Transcript

Transcript of a Press Conference by Dominique Strauss-Kahn, Managing Director-designate of the International Monetary Fund, with Masood Ahmed, Director, External Relations Department, and Saleh Nsouli, Director, IMF Office in Europe

October 3, 2007

[Transcript in English. Includes Translations from French and Spanish.]

MR. NSOULI: Mr. Strauss-Kahn, ladies and gentlemen, good morning. As Director of the IMF European Office, it is my pleasure to welcome you to the first press conference with Mr. Dominique Strauss-Kahn since our Executive Board appointed him last Friday—by consensus—as the institution's Managing Director, after a competitive and open process. There is no need for me to introduce Mr. Strauss-Kahn to you. I would just like to note that during his campaign, he traveled more than 60,000 miles around the world to meet with and listen to the leaders of the IMF's main member countries. As far as I am aware, he is the only candidate in the history of the International Monetary Fund to have done so before being selected. I am very pleased to welcome him to the IMF European Office upon his return to Paris, and I would like to congratulate him warmly on his successful appointment. We also have the pleasure of having with us Mr. Masood Ahmed, Director of the IMF External Relations Department, who has come from Washington to take part in this press conference. I will now give him the floor to say a few words and to introduce Mr. Strauss-Kahn. Mr. Strauss-Kahn, welcome. And now, Mr. Masood Ahmed.

MR.AHMED: Thank you, Saleh, and thank you all for coming. If you will permit me, I will say a few words in English. I'd like to welcome you all on behalf of the IMF to this press conference with Dominique Strauss-Kahn who was selected on Friday as the next Managing Director and Chairman of the Executive Board of the International Monetary Fund. The Executive Directors of the IMF made the selection by consensus after a process that was open and competitive. Mr. Strauss-Kahn has been nominated for a period of five years, beginning on November 1, 2007. I'd like to add that we in the IMF, that is to say the Executive Board, the Management of the IMF and the staff of the IMF, are all delighted with this nomination and we look forward to working with Mr. Strauss-Kahn upon his arrival in Washington and in the interim to ensure a smooth transition. With that, let me turn over to Mr. Strauss-Kahn who is going to make an introductory statement and will then take questions.

MR. STRAUSS-KAHN: Ladies and gentlemen, I will speak first in English since it is the official language of the IMF. Then I will answer your questions in the language in which they are asked, in French when they are asked in French. So, ladies and gentlemen, I'm very pleased to have this opportunity to speak with you after having been appointed to this new position. I'm deeply honored that the Executive Board has chosen me as the next Managing Director and I will take this opportunity to salute the other candidate, Mr. Tosovsky. It's for me a great privilege to join the Fund, which is a very fine institution. I said when I was heard by the Board that the institution is priceless. And really, I believe it. I believe it because in globalization, we don't need less multilateralism. We need more multilateralism. We don't need less IMF. We need more IMF. The condition? The condition is that the Fund has to be both relevant and legitimate. Relevance means that the Fund has to adapt. To adapt to globalization, to adapt to a new kind of financial crisis as we may experience this time starting in the United States with the debate on the subprime mortgage. But other kinds of crisis may happen, and the Fund which has been established 60 years ago, with the idea that the main problem to solve was the question of exchange rates, has now to face a much larger scope of problems. That's relevance—adapt to the problems of today. The question is also a question of legitimacy. The question of legitimacy is to adapt to a new balance of power in the world. Obviously since World War II, new emerging countries have taken a bigger place in the world economy. I'm talking about Brazil, India, China, South Africa, Mexico, and others. They must have more voice and more representation in the IMF. If not, the legitimacy of the Fund itself will be attacked and, at the end of the day, the very existence of the Fund will be at stake. A lot has already been done. I'm not saying that nothing has been done. Not at all. I want to pay tribute to Rodrigo de Rato and a lot of things he already launched. But a lot is still going on and a lot has to be done in the coming years. I don't know if it is Mr. Ahmed or Mr. Nsouli who just reminded you I was just finishing a trip of about 60,000 miles around the world. I don't know if I'm the first one doing so. But what I learned during this trip is the kind of contradictory analysis by most of the finance ministers, or heads of state, or heads of government, in the world. It's true for Lula. It's true for Michele Bachelet. It's true for the Chinese Prime Minister or for the Indian Prime Minister. It's true for Mr. Mbeki. It's true for all of them. They all say: on the one hand, what the Fund did in the last 10 years didn't leave us a very large set of good memories. It's true for the Asian crisis after 1998 in Asia. It's true also in Latin America. But on the other hand, they expect a lot of what the IMF can do. They all say: we need this kind of multilateral institution. So they're both on the critic side and on the hope side. And what we have to do now—the staff, the management, and the Board—is to try to shift everybody from the critic side to the hope side. That's why I think the Fund is at a kind of turning point. I defined myself as the candidate for reform. Now I'm the designated Managing Director for reform and what I want to do after November 1, is to really be the Managing Director for reform. So in this press conference, if you agree, I would like to answer your questions on this point. Maybe you can refrain from asking questions on other points. However, I will refrain from answering such questions. Now the floor is open. Please...

