My book

You can find it here:
And if YOUR voice is noisy enough:


The World Bank Group? (WBG)/ The Executive Directors?/ The Nongovernmental Organizations?/ The Millennium Development Goals?/ 205 Development Topics! —listed on the World Bank Web site

My ED trips 1
Airport #1/ Airport #2/ An encounter with NGOs / Market driven visas? / Quality certifications! / 

The First Country [Vietnam]: Gender; A rural road to the town; Motorbikes; Are we few track minded?; Death penalty for corruption!; A luxurious hospital / The Second Country / Airport #3/ The Third Country [Samoa]: As far as you can go / The fourth country [Tanzania]: Honorable Accountability; Strategic Plan; Trains and privatizations;  Environmental disasters; AIDS vs. MalariaQuestions and answers / A fifth country—while an ED but not as one. [China]: The Chinese of China / Small memories from my Central America: Visas; Global info confusionThe new frontiers of product developmentThe social contract of Teotihuacan  / Small memories from my transitional hometown: Assaulted / Washington and the GPS (Global Positioning System) / Snowing in Washington / This would never have happened to John Wayne / A monument to transparencyA photo album

The Debt Sustainability Analysis 23
Why was it such an issue for me?/ A word of caution about Financial Leverage/ An Unsustainable Sustainability/ Odious Debt/ Odious Credit

BASEL—Regulating for what? 37
Puritanism in banking/ A warning/ About the Global Bank Insolvency Initiative/ Some comments at a Risk Management Workshop for Regulators/ Let the Bank Stand Up/ BASEL and microfinance/ The mutual admiration club of firefighters in Basel/ Towards a counter cyclical Basel?/ A new breed of systemic errors

The debate about using Country Systems 55
Why did I spend so much time on this issue?/ Let them bike/ About El Zamorano and the use of country systems/ Lost in the water of globalization

My very private fight for better privatizations 65
Where do I come from?/ Transmission and Distribution—T & D/ Electricity for Brazil—and Isla de Margarita what?/ Pay now and pray for the light/ Hit in the head by the SENECA sale/ The present value and short circuits/ Reform fatigue opportunities/ Fiscal Space—Public or Private

A bit on some other indexes 95
The through-the-eye-of-the-needle index/ The index of perceived Corruption/ Today, let us talk about the bribers/ A dangerously failed index/ How good or bad is your municipality?

EIR & Environment 107
My answer to the NGOs/ The Amazon/ Our quixotic windmills/ Earth, the cooperative/ A better alternative than a hybrid

Oil 121
About an Oil Market Update/ It’s an oil boom, stupid!/ Kohlenweiss 1979/ The search for transparency in an oil-consuming world/ We need the world price of gasoline (petrol)/ Sovereignty/ The Oil Referendum/ Why do they point their finger only at us?/ About accountability in energy planning

Trade, agriculture, services, and growth 135
On the road to Cancun…with new proposals/ Place us next to something profitable…/ Time to cover up?/ An encore on nudism and WTO negotiations/ Hosting the spirit of free trade/ Time to scratch each other’s backs/ Of Mangos and Bananas/ Local strawberries in season

About remittances and immigration 147
The nature of remittances/ Remittance fees: The tip of the tip of the tip of the iceberg/ What GDP?/ Family Remittances/ Some notes on the securitization of remittances/ Safeguarding resources/ Scaling up imagination about immigration/ The Skin of the United States/ A de-facto USA enlargement

About cross-border services and emigration 165
The prisoners, the old, and the sick/ A wide spectrum of services for the elderly/ The ethics of solving the shortage of caretakers/ Are we truly a World Bank?/ Get moving!

