sustainable situation. it depends a lot on the situation. in many parts of the world, the private demand is still weak and of the withdrawal from -- which was put in place during the crisis. it is possible to wait and support demand. the second risk is the gross -- is the growth. we need growth with jobs.

this does not mean much for the man in the streets. we are working on this topic. growth might not be strong enough in this part of the world. the crisis will not be over until the unemployment rate decreases significantly. i want to talk about the financial sector reform. a lot has been done and recently the rules have been relieved. there is discussion on the aspect of the industry. the problem that i want to mention to you is that the imf has been repeatedly insisting

that to repair the financial sector, we need to do a lot of regulation but also a lot of supervision and a lot on crisis resolution. on the two last fields, it would be unfair to say nothing has been done the very little has been done. one provision is important because of regulation. you have the best rule in the world if you have no structure or process to supervise that they are correctly implemented and then you can almost do nothing. there is still a lot to do and we should not believe the enhancement of regulation that has announced that we have solved all the problems. . .

myself, i think i used this vocabulary, which may be a bit too military, but it is true to say that many do consider their

currency as a weapon, and that is certainly not for the good of the global economy, of course. it is understandable that facing some volatility and destructive volatility, countries want to react to this, but it doesn't mean that in the medium term we should try to avoid a movement and change in the currency value, because it just reflects something which is the main goal, which is rebalancing. what we all want is the rebalancing of the global economy, and this rebalancing cannot happen without consequence which is a natural consequence of it, which is a change in the relative value of currencies. to oppose this in the medium term is certainly something which wouldn't help the rebalancing. so, this question has appeared a lot in your headlines during the last weeks, and we will discuss this a lot, i guess, during this meeting, how we can bring about a stronger dialogue

among countries, and certainly thimf has its role to play in this. and how we can try to launch and organize our work in a way that would be helpful to face this kind of question. of course, to do this, and this is my last point, after the four challenges that we face, to do all this, the fund, which in my view -- it is a bit pretentious to say that, but if you say it, so sometimes you say it, so i want to thank you, the fund has shown its relevance during the crisis, but it is still a question of legitimacy. and the legitimacy has to do as you know with the governance question and we are in the process of a review of the quotas. at the same time the question of the board composition has been raised. i think we are making progress on this, and have no doubt that we will find a solution, and certainly the discussion during the annual meeting will be helpful for this. the result, of course, aims to

give a greater voice to emerging market economies which just reflects fairly the change in the global economy. that is what has to be discussed. it is a lot during this annual meeting, and i guess that all the meetings that have been organized, official ones, the less official ones, the totally secret, will be useful to try to fix, at least, the, to make progress, on all these questions.>> now i'll turn to your questions. if you could please identify yourself, the mic is coming around. your name and your news organization. >> secretary geithner yesterday made a very pointed call for the imf to take a more aggressive role in resolving the currency dispute, and i think leverage was the word he used, i believe. i'm wondering, what role do you think the imf with can play in this? what more can you do? do you seem to have some new powers in mind, something like

that? and, what sort of pressure have you felt from the administration to step up your role in this? >> well, i read this in your comments. what secretary geithner has said was directed to the membership. when he makes something, which makes a sense, which is a link between the need to rebalance the economy, to have a more cooperative way to manage the global governance and a change in the imf, he is certainly right. he is saying to part of the membership, if you want to have more say, more weight in the imf, then you need to take more responsibility in the stability of the system. but this message is directed to the membership. it is not directed to management, even less staff of the imf. we're a part of this debate on quota and chairs. of course, we try to help, we try to provide technical assistance, but it is mostly something among the members of the, the countries of the fund.