QUESTION: You have already mentioned the reforms that you would like to carry out. I would like to know if you could give us a few details, in particular, details on the timetable for such reforms. How will you proceed?

MR. STRAUSS-KAHN: The reforms to be undertaken—I have only sketched them out. I have not described them in detail for a simple reason: I do not intend to define them in detail by myself. A few moments ago, I said that this was a joint task for the staff, the Executive Board, and the Management of the Fund. Thus, whether referring to the main issue—i.e., the adaptation, not of the Fund's purposes, which have no reason to change, but of the Fund's policies to today's world—or whether referring to the most topical problems, since they are the ones that the media is talking about—for example, the issue of quotas, which comes up regularly—on all of these issues, I would like to reformulate solutions based on what has been done. As I said a moment ago, and I repeat it, much has already been done. I would like to reformulate solutions to this issue in consultation with the staff and the Board. So I will say no more at this time, as Rodrigo de Rato is still in negotiations, for example, on the issue of quotas, and we must all remain hopeful that he will be able to move the talks forward between now and the Annual Meetings in late October. As a matter of fact, I would say that if he were able to bring about a resolution of the quota issue, I would more likely be pleased than complain. So I wish him all the best, even if the task is obviously difficult. So, it is too soon at this point to give details on these priorities. We can outline them, however, and I have outlined them in a few words: the issue is to reformulate the policies of the Fund. Remember, the purposes of the Fund are set forth in its Articles of Agreement. It might be a good idea to refresh our memories on them, because we do not always keep them in mind. Article I of the Articles of Agreement states that the Fund's purpose is to promote growth and the highest levels of employment, to develop trade, and—in order to do this—to ensure financial stability. And it is with these purposes in mind that I wish to work; this gives me an opportunity to acknowledge one of my predecessors, Michel Camdessus, who was one of the very great Managing Directors of the Fund, and who always walked around with a copy of the Articles of Agreement in his hand to remind people that the purpose of the Fund was precisely not to shake a big stick at countries experiencing difficulties, but to promote growth and employment. And so, this is what must be the priority: to reformulate the policies of the Fund in order to achieve that objective.

QUESTION: Good morning, Mr. Strauss-Kahn. I apologize for not refraining. You announced that you wish to complete your five-year term. Can you confirm for us here today that you will not be a candidate in the 2012 presidential elections?

MR. STRAUSS-KAHN: See..., you couldn't refrain. But I can. The term proposed to me by the Board was for five years, and I accepted it. I have nothing else to say.

QUESTION: A question in English. You said that the legitimacy of the IMF was in question at the moment, and without a reform, it would not have legitimacy and if it doesn't have that, it should cease to exist. Or at least, they are the words of the Russian Finance Minister in The Financial Times today: if you fail your mission for reform, the IMF will fail as well. Part of that reform is considered giving a voice to the Chinas, the Indias, the Brazils, you've said it yourself. But a lot of people say it's a zero sum game. For India, China, and Brazil to have more power, you must give up some power. Will you propose that Europe give up some power? That's my first question. My second question is slightly a more immediate challenge: are you worried that before you even get your job on the 1^st of November, one of the primary problems facing the IMF and the international financial community will already have occurred: the collapse of the dollar.