On our own governance 181
A real choir of voices/ Voices, Board Effectiveness, and 60 Years/ WB-IMF Collaboration on Public Expenditure issues/ The Normal Distribution Function is missing/ Board Effectiveness and the ticking clock/ WBG’s fight against corruption/ The Annual Meetings Development Committee Communiqué/ Hurrah for the Queen/ Diversity/ About the board and the staff/ A very local World Bank or…the not in my backyard syndrome

Budgets & Costs 193
On the urgency and the inertia of our business/ Medium Term Strategy and Finance Plan/ Unbudgeted costs/ Budget tools/ The remuneration of our President/ About our central travel agency

Reshuffling our development portfolio 201
Let us scale up the IFC/ An encore on the BIG capital increase for IFC/ The Multilateral Investment Guarantee Agency—MIGA

On some varied homespun issues 209
The Poverty Reduction Strategy/ There should be life beyond 2015/ There should be new life beyond HIPC/ We need to make more transparent our harmonization/ Transparently Understandable Debt Management/ The Financial Sector Assessment Handbook —a postscript/ Too sophisticated/ About the addiction of guarantees to Municipalities/ About risks and the opportunities/ Financial Outlook and Risks

Some political incorrect Private-Sector Issues 219
Is the private sector the same private sector everywhere?/ Private vs. local investors/ Some thoughts about financial good governance/ What is lacking in the Sarbanes-Oxley Act./ Too well tuned?/ Alternative Millennium Development Goals

Communications 225
Communications in a polarized world/ Some other global communication issues/ Red and blue, or, red or blue?—a postscript

Some admittedly lite pieces 237
The World Bank Special/ Thou shall not PowerPoint/ Deep pondering on labels/ To write or not to write…by hand/ Three bullets on punctuality

On common goods and some global issues 247
Towards World Laboratories/ Daddy…the original or the copy?/ The rights of intellectual property user/ Who can enforce it better?/ Moisés Naím’s Illicit—a postscript/ Global Tax/ Labor standards and Unions

A mixed bag of stand-alone issues 259
My insecurities about the social security debate/
About the SEC, the human factor, and laughing/ Roping in the herd/ A paradise of customs illegalities/ Human genetics made inhuman/ Justice needs to begin with just prisons - McPrisons/ Real or virtual universities?/ Brief thoughts on Europe/ Some spins on the US economy/ Is inflation really measuring inflation?

My Venezuelan blend 283
A Proposal for a New Way of Congressional Elections/ Let’s all whakapohane!/ We enjoyed/ Hugo, the Revolution, and I/ April 11-13, 2002/ To the opposition/ Synthesizing my current messages to my fellow countrymen/ 167-to-0—a postscript/ What is the financial world to do with Venezuela?/ Massachusetts, please show some dignity!/ Colombia & Venezuela

My Farewell Speech on October 28, 2004 299

Did the Minister do right? 305

And now what? 307

The President’s succession 309

My thoughts on the issue/ The OK Corral and the World Bank/ A letter to an another new American World Bank President

On some current books, a movie, and a future book 315
The World’s Banker by Sebastian Mallaby/ The End of Poverty by Jeffrey Sachs/ The Elusive Quest for Growth by William Russell Easterly/ The World Is Flat by Thomas L. Friedman/ The Pentagon’s New Map by Thomas P. M. Barnett/ And the Money kept Rolling In (and Out) by Paul Blustein/ Confessions of an Economic Hit Man by John Perkins/ The Constant Gardener and the UN/ The future very last book about Harry Potter

My book, Amazon’s profits and the value of its shares 325

The last items in my outgoing tray 329

Pray for us, Karol/ We must aim higher!
List of my fellow passengers who also dined at the captains table 333
A too long C.V. or a too short memoir, and acknowledgements 337

Some more blurring details about the MDGs 349

Shutting down 353

Keep in touch/ The Buck Stops Here

In search of a title



One of twenty four Executive Directors of the World Bank Group

November 2002–October 2004

Some respectfully irreverent questions and suggestions about a great multilateral financial public-sector institution that the world needs more than ever to be a lean and mean poverty-fighting machine and that at sixty years of age should perhaps be renewing its vows in order to move up from “knowledge” into wisdom and instead of trying to advance impossible agenda like justice and social responsibility might do better settling for fights much easier to monitor against injustices and social irresponsibility … all made by a perhaps a somewhat naive but very well-intentioned former executive director equipped only with his long private-sector experience, and his willingness to speak out … sort of.