i understand the message from secretary geithner as something which concerns directly some members with which he has a very well known debate on this question. the second remark i would like to make is that what i like in what tim geithner has said is that obviously he believes, i think he is right, that the imf is the right place to try to make progress on this question. right to say that during the last three years, i think we have been the only institution repeatedly to say, for instance, concerning china, which is not the only problem, but one of the questions which is at stake, that we believe that the renminbi was substantially undervalued and something has to be done to fix this problem over time. i think that secretary geithner, i want to thank him for saying that it is in the imf that the discussion has to take place. we already did, i think, a lot

in this direction. maybe some of you have read the article iv on different countries, including surplus countries, that has been raised a lot in the last month, clear opinion on what should be done. but we also changed a lot of things during the last month including something like what we call the spillover report where we'll study not only bilaterally the policy of the different countries to see if it is consistent with its own stability, but also the consequences of the economic policy of a country on the rest of the world. so, we're going to develop this kind of spillover report, and all that i think will help, i believe, to understand better that as i said at the beginning, there is no domestic or national solution to global problems. so, we have to launch a kind of systemic stability initiative to go further in this direction. we have the different tools, analysis to do it, and i think

that if the membership is willing to participate in this kind of discussion, we can make progress in the coming time. but, of course, as secretary geithner said yet yesterday, i think, this problem is not going to be fixed in five minutes. it is a long-term problem. progress has to be made. certainly can be made more rapidly than has been made up until now, but it will take time to fix the problem. >> specifically on currency, do you think it makes sense to have a plaza-style accord, a currency accord reaching across the world, or separately an accord among asian nations where china would agree to appreciate its currencies while other satellite currencies would agree at the same time? and also, just to make sure i

understood your last answer, do you think personally, do you think as the managing director that a country's role, specifically china's role, a greater role for china in the imf ought to be dependent on them pursuing market -oriented exchange rates? >> let me start with the second part of your question. we have a lively number of market economies, and obviously i see very little economies in the world today which are going in the other direction. so the question is not much to have a market-oriented policy globally or not, but specifically on what you say on the currency, to have intervention on the currency, or not to have intervention on the currency. we have seen a very well-known market economy in the last week, i have in mind japan, having an intervention in the markets. it is not because you may have some intervention in your currency market that you are not a market-oriented economy.

the question is, do these two questions need to be linked? my answer, as i said before, is that there is no formal link, but i think it is right to insist on the fact that the more emerging countries will have a voice and representation in the fund, the more they have responsibility in the stability of the system. you can be at the center of the system, or you can be at the border of the system, but if you want to be at the center of the system, which i understand is a request by many big emerging countries that want to have more say in the imf, which is absolutely legitimate, it goes with having also more responsibility on what you do and the consequences of what you do in the global economy. >> i'm not sure the need is to have a new plaza or louvre

accord, even if the french name rings nicely to my ears. it was more than 25 years ago, something like this, so we're in a different time today. but the fact that the imf can help to try to narrow the position and to have a better understanding of what should be done by each party, each stakeholder, and at the end to have a kind of consensus, is maybe too strong a word. but at least consistent policy by the big shareholders in the fund, this, i think, can be done by the imf.>> sort of a follow-up to the previous question. i'm sitting here with my colleagues from china and

brazil. i know that for many countries the question about the representation issue is not about individual quotas, because they're still smaller for china. the second largest economy in world, still has 4 percent, something like that. so, the question is the overall proportion, developed countries, developing and emerging countries. what should be the proportion in your view and how realistic is the expectation that we can move to that in this session? >> i don't know what is the right proportion. but, i'm sure we can move in this direction in the coming days. what i mean is that you have different ways to define the right proportion. we have a formula as you know which is rather opaque and difficult to understand. it happened after long, long hours of negotiation in past, even before i arrived in the

institution and afterwards to enhance, refine this formula. and then, everybody says, yes, the formula doesn't really reflect what we want. so, we had to add things to the formula, and so the formula has been topped with different kinds of instruments to take into account many considerations. why all this? because it is difficult to know what is the right proportion. it is easy to say what should be the weight of countries in the global economy. oh, fine. what is the weight of countries? is it measured at market prices? ppp? already big differences. then is it only the weight? the quota also reflects the access of countries to fund resources. that is why the formula includes things like the variability of the countries, the more variable the country, the more need though access the fund resources, the bigger the quota. so, finally, the quotas don't reflect only the weight of an economy, but many other factors.