MR. STRAUSS-KAHN: First, I would like to welcome the paper of Mr. Kudrin, the Russian Finance Minister, in the FT this morning. What he says is exactly what I said during my campaign. And his [inaudible] is very welcome. Now on your question on the quota: yes, it's a zero sum game. The sum has to add up to 100 percent. Obviously, to give more voice and more representation to some countries—the ones you just quoted and some others eventually—you have to diminish the quotas from others. And we can be more precise. I think nobody has in mind that the US will see its share diminishing. Moreover, most of the formulas which can be used to calculate the share, the correct share of different countries, give an increase for the United States, not a decrease. On the other hand, what I want to do is to increase the share or the quota of emerging countries. Poor countries don't want to disappear in the process and that's absolutely legitimate. So the remaining countries are mostly the European countries, Russia, some others who may appear overestimated. And there's no way to obtain a solution to this problem without having those countries accepting to have a little part—let's say it that way—of their quota transferred to other countries. It will be my task—not my task for myself only—but it will be my task to be able to obtain this. If not, there is no solution to the quota question.

Now your second question: I'm not here to make any kind of comment on the currency market. But maybe I could enlarge a little bit the question. We have experienced this summer a rather difficult crisis starting with the subprime question and the transfer of this question from the housing sector to a larger compartment of the banking system in the world has given some very sad and bad results, namely in the UK for instance, the last of which being the situation of Northern Rock. Nevertheless, I think that the situation is now under control. Obviously, nobody knows what can happen in one week or two weeks from now, so I won't say it's solved. But I think that everything which could be done, namely by the different central banks, has been done. And so, I have not in mind the kind of collapse you were just describing.

QUESTION: You met with Nicolas Sarkozy this morning. Could you give us an idea about the substance of your discussions, and also, coming back to your appointment, what was the role of Nicolas Sarkozy, your former political rival, in your appointment—or rather—election ?

MR. STRAUSS-KAHN: I will begin with the second question. Throughout this process, the Finance Ministry was, as usual, very effective in its support. France's diplomats played their part throughout the process, and President Sarkozy's commitment has been unwavering. And obviously, for a French candidate, to be able to rely on such commitment is no small thing. It will, therefore, come as no surprise that our talk this morning was cordial. We spoke about the world's most pressing economic and financial problems, about possible initiatives of his, and about his recent speech to the United Nations on these matters. We also spoke about some of my own intentions, some of which I have described here—regarding reforms of the Fund and its involvement in the great problems of today. Nothing, you see, that would make headlines...

I thought I was the one giving the floor, but please, go ahead.

QUESTION: Given that perhaps you know Nicolas Sarkozy a little better now, you may understand better that some of your socialist colleagues were willing to work with him in a purely French context.

MR. STRAUSS-KAHN: Must there really be such a significant difference between the questions asked by English-speaking and French-speaking journalists? I have known Nicolas Sarkozy for a long time, so I didn't learn anything new.

QUESTION: One of the issues for the future of the IMF is financing. Could you address in some concrete ways: will you start selling some of the gold reserves, will you move out of Washington, will you cut staff? What will you do to deal with the financing?

MR. STRAUSS-KAHN: The question of income of the Fund is a real question. As you know, until now, even today, the Fund is financed by the spread on his lending activity, and as the lending activity is decreasing, which is a good thing, which means that we don't experience any kind of current account or capital account crisis. But when the lending activity is decreasing, then the income of the Fund is decreasing. So finding a solution to this question, finding a relevant way to have a new income model is a question which has been addressed by the Fund and by Rodrigo de Rato. You probably heard about the so-called Crockett Report written under the direction of Sir Andrew Crockett. And the report proposes several possibilities to find a permanent and steady-state financing system for the Fund, including what you were talking about. On the one hand, the question of gold and, on the other hand, the question of expenses. In my opinion, 95 percent of what is written in the Crockett Report is not a problem for me. I have a slight difference of opinion on one specific point, which is not that big. And as far as I know, having discussed with a lot of finance ministers or central bank governors during my journey, the question of gold is not really an issue. It's possible to do it. But it's not a solution by itself, it's not a solution which is enough. For instance, there is a solution in the way the Fund is getting some revenue from its different assets. But the other way is obviously to limit the growth of expenses. And when I say limit the growth of expenses, it may be to organize a decrease in expenses. It has already been launched by the management today, but it's a question which has to be taken very seriously. And the question of downsizing of the Fund and focusing on the most important question is a question which is really on the table. And there's no reason why this institution would not be as most other institutions, private or public, able to be more efficient, more relevant, and at the same time, less costly [inaudible question being asked from the audience]...the Washington offices? That's a good idea. The question, you know, the question may not be a question of number of people. It may be a question of number of people. It has to be seen in more details. But it may be a question of other kind of expenses. There are a lot of expenses in the budget of the Fund, and the experience I have, for instance in the French Finance Ministry, when you want to decrease expenses, is that you have to take everything into account and not to have a general measure saying ok, everything is going to decrease by 10 percent and that's it. We know it doesn't work. What we have to do is to enlarge precisely owing to the Medium Term Strategy of the Fund what is the crux, the bread and butter of the Fund. What we really have to do, and starting from this point, what kind of expenses can be avoided and that's the way to fulfill a decrease in expenses, which I repeat is absolutely necessary.