Mr. KUROWSKI GOES TO WASHINGTON (My daughter’s suggestion)


That’s it!



Having an opinion and voicing it is what Voice is all about. Putting together thousands of perfectly pure voices might synthesize into a harmonious symphony but, without some noise, it will never ring true and that is what Noise is all about.

The world I remember when I was young moved forward on carrots and hope in the belief that it was going to be a better place, while today’s drivers are more the sticks and despairs of those looking only to hang onto what they’ve got.

To stand a chance of a better tomorrow, we need the Voice to recreate our dreams but also the Noise to make us want them come true. 

A shrinking world that makes isolation impossible presents the human race with the challenge of really having to get along. If we resist facing this challenge, the world will be a much-saddened place: let me get off. However, if on the contrary we truly try to make it work, we will at least have some beautiful dreams again.

This book with all its simplicities and contradictions is but an effort to put my voice and noise on the table. All yours are needed too.

P.S. After having decided on the title I found on the Web an article by Ingo R. Titze, Ph.D., titled “Noise in the Voice” that originally appeared in the 2005 May/June issue of the Journal of Singing. It reassures me a lot, as it argues that “A little noise, turned on at the right time, can go a long way toward enlarging the interpretive tool."

The Chinese of China

I traveled to China and was mesmerized. I assure you that, as a leisure trip, if you manage to get a bargain-priced ticket, there is nothing like it. When visiting the Great Wall of China, I took a local bus with only Chinese passengers, who sang in Chinese with the help of a karaoke-style video that underscored each Chinese character. But more than all these, for me everything was Chinese.

Nowadays in China, the majority of families have just one child. What does this mean to society? Could Latin families retain their characteristic traits with families of just one offspring? 

It is precisely when a country is getting out of poverty and seeks to position itself in an intermediate level that any improvement, such as going from a bicycle to a motorcycle and from a motorcycle to a car demands a tremendous amount of energy. Is there enough energy and oil in the world to satisfy China’s growth? 

China’s current model for economic growth seems to be taking the country in record time from being a rural country to a country where its citizens are all sardine-like packed in gigantic cities, and we presume that such a move is not good or sustainable. When we observe that recent cutting-edge technological advances in the world allow even the most isolated countryman to be present, almost live, right in the center of the Empire’s capital, we have to ask ourselves, are there really no other better and newer options? 

China’s present growth rate is colossal, and from what we can gather there will be great disparities among those who get on board today’s developed consumerism and those who lag behind with no chance of having even a peek at this new millennium. Any progress entails risks and may even require leaving behind some victims in its passing, but if injustices turn out to be too vast then those passed by are sure to complain. Could China achieve in some decades what previously took centuries to achieve, and still be China? 

Please forgive my political indiscretion, but in the early morning just as the red flags were hoisted in Tiananmen Square and I saw how human masses were mobilized and kept in certain order only when instructed by the guards’ blaring voices, I, discreetly, had to ask myself whether it could be possible to run China in the long run just like current à la mode democracies.

Finally, while climbing the Great Wall aboard a little yellow cart that looked just like an old and retired Disney theme park ride trying to make its way slowly through the crowds, I kept asking myself, will it withstand?

Disclosing the IDA Country-Performance Ratings

The World Bank manages a very large pool of donated development resources from the International Development Agency, IDA. To allocate these resources among the countries and also to decide whether these resources should be given out as loans or grants, they use a methodology that reviews many different variables and ends up in a product known as CPIA. These Country Performance Index Assessments had previously been disclosed in a sort of fussy way (with countries being classified in quintiles), but now there was strong pressure from most of the donors that these Country Performance Index figures should be disclosed in much more detail—I guess to reward the good countries and shame the others. 

Nothing wrong with that, except if you thought that those performance indexes, though probably a good approximation of the reality, did not reflect all the difficult aspects of development and could also, if taken on their own and erroneously interpreted, make development more difficult. 