so that is why it is difficult. and that is what my answer is. i don't know exactly how big it should be. following our formula and our calculation, we can have a very significant shift, and i believe that what has been asked by the leaders in pittsburgh and confirmed by the imfc here, one year ago, can be done, namely a shift from at least 5 percent from advanced economies to the dynamic emerging economies, and i believe this is possible. so, some may say it is too much because we are paying for this. some others may say it is too little because we are receiving it. fine. i think if we achieve this move of five plus, it will be very good, and i do believe it is possible in the time ahead, which has been proposed, which is, namely, before january

2011.>> i want to ask, recently there is more capital inflow going into emerging markets, and i want to know in your sight how the emerging markets can cope with this trend and how different economies can strengthen financial supervision in this regard? >> it is one of the very interesting and important features of the last month, even more than that. and, i understand that many economies contemplating huge capital inflows have to take action to avoid those capital inflows to create bubbles and problems in their own economy. so, what can be done? you have action at the individual level and you have action at the global level. at the global level, the immediate answer is to let the currency appreciate. then, of course there are limits to what you can do in this direction. and, some countries don't want to see their currency appreciate

too fast. nevertheless, the right answer in the medium term is that capital flows are a good thing. capital flows are helping the global economy to develop. and so, there is no reason to avoid too much capital flows, but by the fact that the prices adjust, and the right price is the currency rate. one of the big lessons of what has been learned during the last 20 years is that the currency rate is nothing else than the price of an asset. the price has to change when demand is changing. of course, in the short term, we may not be able to have a revaluation of a currency enough to mitigate the effect of the capital flow. then you have prudential action that can be taken. also, you can accumulate reserves, with consequences of the sterilization and the monetary policy. and at the end, as we say for months now, we can understand that some element of capital controls can be put in place. of course, this is temporary, because there is no way to avoid long-term flows to change

with capital controls. but if it may help to avoid disruptive volatility, then there is no reason not to use it. so, at the end we are back to the question of rebalancing. why are these huge capital flows, because you have high rate of return in some parts of the world, you have high growth, and you have low rate of return -- well, link with growth is a bit too simple, but it is one explanation. so, the only way to face the problem in the medium term is that the rebalancing in growth will take place. and then we come to the collective answer to your question, which is that even if i don't believe that we have exactly in mind the answer to the question on a kind of plaza agreement, what we are doing with the g-20 framework, which is trying in the g-20 to have everybody agreeing on a policy which is consistent, and because it is consistent

provides more growth at the global level than without this policy, is something which looks like this kind of agreement, not only on currency, but on all elements of the policy.>> the positive aspect of the framework is that it involves both advanced and the largest emerging economies, not just as in the plaza, just a limited number of advanced economies, and it creates a process of collaboration for developing consistent policies, not a one- off meeting with announced one- off goals. this is a much more hopeful approach than we saw before.>> yesterday ms. brooks at the

press conference suggested that it would be a good idea for brazil to reduce its government spending, reducing interest rates, reducing theoretically the inflow of capital country to the country. if the brazilian authorities decided to ignore this advice, what would be the consequences? >> could you repeat the last part? >> her suggestion was that brazil should reduce its government spending, therefore reducing, let's say, the pressures to attract currencies to brazil. my question is, if the brazilian authorities just ignore this kind of advice, what would be the consequences? >> i'm going to guess, if you will -- i wasn't there. i doubt if it was exactly to reduce spending, but it would, i think the overall issue she

was referring to was fiscal adjustment and control of the growth rate of spending, reduce the growth rate of spending, not actually cut, not suggesting cutbacks. so clearly, the brazilian economy is performing very well in a favorable economic environment for them, with favorable movements in terms of trade, favorable view of international investors toward the brazilian economy, strong capital inflows, this is a moment for improving the medium-term fiscal balance in brazil, instituting structural reforms in the brazilian economy that will improve its efficiency and take advantage of the very favorable, long-term prospects for brazil that have been created, among other things, by recent discoveries and the prospect of large-scale energy resources. this is a very favorable moment