QUESTION: Sorry, I'm not an expert on the quota question, but can you please repeat what you said before on the share of the United States? You said the share would rather go up than down? And then I have two further questions, if you'll allow me. I suppose you still define yourself today as a Socialist. So what does this mean for the Fund that, from now on, a Socialist will head the International Monetary Fund?

MR. STRAUSS-KAHN: Nobody agrees today on the right formula to define what should be the quota of the different countries. That's part of the discussion. How can we calculate what should be included in the computation? So there is on the table several formulas, which do not give the same results, of course. But in most of them, when you apply the formula, then the computation gives a bigger result for the United States than the actual share they have today. And the United States already said they don't want to increase and they're ready to go back to the situation they had before the Singapore move. What I wanted to explain is just that nobody can expect that the percentage, let's say 5 percent for instance, we have to win to distribute to other countries can come from the United States. That's the reason why I was thinking that, in this case, the other candidates are the ones I quoted before. Now, what was your second question? [question is repeated.] Nothing. What may mean something for the Fund is that I will be the Managing Director. The fact that I'm a Socialist has nothing to do with that. Maybe some were afraid from this kind of bureaucratic, state-lover socialist that I was supposed to be, and I've read in some comments somewhat very surprising, coming from countries where, 15 years ago, bureaucracy was very well-known. I have read some comments which surprised me at the time. But in fact, I'm here seen as a free-market socialist, so I'm not afraid that the Fund will find it surprising or awkward. At least, the support I received in the Board does not show that the Board members were afraid of that.

QUESTION: What is your take on world economic growth and what do you see as the greatest threat? The slowing of growth, inflation, the behavior of certain central banks?

MR. STRAUSS-KAHN: I'm going to say a few words to you about that, but this press briefing is a press briefing about the new position I will be holding. I don't intend to make this a press briefing about the Fund, which I am not in a position to give today. I am not speaking for Rodrigo de Rato and my personal opinion is of little concern. Therefore, stating my formal position will have to wait until November 1. Nevertheless, I will now answer your question. I believe that the foundations of world growth are currently solid—whether because of accumulated profits that make investment possible, or of structural adjustments made over the past few years. So I think that the shock we continue to experience in the wake of the crisis in the U.S. mortgage market will certainly affect growth, but I do not believe that these effects, insofar as they can be measured today—as I said a while ago, no one knows what might happen in two weeks—will affect it dramatically. So, most probably, the year ahead will be one in which the emerging countries will again drive world growth—which, by the way, is a strong justification for the new importance they should acquire in the decision-making of such varied institutions as the Fund or other multilateral institutions I do not wish to discuss. In these circumstances, I think that by end-2008, the growth rate of the world economy will still be very respectable. But, to be sure, financial flows will have affected growth somewhat. And it is, in fact, the Fund's raison d'être to anticipate such difficulties, find solutions for them, and thereby ensure growth. The great challenge for an institution such as the Fund is that when what it does makes crisis avoidance possible, it has done its job, but then no one realizes it. It's only when a crisis erupts that people say: we need the Fund. The truth is that we need the Fund before that. We need the Fund for surveillance, for advice, and to ensure that growth, as I explained at the outset, is as robust as possible, and that the highest level of employment can be attained. So, you see, this is a little bit like the story of the Chinese doctor whom people think should be paid when his patients are in good health and no longer be paid when his patients are ill. For the Fund, it's somewhat similar. Its patients are doing well, it's not lending much, so its resources are low. This is what has to be changed.

QUESTION: I would like to ask you...In Latin America, there is a great deal of mistrust of the International Monetary Fund...

MR. STRAUSS-KAHN: A great deal of...?

QUESTION: ...Mistrust. I would like to ask what you are going to do to change that situation? And then, my second question concerns the weight of countries such as Mexico or Brazil within the IMF. And I would also like to ask you.... I don't know whether you can answer in Spanish or not.