I had had enough with organizations publishing indexes that were later appropriated by the selfish interests of others, making them mean more than they really do, without the originator responding clearly enough—as it was honored just by the attention given to its index and did not want to hurt a member of its fan club. And so the table was set to ignite my devil’s advocate genes. 

A first round of comments

As so many of us invest much of our hopes for a better tomorrow in achieving a more transparent society, it is important that we always remind ourselves that there is nothing so nontransparent as a half-truth, said at the wrong time, at the wrong place, and not in a fully comprehensible way.

But, in a world that frequently demands that information be transmitted through easily digestible means, such as oversimplified rankings, we would rather have the World Bank (WB) doing it than any of the many not-accountable-to-anyone rating agents that frequently pursue undisclosed agenda. That said, it is not an easy decision for the WB to get into the rating game, and much care is needed. 

It is by definition an impossible task to compress in an adequate way all the very complex realities of a country into a simple index or rating, and in doing so it is absolutely certain that many mistakes will be made. On the other hand, one also needs a simple, comprehensive and understandable tool to be able to convey results powerfully, and a simple index or rating can do just that. The balancing of all the various elements and contradictions needs to be done with much concerned carefulness. If a minor agent such as an NGO would go wrong, there might not be much to it but if it is the knowledge Bank that puts forward the impreciseness, this could be leveraged into extremely negative consequences.

If we were to use only the term of an “IDA Resource Allocation Index” this would make the whole disclosure more transparent and honest, as this would indicate that when monitoring results and performance, it takes two to tango, the evaluated and the evaluator, and anyone—or both—could make mistakes. We should ban, forever, the use of the very arrogant and error-prone term “Country Performance Ratings.”

Friends, it is just because we believe in disclosure that we should strive to find the right disclosure.

Development alchemy

Somewhere in the documentation the “Weighting Procedure” is described as taking four parts of CPIA and one part of ARPP (I don’t remember what ARPP stands for but I guess that is not so important either) and multiplying this by a “governance factor that is calculated by dividing the average rating of these seven criteria by 3.5 (the midpoint of the 1—6 rating scale) and applying an exponent of 1.5 to this ratio.” Friends, whatever it means, this sounds just too much like a “Potteresque” development alchemy that even a studious Hermione would find difficult to understand. 

Excuse the jest, my colleagues, but we could encounter some serious risks to our reputation. For instance, the Credit-Rating Agencies—at least with respect to sovereign credits—refuse to describe their methodology in too much detail, and they officially justify this refusal by stating that they do not wish the countries to know about how to get a great rating—although I truly suspect that they just don’t want to be called on their bluff. In our case we might be expected to come up with a more substantial explanation than the mixing of the potion above—and what if we can’t? 


I have heard that “ratings should depend on actual policies, rather than intentions,” which sounds quite right, especially remembering that the road to hell is paved with good intentions. However, I have also heard that “the criteria are focused on policies and institutional arrangements, the key elements that are within the country’s control, rather than on actual outcomes.” Simplifying arithmetically both possibilities, it would seem to me that we could end up with a rating system that depends on policies rather than results. This, although perhaps quite acceptable to a private charity, seems a bit out of place for the World Bank. But then again, I might just be confused.

About the Panel of Experts

Dear Colleagues,

With respect to the Terms of Reference (TR) for the Panel of Experts—I would like to make the following brief comments.

To begin with, I believe we should avoid qualifying the panel as a “Panel of Experts,” as clearly the whole issue of rating, in this case of development adequacy, is governed by subjectivities and not by that kind of know-how that permits anyone to represent himself or herself as an “expert” without being deemed presumptuous. A reference to “experts” may also convey an unearned sense of precision that might backfire.

Reading through our methodology manual, we understand that if the Panel is to review whether the criteria used in the ranking provide an adequate basis to asses the quality of policies and institutions and, at the same time, the quality referred to means the degree to which a country’s framework is conducive to growth and poverty reduction, then, in all logic, it would seem that the Panel is supposed to review the whole effectiveness of the current development strategy of IDA. Although this could perhaps be a welcome exercise we find it hard, if not again presumptuous, to believe that it could be done during just 48 hours in March, unless of course the Panel is just called to apply freely any preconceptions of their own.