for the brazilian economy and the new brazilian authorities to take advantage for establishing the basis for a sustained, strong growth. it seems to me that the direction is so clearly in the advantage of brazil and brazilian citizens, that this is what they will expect and i suspect that is what the authorities will look for.>> i would like to pose to you a very hot question in terms of our greek economy. the european commission is going to revise the sovereign

deficit about greek economy. do you think that greece has to take further austerity measures in order to accomplish the terms of the agreement with the imf and the european union? >> it is very unfortunate that the figures are going to be revised, because, of course, it was better to have the correct information earlier. but, as i already had occasion to mention, i think the greek government has implemented a plan that were defined with the european union and themselves in a very, very bold way. what they're doing goes exactly in the right way. on many topics they're over performing. still a lot do, of course. today, i wouldn't advise anything different to the greek government. we need to know how big the revision is.

what is the revision on 2009? what is the carry-over of this revision in 2010? is it big, is it not big? maybe not that big. may change very little, or not, we'll see. it is only at this moment that we will be able to see if it has a big influence or not on the plan designed. but today greece is clearly on track, and i think that is the most important thing that has to be underlined. >> two questions, please, on emerging markets. first, if we are to have a concerted and orderly appreciation of emerging market currencies, how is that to be measured to ensure each country moves fairly? does it require some new kind of global currency unit? secondly, on the issue of the managing directorship of the fund, whether it should be a

european, is that something that will be an integral part of the imf governance reforms? do you expect to see any early progress on this issue? >> i don't understand exactly what you mean by early progress. this is news that you give me that i'm expecting to leave this week. so, i think that is one important part of the governance reform, and i think it has been accepted. the idea has been accepted, the so-called agreement between the u.s. and europe for the leadership of the two sister institutions has to disappear. i think that on that principle, everybody agrees. the question is how will it be implemented. that is another point. you know, finally, i don't know if it is such a good idea, because when i see that the main discussion today takes place between the united states

and emerging countries, i see that a third party may be useful to be more neutral in the middle. but, that is just a personal thought. now, on your first question, let me see if i understood well, which is how do we measure the fact. it is very difficult, you know, that we got, we have a different kind of analysis and a model which is published, and everybody knows how we made our own calculation to try to see if the currency is overvalued or undervalued, but it is just fair to say that it is very pragmatic and you have no way to really measure. it's not a question like temperature or length, or weight. the overvaluation or under valuation of a currency, which is something which has a large range of variability, and what is important is to see if really we see a currency going far from its long-term equilibrium, which has to do with the fundamentals of the economy, or not.

and, for some currencies we do see this. tto say if the undervaluation is 28 percent or 22.5, it is a bit ridiculous. >> there is an impression that the only people that have emerged from this financial crisis in a strong situation are the bankers themselves and the banks, it's an impression on main street and high street, something across the world, that profits have gone up, bonuses have returned, that they're up to their old rapacious ways again. i am just wondering whether you felt it was time really for dramatic action to make sure that supervision is put in place? and secondly, that a tax on financial transactions to slow down the pace at which this rapacious way is returned, is in order? >> on the first point, i already said a few words about

that. yes, we believe that it is not the right way to go back to business as usual, and there is a risk of going back to business as usual, despite the efforts which have been made to enhance, adapt regulation. regulation is fine, capital requirements are fine. all this is good. but, it is far from being all what has to be done. you were mentioning supervision. absolutely right that we need huge enhancements in the global supervision, and the risk of having a system which are developed in different parts of the world and not totally consistent is an important risk because of this kind of hole and loopholes in system, are the seeds for the next crisis. we are advocating, we are working on this, as members of the fsb, but of course it is the job of the fsb to go further. we are advocating that we need absolutely to work more on supervision. i would say exactly the same thing on crisis resolution,

also some progress has been made, that the esf in the european union is a step forward in terms of crisis resolution, but still a lot has to be done. and, let's be frank. if in two years or in five years, or in ten years from now, we have another financial crisis, which certainly will be different from the previous one, but we won't be able to say that we fix all the problems that we have analyzed and determined in the previous crisis. still a lot has to be done, and i urge all the countries in the relevant institutions to work on this, and to make progress. that is a very old question. we have been asked by the g-20 in pittsburgh to work on this. and, we have produced a report which has been praised, i think, by everybody, not meaning that everybody wants to