MR. STRAUSS-KANH: [Speaking in Spanish] Excuse me for not speaking Spanish. But then, those who do not speak French will understand my French better than my Spanish. [Speaking in French] Concerning your first question, to be sure there is a great deal of mistrust in Latin America, and I said earlier that it was not unjustified. On many occasions—and the most recent is undoubtedly the Argentine crisis—the Fund's recommendations were perceived by the people of those countries as being too harsh and as going beyond what was necessary to remedy the situation. And so, throughout Latin America today, I indeed felt the mistrust, the reticence that you mentioned. On the other hand, when I see that all the representatives of Latin America supported me, it is probably because they had hope—and that perhaps is an answer to the gentleman's question a little earlier who wanted to know what a socialist can contribute—probably they hoped that the Fund's policies toward countries such as theirs, and toward Latin America in general, might change. And, indeed, that is my hope as well. The Fund should be there to help people. Sometimes to correct mistakes, but to correct mistakes in order to help people, not to force them to swallow unbearable remedies. The problem of Mexico and Brazil that you mention is the typical case of two large emerging countries whose representation in the Fund needs to be improved. When a small, highly respectable and friendly European country is compared with Brazil, and it is noted that Brazil is less represented than that country, it becomes apparent that the world is out of kilter and needs to be righted. This is also true of the representation of the African countries, which are not in the same situation. They are not emerging economies, but it is inconceivable that a billion men and women should be so poorly represented in the Fund's meetings—and I would say the same thing about the World Bank, even though that is something that does not concern me directly. And so, indeed, the reform of quotas and the legitimacy of the Fund are based in part on this consideration; the quota reform must give more voice to those countries. But we should not stop there. You see, Brazil's quota—since you mention Brazil—is 1.4 percent. Once the reform is implemented, and I hope that it will be implemented as quickly as possible and in the right way, that quota could and should increase. By how much? I don't know. 0.2, 0.3, 0.4 percent perhaps? But even when Brazil reaches 1.6, 1.7, or 1.8 percent, it will not fundamentally change the situation around the table. Thus, the quota reform is necessary, but we must go beyond quota reform in exploring ways to give voice to and listen to countries that today have much greater weight and play a very dynamic role in the world economy. This is why I made a number of proposals. I expect there to be others; mine are not worth more than the proposals that other interested parties may put forward, so that in the decision-making process, account can be taken of the number of countries concerned, or at least the number of Board members concerned, and not just quotas, so that more attention is paid to the voices of countries that currently represent hundreds of millions of men and women who have something to say about their future, something to say about the future of the planet, and who, speaking strictly in terms of financial quotas, are greatly under-represented.

I will get to you next....

QUESTION: I have two questions. One: among the priorities you will have as head of the IMF, what specific place will you give to the development of the African continent? And two: for almost five years, African growth has hovered around 5 percent, but for countries that do not benefit from that growth and do not enjoy such stable growth, it is frequently thought that the IMF's remedies are often worse than the ills they are intended to cure. What will you do to change all that for the better?

MR. STRAUSS-KAHN: First, the good news in what you say is that Africa's growth is currently quite robust. Not as robust as in other parts of the world (I am thinking of China, for example), but stronger than we are experiencing in Europe, for example; and that is a good thing. This growth is very unevenly distributed in Africa, and so there are countries in Africa that are experiencing the difficulties you described. The fact that past IMF policies were sometimes seen as not yielding solutions is worth discussing, and there are very numerous examples in Africa where the IMF's intervention helped rectify the situation and contributed to orderly development. Moreover, while the average growth rate in Africa today is considerably higher than it might have been 10 years ago, there are also reasons for that. But you are quite right to say that policies must be adapted to Africa's situation. And, you see, there is something that has troubled me for a very long time. I said so back in 1998, when I was Minister of Finance in France: it is the approach of insisting on a one-size-fits-all model that institutions such as the Fund (as well as other institutions) try to implement systematically all over the world. That idea, I believe, is wrong, and it is one that the Fund itself has gradually renounced. Policies should be adapted to each situation—to historical, cultural, and demographic situations, and to political practices—all of which are different and make it unrealistic to try to change all countries based on one predefined model. And, clearly, one of the difficulties encountered in Africa—not only in Africa, but obviously in Korea in 1998 as well—springs from one of the shortcomings of multilateral institutions, namely not having been able to take sufficient account of the historical, traditional, and cultural differences of those countries. That is why I said a while ago that the issue of representation is not simply a question of quotas. It is also, for example, a question of representation among the staff of the Fund, for to understand the nature of the history of those countries, it is essential to have Fund staff members who come from those countries. And that means greater diversity among Fund staff and experts. This is also something that I want to work on.

