Monday 15 August 2011

Mr. Zoellick's Bad Memory

Creditors have better memories than debtors.
Attributed to Benjamin Franklin

I don't mean to be disrespectful to Mr. Franklin, but I know of at least one case where a master creditor, a top world banker, has shown what looks like a remarkably faulty memory.
Robert Zoellick.[1]
Compare this statement by Robert Zoellick (former US Deputy Secretary of State and current president of the World Bank) on last Monday 15-08-2011 edition of the ABC's 7:30 Report:

Leigh Sales (interviewer): "Is this sort of economic volatility and the serious structural reforms that are required going to lead to a period of political instability in Europe?"
Robert Zoellick: "Well, you know, it's certainly not good for governments, but you can also see sometimes governments that make tough decisions, sometimes that's rewarded by the voters. (…) I think the British Government to its compliment sort of set a long-term strategy, and as you can see, it actually has helped it in bond markets and it's helped it with its ratings, but then it has to have the fortitude to maintain it."
LS: "Well there were some people last week arguing that it was the austerity measures in the UK that contributed to those riots that we saw and that it's to do with the tensions between the haves and the have-nots. How did you read that?"
RZ: "Well it's so striking to me because I work with developing countries and I see really poor people. And, to me, the idea that poverty leads people to riot is an insult to hundreds of millions of poor people that I work with around the world, who frankly want an opportunity, want to have an education, want to have a chance to climb up the ladder. So, I don't believe that was the fundamental cause. There's obviously other serious things going wrong with that segment of society." (Emphasis added).
And this BBC note ("World Bank warns of social unrest", 24-05-2009):

"Robert Zoellick has warned of the destabilising effects of unemployment.
"The head of the World Bank has warned that the global economic crisis could lead to serious social upheaval.
" 'If we do not take measures, there is a risk of a serious human and social crisis with very serious political implications,' Robert Zoellick said.
"He pointed to Eastern Europe, which faces the 'tricky situation' of fast-shrinking economies and protests.
"Mr Zoellick suggested governments should start preparing for high levels of unemployment."
" 'In my opinion, in this context, nobody really knows what is going to happen and the best one can do is be ready for any eventuality,' Mr Zoellick said in an interview with Spain's El País newspaper."
(Emphasis added).

Either Mr. Zoellick, who is in Australia among the 40 US delegates for the 19th Australian American Leadership Dialogue ("The most significant exercise in private diplomacy ever undertaken in Australia", as stated in its website) completely forgot the El País interview (original available here, in Spanish), or has dramatically changed his mind since then.

Which is quite puzzling, considering not only the high levels reached by general unemployment in the UK, but the fact that unemployment among the young has increased since 2009, when Mr. Zoellick seemed to have considered it a potential cause of social upheaval, as evidenced by the April 2009 London protests to the G-20 meeting (see here).
Source: UK Office for National Statistics.

It makes me wonder if the other experts, mentioned here, who also warned about the possibility of social upheaval have either forgotten their warnings, or changed their minds.

Photo Credit:
[1] Robert Zoellick: Wikipedia

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