implement what we say, but everybody is saying that the report was well done. what does the report say? that for many reasons it could be a good idea to have some taxation on the financial sector. not in place of regulation. it has to go along with regulation and supervision, by adding a complement. for two reasons. one, being able to provide resources, could be to a fund, could be whatever it is, which would help in the event of another crisis, because, not sure that the different parliaments will agree again to provide billions of dollars, euro whatever to help the financial sector in the next crisis, if needed, for the reasons you say, because the taxpayers are seeing the banking sector going back to business as usual, and i'm not sure at all, really, if it is an understatement that they will be likely to consent to big efforts in this direction.

so we need something, because the financial sector in case of a crisis will need to be fixed, so we need a fund likely to be used for this, as a kind of insurance. we thought about that. second, a tax can be a way, along with regulation and all that stuff, to curb the behavior, the risk-taking behavior, and good reason to try to curb this behavior, because at the end of the day there is no reason why risks can be taken by a small group of people when it is beneficial, it would be for them; when it is a problem, it would be for everybody. but, that is why we propose two taxes to answer these two questions. in our analysis we see the financial transactions tax as not being the best tool to do that, because transaction is a bad proxy for speculation that you want to address.

so, this whole idea of the financial transactions tax has a bit lost its steam with the financial innovation in the world we are in today. yes, we believe a tax on the financial sector is useful. we propose addressing two different problems. but, no, we don't believe the ftt is the best way to do it.>> let me repeat the question i made to you last year in istanbul, if i can. why argentina still doesn't accept to make the article iv despite it is a member of the g-20 and a member of the imf board?

and despite istanbul; and more importantly, if the staff or the board are thinking of any kind of punishment or sanction if this situation continues without any change in the status quo? >> you asked the question last year. what did we answer last year? [laughter] >> you answered last year that would be the last time that i will have the chance to ask you this. [laughter] >> good point. very good point. so, to follow what i say, i won't answer. i will ask john to answer. >> let's think of this in formal terms. membership in the imf carries obligations under the articles of agreement, one is consultation. this is an undertaking that is

an obligation to members, not to fund staff, not to fund management. so, this is an issue that will have to be addressed by the membership. i am sure that we are all hopeful that argentina will once again take its place among countries, i think the rest of the membership that have normalized relations and regular consultations with the fund, we're very hopeful we're moving in that direction. of course, as a member of the g-20, argentina also has accepted, implicitly, the obligations. i don't know if obligation is the right legal word. but, the membership of the g-20 have undertaken to undergo fsaps, financial sector assessment programs, every five years.

we're hopeful that this will move forward in a positive way. but, again, let me emphasize this is issue for the membership. >> thank you very much. we've been here for quite awhile. there were many questions. there will be other press briefings and press events. there will be another press briefing from the managing director and mr. lipsky with the chairman of the imfc on saturday after the imfc meeting. tomorrow, there will be the annual meetings plenary, which will be open, and various panel discussions, and so on. thank you. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> c-span coverage of campaign 2010 continues tonight with more debates. live at 8 eastern, ohio governor ted strickland faces john caszek in toledo. live coverage continues a 9:00 with the nevada governors' debate. later, the georgia governor's debate from atlanta. then, president obama campaign today with maryland governor martin o'malley. you can see that tonight here on c-span. >> to more on "washington journal," bob woodward stops by to discuss behind-the-scenes obama white house negotiation on the bourse in iraq and afghanistan. it is the subject of his latest book. join the discussion on "washington journal," friday at 8:30 a.m. eastern here on c-

span. now, more from the imf meetings happening here in washington d.c. this week. the world bank president spoke for about 25 minutes. >> good morning, ladies and gentlemen. welcome, and thank you for joining us this morning for this news conference with the world bank president. he will begin with some opening remarks and then will be glad to take your questions. >> they do very much. i'd like to welcome all of you to this opening press conference for our annual meetings. we have reorganized these meetings so they will be shorter and more businesslike. the official part will now only be about 2.5 hours long, compared to a previous day and a half, something that dominique and i talked about we first came to the bank and the fund. i hope this will be of greater focus for our governors.

