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Farewell Dinner SpeechStanley Fischer
First Deputy Managing Director, International Monetary Fund
August 29, 2001
I am overwhelmed by what the Managing Director, Michel Camdessus, Larry and Jacob have said, and there is no adequate way to reply. All I can say is thank you. To Jacob, Rhoda's and my friend of 32 years, thank you for your friendship and your support, for your boundless energy, and for the skill and the courage you showed in stabilizing the Israeli economy; to Larry, onetime student, onetime colleague, academic superstar, policymaker extraordinary, and friend, thank you—and I mean this—for taking an interest in the IMF and for all—well, most of—your initiatives to reform us; to Michel Camdessus, thank you for our partnership and friendship, and for the unforgettable letter that Jack Boorman just read out; and to Horst Köhler, thank you for the generosity of your words and actions—not least in organizing this lovely gathering—and for the trust that has developed between us and enabled us to work so well together in the recent crises.
I am totally delighted by this event, and I would like to thank all of you for coming. Much as I would like to name each of you, I will be invidious by singling out Risha and Paul Samuelson—my mentor, whom I first met forty years ago, in hard cover, and then in person 35 years ago, and from whom I have learned so much—some of it about economics, and whose conversation and company Rhoda and I cherish whenever we have the opportunity. And the evening is made perfect for Rhoda and me by having our children here: Michael, unfortunately minus Jill; David and Joannie; and Jonathan.
It has been a great honor and an enormous pleasure to serve at the Fund these last seven years. I expected this to be an interesting job, but I hadn't expected it to be so interesting. My arrival a few months before the Mexican devaluation in December 1994 seems to have marked a structural break in the frequency of crises—and I am sure that my predecessor and successor, Anne Krueger, hopes that my departure will mark a similar break but with the opposite sign.
Let me add how glad I am that Anne, a firm believer in the Fund and in the values it promotes, is taking over as FDMD. I am happy too that with Tim Geithner, Gerd Haeusler, and Ken Rogoff coming on board, the Managing Director has selected a strong set of replacements for the old-timers who are leaving.
What I would like to do tonight is to tell you something about working at the Fund, why it is such a special place, and such an indispensable part of the international system. And then I will conclude by sharing with you some of the memories I will be taking away from my time at the Fund.
One of the questions I'm asked most often is how the real world of policy-making differs from the textbooks. I usually reply along the following lines. Much of what one learns in academic life is essential in dealing with the technical problems that come up in the IMF. But a key difference from the textbooks is figuring out how to deal in complicated situations with live human beings: what is driving them, what matters to them, which incentives they will respond to, and how.
We are sometimes accused of being too soft on borrowing member countries. Perhaps—but this is a cooperative institution, whose members have a right to request assistance. In responding to those requests, I often quote the Ronald Reagan maxim, "Trust but verify", which in the case of the Fund should be "Trust, but use conditionality". Nonetheless, sometimes we need to walk away, because the government we are dealing with is incapable of delivering on the needed policies, sometimes because even if the government may be able to deliver, corruption and governance problems are too severe.
It is an abiding strength of the IMF that we stand for a particular set of policies, for macroeconomic stability, for integration into the global economy, especially in trade, and for market-oriented domestic policies. Those policies do not just happen. Often we do our job by reinforcing people struggling under enormous pressures to do the right thing. I am deeply aware that it is a lot easier to say what should be done from the safety of Washington than for those who have to implement the policies, deal with the political realities in their countries, and bear the consequences if they make a mistake.
Who are those people, trying—on the whole—to do the right thing for their country? Some of them are here tonight. Let me mention, a very few of the others I have met and dealt with: in Mexico, Guillermo Ortiz; in Brazil, Pedro Malan; in Thailand, former Finance Minister Tarrin; in Indonesia, the legendary Widjojo, who has had more lives than a cat; in Russia, Yegor Gaidar and Anatoly Chubais, who understood from the beginning the stakes in the battles they were fighting, and who made choices I am glad I have never had to confront; in South Africa, Trevor Manuel; in Hungary, Gyorgy Suranyi; in Jamaica, Omar Davies; and I could go on and on.
But we cannot afford to divide the people we deal with into the good and the bad. As we say in sticky situations, the IMF deals with policies, not people. We have to work with the governments that are in place, supporting good policies, refusing to support bad policies, always putting safeguards in place when we do move. We have seen one of the best examples of IMF diplomacy and effectiveness in the last year, as Anoop Singh and his team have dealt with the complexities of the situation in Indonesia.
