"I've spent 40 years, now, investing other peoples' money, and In think I know how to do that. That's what I'm interested in and that's what I've been able to do." -- From an interview with Robert S. McNamara.
At the recently completed annual meetings of the World Bank and International Monetary Fund, Amir Jamal, the finance minister of Tanzania and chairman for the sessions -- leveled a bitter blast at both institutions, which he said appear to be "the last bastion of an existing system, unwilling to change, except most grudgingly, slowly and marginally."
But Jamal, like most of his colleagues, had an exception to the sweeping indictment. For Robert S. McNamara, who will retire next year as president of the bank after 13 years at the helm, Jamal had nothing but praise.
Not only did bank lending bulge from $1 billion to $12 billion under McNamara's "sympathetic and enlightened leadership," Jamal said, but there was something more -- "the legacy of lending programs whose quality and character have become increasingly responsive to the fundamental needs of developing societies that he leaves behind him. Above all, Robert McNamara has been a voice of compassion, of conscience and of competence."
There have been few men who have had as much impact on the nation and who have generated as much controversy as Robert Strange McNamara in his 20-year span in Washington, first as secretary of Defense during the Vietnam war, and then as president of the World Bank.
An aggressive business manager who came to the Pentagon via Ford Motor Co., McNamara has a reputation as a cold efficiency expert with a computerlike mind. Some former associates insist that he brooks no criticism, and for years has been surrounded by "yes-men" who will betray their own and the bank's weaknesses once McNamara is gone.
He has equally strong defenders who say that no other man could have had the imagination and drive to turn the bank into the powerful and highly respected AAA-rated institution that it is today.
There is no doubt that McNamara is also a tense and highly emotional man. Addressing the annual meeting for the last time, McNamara choked with emotion as he warned that no matter how much money his bank could lend, there still would be 600 million persons suffering in "absolute poverty" at the end of the century. But he said that the past 13 years, despite the many frustrations, "have been the best years of my life -- I wouldn't trade them for anything." He then turned to a George Bernard Shaw quotation to sum things up: "You see things and say 'Why?' But I dream things that never were, and say, 'Why not?'"
Last week, in a rare interview in his 12th floor World Bank office, sandwiched between bilateral conversations with dozens of finance ministers from all over the world, McNamara said that the gap between rich and poor countries is still there and is likely to grow.
He noted that his interest in the poor had a personal beginning, when he couldn't afford to go to the college of his choice -- Stanford -- and had to scrape together the $52 annual "towel fee" at Berkeley, where he finally did go.
As to the suggestion (sometimes made by his critics) "that I'm interested in this [development work] because of whatever I did or didn't do in Vietnam, [it] is baloney," McNamara said. "I can guarantee you it doesn't have a damn thing to do with it."
His own view of his performance at the bank is that he's shown "you could be a hard-headed investment manager, and at the same time sensitive to basic human welfare. I think the greatest contribution that managers can make to development is to help the developing countries use their resources most effectively.
"That's my job. I'm a professional man. I've spent 40 years, now, investing other people's money, and I think I know how to do that. That's what I'm interested in, and that's what I've been able to do -- reconciling two things that people think are irreconcilable -- hard-headed management going for profit on one hand and advancing human welfare on the other. And I get a real thrill out of it."
McNamara said that his biggest satisfaction as bank president, "in a sense the high point, has been the growing acceptance of the necessity of dealing with the problem of 'absolute poverty.'" He pointed out that 13 years ago neither the term nor the concept was in vogue.
Conversely, McNamara's biggest disappointment is that "my own country" doesn't fully understand that it is in the nation's self-interest to extend a more generous hand to the developing countries.
In his farewell speech to the World Bank-IMF meeting, McNamara pointed an accusing finger at the United States (and Japan) for falling below the average level of concessional aid offered by other industrial nations. "The former secretary of State [Cyrus Vance] called the U.S. performance 'disgraceful' -- and I agree with him," McNamara told the meeting.
The former Ford executive frequently has observed that "man cannot live by GNP alone." Making his own penciled notes as the interview proceeded, McNamara said that his staff tries to discourage him from appealing for U.S. support in terms of belief in God, or in the quality of life. "But I believe one should appeal to it," he said. "It is a very fundamental driving motive, and one should appeal to it. It's there. If we don't, I think our nation will suffer, an I'm sure the world will."