these meetings are important opportunities for me but also for the bank's staff to be able to listen and to learn about priorities of our 187 member countries. i suspect we will be focusing on several areas where we have had discussions assessing the crisis two years on, how the world bank board responded, what more developing countries need, including -- we will try to do some anticipation of future challenges and opportunities. as far as the crisis is concerned, the world economy is recovering. that is the good news. but it is recovering at to slow a pace to bring down unemployment significantly in a number of developing countries. whenever you have high unemployment, you have risk of other tensions. we see this now and debates on currencies. developed countries are using be easing monetary policies. some developing countries are

tightening in response to grow. some surplus countries are intervening to lower currency values to boost exports. all this is causing international tensions. in an increasingly interconnected world, we need not to just be conscious of negative effects that policies can have on others, but we need to act accordingly. today we face currency tensions. tensions can lead to trouble if not properly managed. the recent crisis is still affecting jobs and livelihoods across the world. if ever there were time we should not turn our backs on international cooperation, it is now. we should also recognize that today's low interest rates cannot last forever. at some point, interest rates will rise, so policymakers and markets will need to be ready for what could happen next. today's prices on bond markets will inevitably come down with consequent effect on portfolios

and savings. today's market volatility and risk should not distract us from the fundamentals. that is what we try to focus on at the bank. we need attention to balance sustainable, inclusive growth. some economies have high savings and export-led growth while others are fueling their consumption with debt. the world economy will need structural changes to become more balanced and sustainable, and the focus on conditions to fuel private-sector led growth. one particular bright spot has been the growth in developing countries. they are growing at a faster pace than developed countries. developed -- developing countries are expected to account for about one-half of global growth several years ahead. it is a very different world from the one even 10 years ago. their growth provides an important source of demand for exports even begin in developed countries. some developing countries are

facing headwinds while many have regained access to the capital market. bank lending remains weak. in net terms, new loans last repayments, bank lending is likely to be negative for this year as a whole. that will be harder and smaller countries, poorer countries that don't have is that access to security markets, or smaller companies. also for many developing countries, the food crisis of 2008 has never fully gone away. recent price rises and strife in africa are a serious cause for concern. the rising wheat prices over the last few months is affecting the price of other staples due to the increased demand for substitutes. we are very pleased that the world bank has been able to provide $140 million in finance for the developing world since the middle of 2008. since the middle of 2008, when

the global crisis to a cold. we know we need to do more. in new york last month, leaders affirm their commitment to meet by 2015. are funds for that 79 poorest countries is a key fund for this. over the last seniors we estimate it has saved 30 million lives. with the robust replenishment, we could immunize 200 million more children, extend health services to over 30 million people, get access to improve water sources to 80 million more people, helped build a 80,000 kilometers of roads and train and recruit over 2 million teachers. we will not be discussing significant commitment numbers at this meeting, but we will be asking donors to step up in support by the end of the year. it means more voice for developing countries.

we have been able to boost the developing company representation to more than 47% at the ibrd. on november 1 we will add our third chair for sub-saharan africa. i believe you can get to equitable voting over time. our staff reflects the changing role. for the first time in our history, all are managing directors and leaders from developing -- our leaders from developing countries. it also means changing how we research economics at the bank. we certainly recognize that we don't have all the answers and we have to revisit old assumptions and open our doors to new ideas. we are very excited about moving to a new model for development research. one that gives people outside the bank the tools to do their own research and come up with their own conclusions. it can draw on the experience and knowledge of people in developing countries, those that are closest to the problem of

poverty. this week, the bank has doubled the number of indicators is releasing to the public and providing them free of charge. we are complementing the data by sharing software applications that let other scrunch their own numbers and to double check hours. today we are launching an app for development challenge to encourage others to provide new solutions to help us reach our goals. we are also launching a two-day global open forum which will be alive internet discussion on key development issues of the day. we are trying to throw open the doors to hell we do business, and we hope others will follow suit. in a networked development architecture, this will be held need to work. we have a busy few days ahead of us and are looking forward to working with our 187 member countries. i will be pleased to try to answer your questions. >> let's start in the front row here.