So far I have talked about policymakers in our borrowing member countries. This institution cannot operate without the support of our major shareholders. Gordon Brown, the Chairman of the IMFC, has done much to strengthen us in recent years. Our working relationship with the U.S. Treasury is critical to the success of the Fund. The presence of Bob Rubin, Larry Summers, Stu Eizenstat, John Taylor, David Lipton, Tim Geithner, and Caroline Atkinson testifies to the importance successive administrations have placed on that relationship. It is sometimes said, in apparent horror, that we are used by the major shareholders. Well, we are, and we are used by the minor shareholders too—and if our shareholders cease to find us useful, we will cease to exist.
Accusations that the Fund is in the pocket of the US administration are as old as the institution itself. Indeed, these worries were reflected in the debate over where the Fund should be located. Keynes favored putting the Fund in New York. He was distressed to hear that the US favored Washington instead, and wrote to his authorities in London: "I reacted very vehemently, declaring that in that case these bodies could not be regarded as international institutions but as an appendage of the American administration, which was just what the critics had claimed them to be".
Keynes expressed his dismay to Treasury Secretary Vinson, who replied "that in the American view the institutions would be fatally prejudiced in American opinion if they were placed in New York, since they would then come under the taint of 'international finance' ". The Americans of course won the argument, although at the moment the DC police department no doubt wishes they hadn't—and putting us in Washington didn't help much, because we are now accused of being simultaneously in the pockets of the Administration and Wall Street.
To be effective we need not only the support of our shareholders, but also to cooperate fully with the other international financial institutions. I am happy that our relations with the World Bank have become much closer in recent years, and I would like especially to thank my counterpart, Sven Sandstrom, for his cooperation and quiet effectiveness. And to Enrique Iglesias, President of the IDB, tireless warrior for Latin America, friend of the Fund, and friend, thank you for our cooperation over the years.
What is it that makes this institution so special? What keeps it at the center of the international system, despite the criticisms from left and right?
First, there is the continuing validity of its original mission, as set out in Article I of the Articles of Agreement. Contrary to what is often said, the Fund was never just about managing a particular exchange rate system.
Second, the Fund has remained flexible, swift and responsive. Our staff is relatively small and our mission remains relatively focused. We should make it a high priority to continue to stay small, mean—well tough, and lean.
Third, the Executive Board, the secret weapon of the international system—and here I'm modifying words from Karin Lissakers' farewell speech to the Board. The Executive Board takes itself seriously, and it has earned the right to do so. This is a cooperative institution, and the Board prefers to make decisions by consensus—and watching Executive Directors working towards a compromise has been one of the pleasures of my time here. Nonetheless, the Board can move very fast when the need arises. Of course, it helps that behind every ED stand finance ministries and central banks that actually care what we do on a day-to-day basis. Not every international institution is so lucky.
Fourth, the management. I have already mentioned my gratitude to the two Managing Directors with whom I have served. Let me also thank my Deputy Managing Director colleagues: P.R. Narvekar, Alassane Ouattara, Shige Sugisaki, and Eduardo Aninat. In successive combinations, we have worked together productively and in near-total harmony. This evening I think especially of our close friend, Alassane Ouattara, a man of outstanding ability, decency, and integrity, and regret that he is still being denied the opportunity to serve his own country.
Fifth, and perhaps the greatest strength of the Fund, is the quality of the staff. I cannot speak too highly of their professionalism, their talent, their dedication, and their capacity for hard work. Whatever the challenge, the staff rises to it, be it negotiating a program with Korea in a week, or designing a monetary system for Bosnia-Herzegovina in a weekend, designing and carrying out financial sector assessments, or finding a way of financing our contribution to HIPC debt reduction. It has been a pleasure, literally a pleasure, to work with highly skilled, very pleasant, people who are willing to give heart and soul, nights and weekends, to solving the problems that are presented to this institution.
Although I would like to name many of the outstanding present and absent staff members, let me mention only two: Jack Boorman, comrade in arms in so many battles; and the late Tom Leddy, who commanded more respect with fewer words than anyone I have ever met. Their attitude, and that of most of the Fund, is to do things right; long before the management gurus discovered the secret, the Fund was practising the zero defect, Total Quality Management approach to its work.
Those are some of the ingredients. But you could mix them together and still not produce the culture of the Fund, for there is more to it than that: an attitude by everyone involved that what we do matters—for the international system, but more fundamentally for the people who live in our member countries; that people care about the issues; and that they care about the Fund.
Now to the memories:
Events and Memories
Well, those are some of the memories—and I must confess that as I told these stories, I realized that I may never again face challenges of the same intensity, nor enjoy in future the exhilaration of working with such outstanding people. But life has to move on.
None of this could have happened without your support, especially the loving support and understanding of my family—the children, and most of all, Rhoda.
Thank you all for these seven extraordinary years.
IMF EXTERNAL RELATIONS DEPARTMENT