It's a message that McNamara has been trying to get across for many years, and his eloquence is one reason for the genuine affection for him in the Third World. He gets Third World plus-marks, also, for having engineered a gradual shift in the bank's lending operations away from the standard "infrastructure" -- power projects, roads and the like -- toward "basic human needs," focusing instead on the kind of projects that directly help the poor.
And in recent months, as the bank has been more open in its criticism of oil cartel pricing, it has been willing to lend money to tide its clients over balance-of-payments deficits arising out of higher oil prices.
Although McNamara now bluntly blames the Organization of Petroleum Exporting Countries for may of the world's current economic ills -- something he refused to do four or five years ago -- he believes it counterproductive for the bank to place any political pressure on OPEC to reduce prices even though the massive boosts have hurt the Third World more seriously than anyone else.
McNamara contends that the world has to accept a steady, real increase in the price of oil to stimulate both conservation and to make it financially feasible to produce large amounts of alternate kinds of energy. But at the time of the first oil shock in 1973, McNamara and other bank officials were saying precisely the same thing. The bank (and others) made the basic miscalculation then that if oil got as high as $7.50 a barrel, the world would have solved the problem.
McNamara would not discuss such issues during the interview, saying for the record only that he thinks OPEC "itself is moving toward a more gradual, more predictable change in energy prices. And I think that would be very much in the interest of the world."
Everything that McNamara visualizes for the bank in the next decade of course will cost increasing amounts of money in an inflationary world. To his disappointment, McNamara meets resistance in the First World in trying to beef up the capacity of the bank to make loans to the increasingly hardpressed developing countries.
With the sympathetic help of the Carter administration, the bank's capital is in the process of being stretched from $45 billion to $85 billion -- a goal that eluded McNamara during the tight-fisted Gerald Ford administration -- provided a recalcitrant Congress commes up with an increased appropriation next spring.
Nonetheless, McNamara argues that to handle the burden of loans during this decade -- taking into account inflation, energy development and the not inconsiderable needs of its newest large member, the People's Republic of China -- the bank must be expanded again.
High Carter administaration officials -- although ideologically right on McNamara's wave length -- are a bit chagrined that McNamara brought up expansion of the bank before Congress has acted on the capital increase. In particular, they are sensitive to one of the ways McNamara suggests boosting the bank's loan potential. This would be an alteration in the bank's present "gearing ratio," which provides that its total loans must be limited, dollar for dollar, to the total of its subscribed capital and reserves.
A one-to-one ratio is highly conservative -- commercial banks can lend 15 to 20 times their equity. The Brandt Commission, created at McNamara's suggestion, had recommended that the bank increase its loans by lending $2.00 for every $1.00 in the equity base.
McNamara did not endorse a specific new ratio, just the principle of something more flexible. Asked why he didn't wait a bit, McNamara said during the interview that "the time for the expansion of the improved lending program is now." If there is a problem on Capitol Hill, "then I'd simply say, 'Let's sit down and talk to them about it. Let's make clear where the U.S. interest is.' There aren't 5 percent of the people in Congress or 5 percent of the people in this country I can't convince that it's in their interest -- their national interest -- to provide additional support," he said. i
McNamara feels bolstered by the consensus among the rich and poor that was developed at the last meeting of the IMF and World Bank -- a sharp contrast to the highly confrontational North-South fracas at the United Nations special session a few weeks back.
He observed that the finance ministers who are the governors for the IMF and World Bank "know a lot more about the real economic world than do the foreign ministers" who represent their countries at the United Nations.
All of the suggestions put forward at the Washington sessions were mutually helpful -- "a plus-sum game," he said. Thus, the poor countries represented here not only applauded the efforts made by the rich countries to help, but acknowledged that they themselves have to make an "adjustment" -- pull in their belts a bit.
McNamara didn't mention it, but in well publicized remarks at the IMF-World Bank affair, the Indian finance minister welcomed the more liberal lending posture of both institutions, just a few days after the Indian foreign minister was blasting the institutions at the U.N. in New York.
McNamara will not say who would be his first choice to succeed him as the sixth president of the bank. He reportedly favors Federal Reserve Chairman Paul A. Volcker. By announcing his resignation early, McNamara -- committed as he is to a larger role for the bank -- clearly was betting that a successor more likely would come from the Carter administration than from a possible Reagan administration.
And what will McNamara be doing while someone else is running what inevitably has come to be known as McNamara's bank? He syas he wants to stay in Washington, retaining an association with the public sector (international as well as national) while serving on private corporate boards.
"I'm not wealthy," he said with a smile, "but fortunately, I don't have to worry about the compensation. I'll just do what I want to do."