>> you had some very strong words on the currency issue. i would imagine a lot of the country's you are concerned about are effectively victims of the drive-by shooting. i was wondering if you could indicate how bad the impact is likely to be on developing countries, the lowest income countries. if you could be specific about what you would like to come out of this meeting, at do you plan to oversee coordinated management of currencies? >> it really started with the breakdown of the fixed rate exchange system in the early 1970's. a lot of these issues are not new. i was at the u.s. treasury at the time of the accord, so this was an issue of volatility in disputes in the 1980's. i think what has changed are two

things. first, we have more and different players, particularly some of the emerging market players. second, we are in the midst of a very severe economic downturn. at ads to tensions. my suggestion would be first, one needs to manage the tensions. if one lets this light into conflict, or forms of protectionism, then we run the risk of repeating mistakes of the 1930's. second, in general, surplus countries should try to resist intervention to boost exports. third, i think we need to recognize that it's hard to come up with the new system to manage some of these problems at a time of tension. we also need to recognize, and i have seen this over 30 years, when the tensions reseda, then so does the interest.

this will be a question for the , because they have different perspectives and opinions on this. maybe they should urge some combination of the imf, the world bank and others to help with this process, to look at some of the options for dealing with these issues that arise. this is something that keynes talked about at the creation of the imf. there is some loose language for the imf to deal with this, but it has never fully taken hold. all the billick, it will have to be the countries that decide this, -- ultimately it will have to be the countries that decide this. over time, maybe there is a need to look at some of those issues again. the fourth, and perhaps the most important issue, from my perspective, is that one should not divert from the fundamental

issues of growth and some of the structural issues that allow us to rebuild a healthy world economy. for example, i have emphasized in the case of china, while i believe the currency should appreciate, that is not a silver bullet. this will have to go to some of the issues of switching the savings consumption balance. we have talked with the chinese about some ways of doing that. they have expressed interest in doing that and building it into the next five-year plan. the u.s. has the reverse situation. has relatively lower savings and higher consumption. these will be issues the u.s. will need to deal with in terms of spending and budget issues. all these tensions add to risk for the private sector. over a year ago when i talked about getting out of this crisis, i mentioned the handoff from the public to the private sector. it is very important that the

policies continue to create an environment for private sector leg growth. >> i know you just came back from china. do you have some specific ideas how china and other emerging markets can contribute to the development nowadays? you mentioned china is a stabilizing force in the global recovery. do you still think so? >> as for the first question, part of the focus since i came to the bank is recognizing that we are beyond an era of north- south knowledge transfer but we are in a world of self-south transfer and potentially south- north.

many developing countries are concerned about budgeting issues. i saw a news report of a u.s. commission looking at infrastructure, and it was all of government financing. with the full range of developing countries, it is often a mixture of private and public financing. there are ideas that can come from all sides. >> clearly china suggest that there are lessons people can try to draw. china has always been correct in assuming that these often -- there is not a direct transfer. years ago what they said was what we should learn was not the specifics, but questioning the method and try to find one's own way, drawing from others. one of the things that i did on this most recent trip was actually go to one of the

provinces where i think there could be additional support in the rural finance system. it relates to the structural question, the nature of chinese development has tended to focus on some of the big enterprises. i think there could be more in the rural and small to medium enterprise side. in general, i will say that i find in our discussions with chinese officials, whether provincial leaders or in beijing, there is a real interest in this exchange in dialogue. fact, there is this topic of how to make the rebalancing work effectively, whether better social services so people don't need the high savings rate, whether it is the industrial structure. equally important are topics such as how to avoid the so- called middle income track, when you get to $6,000 a year. this is the subject in china. how to have innovation in an

open fashion, not one that closes off others. this is what the bank is about, and when i was in china, we had an african delegation there. there are also thinks it can learn from others. this is the type of environment we are trying to create. i think the chinese growth has been very important in this recovery and i think it had a very strong and effective stimulus program. i think this rebalancing issue we are talking about is one that is going to be in china's interest to address as well as others. >> thank you very much. >> there could be an easier time to be battling for replenishment.