Frankly, when I thought about a panel in this matter, I never visualized a team able to reconstruct or even evaluate a methodology and a ranking that have been developed over many years, and I believe that for that purpose we already have other more appropriate procedures that we are already paying for and that work fulltime. 

No, I thought we were talking of a Panel that could advise us on how to design and communicate and control the interpretations of the rankings, so as to maximize their potential benefits and minimize the risks, for all, of this extremely hazardous activity.

The questions for such a panel are almost infinite; for instance, how do we make sure that the ratings are not used for any wrong purpose, which could even conspire against our development mission? Is the ranking a proprietary good to be controlled and marketed? Do we allow any media to report on the ratings out of context, or perhaps even redesign their presentation, for instance by cutting the axis and thus seeming to have the WB endorsing erroneous interpretations? What are the market implications of putting the whole credibility of the WB behind a rating? Will the other raters only follow us? Will this only reinforce the cyclical nature of capital flows creating “the Mother of all systemic risks”? If it does not work, can we pull out?

With respect to the list of the named “experts” not knowing them, I cannot endorse or object. Nonetheless, I sincerely hope that the list does not include any ranking fanatics, but includes more the well-intentioned healthy ranking skeptics who, aware of the needs for rankings, are also conscious of the risks. In other words, I hope the panel does not end up being a panel of “formula builders” but a panel of people who know why, when, and how to use the ranking formulas. 

Some follow up comments

It is symptomatic of the many difficulties with rating that the request by the Panel for more analytic work in relation to the weighting system was answered by the Bank with a very basic equal weighting, backed by some correlation analysis. Equal weighting could very well be the best answer, at least in simplicity, but it is also a very normal and transparent way of admitting to not-having-a-clue. In the area of the CPIA ratings, we are indeed walking on very loose sand, and we need to be very careful, come disclosure time.

When thinking about all the suggested CPIA criteria, I would have many fewer problems with fully disclosing the exact information on each of these fifteen criteria, than with having them all stirred into a murky and totally nontransparent cocktail.

I saw that some Panel members noted that once the disclosures occur, “The Bank should closely monitor any potentially adverse impacts on borrowers, such as misinterpretation of ratings by financial markets, any impact on foreign direct investment, and/or the abuse of ratings for political gains.” This is all well said but, in today’s world of rapid and active communication, those are the things you analyze before you communicate and not after. We wonder whether now is not the appropriate time to leave out the economists, and call in some experts on communication. 

Let us never forget that the rankings, unfortunately, say almost as much about the one doing the ranking as they do about the one being ranked.

Just as an example of rankings gone haywire, let me refer to the Globalization Index published some months ago by A. T. Kearney and Foreign Policy. Their ranking method assigns globalization points to countries by measuring the number of internet users, hosts, and secure servers, without even bothering about what contents are transmitted over them and similar media. Who is more global, a family of a rich country with ten televisions for ten local sitcoms, or a family of a poor country with only one TV, but who mostly have to watch foreign programming, and many of whose family members are working abroad? 

Let me again illustrate three risks that I believe have not been sufficiently considered.

· When discussing Argentina we heard comments as to how it changed (almost overnight) from being A Golden Poster Boy into an Ugly Duckling. This begs the question of what could have happened to the reputation of the Bank if our ratings had officially indicated very good results over a long period and then, suddenly, something went wrong. Would creditors sue us? Would credit rating agencies sue us?

· There is always a risk present when good ratings are thrown in the face of crude realities of poverty, since the hope of food for today is not easily appeased by the promise of food in a year or a decade.

· The risk that bad ratings could in fact be turned against the interests of furthering development, for instance when bad ratings are brought forward by bad governments as an evidence of their ability to defend their “true” sovereignty. 

In the very little which our Panel of Experts (mercifully not eminent persons) mentions about disclosure, it urges for the preparation of adequate information to help the public interpret the ratings. This recommendation stands, at least in terms of transparency, in stark contrast with the other recommendation “that the write-ups that accompany the ratings should not be disclosed—as this might discourage candid assessment by staff.” We do not believe that in this respect you should be able to have your cake and eat it too, and so, if you are prepare to disclose a rating, you must be willing to disclose fully how you got it.