Now, I promised this lady that I would get back to her.

QUESTION: This will be a very short question. You have mentioned China four times just now... we'd like to know your opinion about the Chinese currency, the renminbi—or the yuan as it is called—and Chinese finances in the world economy.

MR. STRAUSS-KAHN: I'd need much more time than I can give you now to describe Chinese finances in full. But your question is [essentially] the question of the valuation of the renminbi, which—as you know—is currently being debated. A number of powers—our American friends in particular—consider that the renminbi is undervalued at present and that it is one of the causes of the trade problems. This is a very good example of debate that is needed on a multilateral level. And I believe that we cannot, we have no interest—we together, the inhabitants of this planet—in letting this debate take place, sometimes acrimoniously, between the world's biggest power, i.e. the United States, on the one hand, and the fastest growing part of the world today, i.e. China, on the other hand. This is typical of the kind of question that needs a multilateral discussion and then multilateral answers on the role of China in world growth, on the effect of its exchange rate in this situation, on what a balanced exchange rate is, not only in the bilateral relationship between the two powers that I've just mentioned, but in a multilateral context. And when I said just now at the beginning that we need more multilateralism, not less, if there is a need for a table around which these different actors can meet and find, in a cooperative way, what best suits collective development, then the Fund will have found a new phase of its vocation.

Ah, you've finally gotten a microphone.

QUESTION: There are going to be two socialist activists heading multilateral organizations: yourself and Mr. Pascal Lamy, who heads the WTO. Does that mean that French socialists have something special to contribute to multilateralism? And if so, what? Second question: many in France have expressed their pride at having you at the head of a multilateral organization such as the IMF—President Sarkozy included. Can you in some way say what your presence at the head of the IMF can bring for the French people?

MR. STRAUSS-KAHN: I am not sure that international institutions hold a particular attraction for men and women of the left. But there is undoubtedly a particular attraction to internationalism: the idea that we need to go beyond national borders and provide answers—and not just to economic and financial problems (it goes far beyond economic and financial problems) —that are not nationalist is deeply rooted in the conscience of the left. But it goes beyond the conscience of the left, and there are many men and women of the right who can think in the same way. And so, do the French have a particular taste for multilateralism? I think so. Our country has always wanted to get away from a unipolar world situation and has always preferred, in one way or another—both on the right and on the left—solutions that are meant to be multipolar. Now, talk of multipolar solutions leads you fairly rapidly to multilateralism. But apart from that, there is a lot of difference between Pascal Lamy and me: he is a long-distance runner, whereas I'm not; I have a bit more hair than he has, for the time being. You see, we are alike in some respects, but not in all.

Right, we'll take perhaps another two or three questions ...

QUESTION: You have answered briefly in English, in French, in which ways will your program as Managing Director of the IMF be able to mark a break with your predecessors? In what way will it result in more social justice for IMF member countries?

MR. STRAUSS-KAHN: `Break' ... what a choice of words! The problem is not to engineer a break. The problem, for my part, is to shift the emphasis, to accentuate the Fund's adaptation to the world as it is today. I've already told you what I think about it from the point of view of financial problems. But your question is more specific. Your question is saying: can we transform—let's be clear—this institution so that it produces not simply growth, development, and balanced public finances, but also social justice. My answer is yes. It's an answer that comes from my life as an activist. It's an answer that comes from my life as an academic. I spent decades explaining to students, teaching students, and claiming in political debates that there was no contradiction between economic growth and social justice. In fact, not only that there was there no contradiction, but that they were a precondition for one another; that economic growth is necessary for there to be social justice, because without growth, there is nothing to distribute. But that social justice was necessary for economic growth because otherwise we were creating tensions and inequalities that were themselves harmful to growth. And so, I am being given an opportunity to leave the confines of lecture halls and television studios and to go and try to put that into practice. My hope, or rather what has given me renewed hope, is that finally I have heard this, in slightly similar terms even if not in exactly the same words, from the majority of the heads of state and government that I met on this tour. And I am not talking about those that I already knew well before, in particular the Europeans or several outside Europe; no one I met was saying anything else or wanted anything else for their own country. So, I think in fact that it is possible to build multilateral institutions, in particular the one that concerns me most especially today, so that the happiness of the people is taken into account in sometimes difficult corrective policies when these are necessary and need to be implemented. Fine, two final questions, Sir ...