the world is trying to cut spending in have austerity programs. what sort of message are you sending to some of the more reluctant parts of the system? >> we will have a meeting of the deputies right after this annual meeting and we will get a better sense. i would send the following message. one, all you have to do is what fruit each room in our building any concede the focus on the results -- oh you have to do is walk through. second, as we discussed here, part of the nature of the new world economy is the help for developing countries that comes back and helps developed countries. they are healthy and growing,

this also will be a source of demand for the developed world. third, recognizing that this was going to be a tougher period, i started to work with some of my colleagues to come up with innovative ideas to generate additional internal funds. we have been talking bit some countries on the border of moving out, whether they would be willing to hearten the term so we could get money back. we talked with past are ours a about whether they would be willing to prepare earlier to get money back. we are adding donors, and some of them being former ita recipients. that was something we link to our share increase. this depends on the overall target, but i think we have a reasonable shot of having about 75% of the added resources from some of these new tools. to drive that far, we do need

the donor countries to continue to try to make good contributions. we want to try to work with them to make the case. i am pleased with the case of the uk that even though there is an environment of cutting the budget, they will try to defend development systems. >> thank you very much. >> you said that perhaps some sort of combination of the imf and the wto might get involved, and he made reference to keynes. i think his suggestion it had something to do with penalties, terrace for countries that were out of whack. can you explain what you were thinking of? >> i don't have a specific

proposal, by any means. what i was reflecting on, in part with the added discussion, is my experience in dealing with this in the 1980's, realizing you now have a wider set of countries, and if you believe in multilateralism, there is a role for institutions to play an intermediary part with the key countries. we cannot ignore the fact that countries are the ones that make the decisions here. the traditional problems in this field, at the time of keynes or when i dealt with these issues in the 1980's, is that the burden is all on the deficit country, not on the surplus country. the language in the imf is much weaker, but there is a reference to this. my point was not to try to have a specific solution. it is a recognition that given

the tensions in has created, i first priority is to manage the tensions and get on to the fundamentals of growth. given the way the international system works, maybe there could be some thinking about having the institutions look at these and a slightly less tense context and try to come up with some issues that would benefit different countries. you have some developing countries with a looser monetary policy. some of this for the developing countries has meant that their currency appreciates. that puts them under stress versus others. this is not a developing developmental issue. there should be a common interest in trying to figure out how to manage this. so naive to believe

there is a -- it is important to try to steer it in a constructive direction. >> let's take a final question. >> in your opening remarks, you referred to the 1930's and protectionism in relation to currencies. and is wondered how fearful you were that these tensions could go wrong. is the mosthink it likely course by any means. while i know the nature of the business is to try to find aspects, tried to emphasize the tensions, my own sense is that there has been -- we have managed a lot of these great protectionism issues relatively

well. as the head of a multilateral institution, i see part of my function as trying to anticipate and trying to see potential risks and speak out on them before they occur, which is some of what we have talked about today. hopefully we can try to avoid it. i have avoided some of the rhetoric that some people use that as a little bit more inflammatory on these topics. i have seen this in different contexts for some 30 years. i don't think someone should take this for granted. we are still in a fragile recovery and people have to be careful about some of the downside risks. you can see this across developed countries, with slow growth -- by the way i don't expect it will have a double dip, but would slow growth, you are going to have an woman stay relatively high. it is important that we try to

create an environment where they work to resolve those differences in a copper to fashion as opposed to ones that exacerbate tension. my last point goes to the point i have emphasized. from the start, i thought there was some important government interventions, but for an effective recover, you need to get the private sector investment and consumption back to a more normal pattern. people see that the corporate sector is in pretty good shape in the u.s. the more recreate and internment of risk and uncertainty and fear, that will make it less likely people would invest. >> thank you so much for joining us. we will make his remarks available on our website and also in the press room, so thanks again. thanks again.