About our own accountability

Of course I agree with the recommendation that the disclosures of any results should always include a statement indicating that the ratings are the product of “staff judgment.” That said, and given the importance of checks and balances, and accountability, we would like to know a little about the foreseen consequences to staff. This is no minor issue as their judgments, if wrong, and even if right, could foreseeable bring down governments and also stoke anti–World Bank sentiments. I need to bring this up, as the debate reminded me of the note I wrote about the US GAO Report on the IMF.

What if they rank us?

Finally, as we see in the documents on the IDA disclosure policy that this exercise generates a normal distribution curve where we can point out the best and the worst performers, I cannot but reflect on the fact that within the Bank, for its own internal evaluation purposes, it seems impossible to gain acceptance for this sort of useful ranking tool. In fact, in most internal evaluations that are presented to the Board, we have not even reached a name disclosure by quintiles and have been basically limited to a binary grading (satisfactory or not), mostly without really even knowing who belongs to any of those groups. Just think about our reactions if some NGO would start to rank the performance of our own country teams and to disclose the results on the www, with three-decimal precision, and arguing that, given the utmost importance of the WB’s poverty-fighting mission, this should be quite helpful

About indexes and their disclosure

I remember that a few years ago I argued the thesis that lack of information actually could be valuable as a promoter of development. On some occasions, ignorance of certain matters kept alive the dreams of finding the greener valley. These dreams are the ones that drove Americans to invest in Italy, Italians to move to Venezuela and Venezuelans to find work in the United States. This generated economic growth all around.

The increasing speed of today’s information flow raises some doubts. Although it is certainly advantageous to insure that correct and relevant information as well as good news is transmitted rapidly, it is also certain that this same speed is usually applied when propagating incorrect and irrelevant information as well as increasing volumes of bad news. For some not totally identified reason, I feel that the magnifying effect of speed upon bad information is somehow greater that on good information. Making peace, for example, requires much time that is often not available. Provoking war is often a matter of seconds.

Some of the previous concerns plus the fact that we continuously observe how media can make so much of so little have made this whole evolution of jumping from blissful ignorance into urgent pseudo certainties a quite important issue to me.

The Riskiness of Country Risk

 How horrible it must be to work as an air-traffic controller! Any slight error can provoke an unimaginable human tragedy. No wonder these professionals burn out so rapidly. I “suppose” the same must happen with the country-risk assessors, those people who carefully pass judgment as to what the country risk is for any given nation.

The all important mission of these risk evaluators is twofold. The first, that for which they are actually paid, consists of analyzing whether or not the debtor nation will ultimately be able to honor its obligations. This determines whether or not pension funds, banks, and insurance companies will be willing, or even allowed, to invest in that country’s sovereign debt instruments. The second, even more important than the first, is to send subtle signals to the governments of these nations in order to help them improve their performance.

What a difficult job this is! If they overdo it and underestimate the risk of a given country, the latter will most assuredly be inundated with fresh loans and will be leveraged to the hilt. The result will be a serious wave of adjustments sometime down the line. If on the contrary, they exaggerate the country’s risk level, it can only result in a reduction in the market value of the national debt, increasing interest expense and making access to international financial markets difficult. The initial mistake will unfortunately turn out to be true, a self-fulfilling prophecy. Any which way, either extreme will cause hunger and human misery.

What a nightmare it must be to be risk evaluator! Imagine trying to get some shuteye while lying awake in bed thinking that any moment one of those judges, those with the global reach that have a say in anything and everything, determinates that a country has become essentially bankrupt due to your mistake, and then drags you kicking and screaming before an International Court, accused of violating human rights. If I were to be in the position of evaluating country risk, I would insure that the process is totally transparent, even though this takes away some of the shine of the profession and obligates me to sacrifice some of my personal market value.