QUESTION: From what you are saying, one could get the feeling that you intend to encroach on areas that have traditionally been reserved for other international institutions such as the World Bank or the United Nations Development Programme. Isn't your position on reforms rather far-reaching?

MR. STRAUSS-KAHN: No, not at all. The boundaries between institutions are always difficult. Constantly repeating that "the relationship between the IMF and the World Bank must be improved" has become a sort of mantra. Everyone repeats it all the time. Few have managed to make it happen. Why? Because the twin Bretton Woods institutions work in areas that are, in fact, quite closely related. But they are not exactly the same. The World Bank deals with project financing, with the financing of structural reforms, with the long term—education, health. The Fund deals with macroeconomic balance, fiscal problems, foreign exchange problems, and shorter-term balances. This is not the same function. It might be in the same countries, but it isn't the same function. So I think that although overlaps are inevitable, they can be handled without too much difficulty. There are other institutions, you mentioned the UNDP, which is led by my friend Kemal Derviş, another man of the left whom, by the way, you forgot to mention earlier.... Indeed, and this is quite clear too, the United Nations Development Programme has points where it overlaps with what the World Bank and the Fund too, which is hardly a surprise. When it comes to the WTO, the situation is the same. I quoted Article I of the Fund's Articles of Agreement to you a moment ago, which talks about growth and employment, through the development of trade. So right there, obviously, we're in an area that is quite close to that of the WTO. Clearly, there are interconnections here, but that is a good thing. It is a good thing. I am convinced that the work I will be participating in, and that I may lead with Bob Zoellick at the World Bank and with Kemal Derviş at the UNDP, Pascal Lamy at the WTO, and with others, is work that can be more effective through coordination than when each institution, in one way or another, tries to work at cross-purposes. So there is no desire for hegemony. That would be absurd. That makes no sense. Rather, there is a desire to work much more closely together. One last question...

QUESTION: People have been talking about a reform of the IMF for years. No one has managed to make it happen. Do you think you have the support of major powers like the United States for a reform that goes beyond quota reform? Have you begun to discuss this with the Americans, and with the Brazilians, obviously?

MR. STRAUSS-KAHN: So only two countries matter, America and Brazil? They're the ones...? Once you have discussed things with the Americans and the Brazilians, you've sealed the deal?

QUESTION: Especially the Americans...

MR. STRAUSS-KAHN: Ah, especially the Americans, there's realism resurfacing. Clearly, the Americans hold a very important position within the Fund, and the de facto veto power that they have given the size of their quota means that no substantial reform can be undertaken unless they have been convinced of the need for the reform. But I am certain that the United States is aware today that it is in its best interests to have an International Monetary Fund that works well. An International Monetary Fund that works well is not an IMF that is rejected by billions of people. I spoke about Asia, you are from Brazil. Speaking about Latin America, which was mentioned a moment ago, someone asked a question about the feeling of mistrust that a good part of Latin America—in Brazil and other countries—may have with respect to the Fund. Every person who is responsible, or partly responsible, for what happens on this planet understands that there is a need to integrate all these countries within the multilateral organizations, and that without this integration, there is no solution. The U.S., like everyone else, realizes that, if the International Monetary Fund were to be rejected by a large part of Asia, and by part of Latin America, it would not be able to act. So, the desire to make progress toward multilateralism is, I believe, also present within the U.S. government—and this makes the potential for change credible. This allows me to end with a formula that I have used before and that will serve as a kind of conclusion, since it summarizes what you just mentioned. There is a problem of boundaries, the Fund has a problem of boundaries with other institutions: who does what? We have to be better organized. The Fund has a problem with Latin America which, in a way, has sometimes been very reluctant to continue to work with the Fund. The Fund has a problem with Asia, which has expressed interest in breaking away and in regional organization. I said in July, when I began this campaign in Washington, and I repeat it today, that my first priority is to cross 19^th Street, i.e., to go across the street to where the World Bank is located. My second priority is to cross the equator to go see Latin America. And my third priority is to cross the Pacific to go see the countries of Asia. Once this has been done, we will be able to start working on new ways for the Fund to function. This renewal is consistent with the logic of what has already been done, and I believe we must now step up the pace. I will have the opportunity to revisit all of this with you when I have actually taken office. Until then, thank you for coming.