How lucky we are that we are neither air-traffic controllers nor sovereign-risk evaluators! However, since we can easily become victims of their missteps, it behooves us, if only because of our survival instinct, to make sure that both do their jobs correctly.

We have seen in recent Country Reports how, after having introduced a myriad of information into the black box of methodology, as if by magic, a credit qualification is produced. Many of these reports seem to me like the pronouncements of film critics. It would seem that, more often than not, the individual evaluator is determining more how much he likes the ways or forms the Directors of a nation try to honor its obligations than on producing an honest and profound financial analysis of the country’s capacity for servicing its debt correctly.

In his book The Future of Ideas: The Fate of the Commons in a Connected World (New York: Random House, 2001), Lawrence Lessig maintains that an era is identified not so much by what is debated, but by what is actually accepted as true and so is not debated at all. In this sense, given the risk that the perceived country risk actually becomes the real country risk, it is best not to assign an AAA rating blithely to the risk qualifiers—perhaps not even a two-thumbs-up.

From The Daily Journal, Caracas, September 27, 2002

Thou shall not PowerPoint

· Dear Colleagues,

· When we were small, our fathers taught us never to FingerPoint anyone, and today we also need to teach kids not to PowerPoint one another. 

· Yes, I have seen some splendid use of PowerPoint presentations, but, in general terms, the world is not a better place for it.

· PowerPoint has empowered so many people with so little to say with a deep belief that the world is waiting for them to predicate, for hours. 

· PowerPoint is little by little replacing all decent readable issue papers with thick bundles of copies of PowerPoint sheets, each one containing less than 15 words, in beautifully irrelevant colors, except when replaced by thin bundles containing miniature unreadable copies of aforementioned sheets. 

· PowerPoint is forcing the world to structure its whole thinking process in terms of bulletpoints. 

· NO, thou shall not PowerPoint me and I promise not to PowerPoint you … too much. 

· Happy Holidays

· Per 

· December, 2003

Today, let us talk about the bribers

On the 26th of October, Transparency International, TI, published its annual index ranking the Perception of Corruption that exists in various nations. As usual, Venezuela was somewhere down at the bottom of the list. However, for the first time, TI also published an index related to the Bribe Payers (BPI).

This index ranks the 19 countries with the most exports and is based on the perception of how corporations from those countries use bribes to generate business. 

A professional firm interviewed 770 high-level executives in 14 emerging markets with geographically diversified imports. Venezuela was not included among the interviewed parties, since most of its imports come from only one country, the United States.

The executives interviewed belonged to large firms, banks, chambers of commerce, auditing firms, and law firms. A result of 10 points means no bribes are used while 0 means, naturally, that bribing is used as a norm. The countries with the highest ranking were Sweden (8.3), Australia and Canada (8.1) and those at the bottom of the ranking were China (3.1), South Korea (3.4) and Taiwan (3.5). The ranking of some of our main trading partners were England (7.2), Germany and the United States tied at (6.2), Spain (5.3), France (5.2) and Italy (3.7).

Just like the Corruption Index, the Briber’s Index will create much argument and rebuttal, especially from those that were not favored by their ranking within the index. 

Among the traditional arguments, we are sure to find that many will maintain that the index is not really objective, but is really all about perception and that therefore, before being an ethical problem it is really more an image problem. 

We will perhaps also hear technologically inspired arguments, such as accusing the better-positioned countries of using advanced versions of corruption, something like the stealth planes that do not appear on the radar. Sometimes when I read about the lobbying in the United States, I can’t avoid a nagging feeling that corruption has just been institutionalized.

I have often seen how citizens of many developed countries shed their shackles and truly enjoy as tourists the perhaps humanizing experience of trying to avoid a traffic ticket by negotiating avidly with the particular foreign public servant who has accosted them. 

On the other hand I have also seen people who behave better away than at home. We see it over and over again when Venezuelans, who, although notorious tax evaders at home, become exemplary citizens when overseas—to the extreme of not using readily available and popular loopholes. 

Because of those contradictions it could be interesting to compare the two indexes side by side, and find out whether there are some significant inconsistencies. It does not look that way as with the exception of 5 countries, all those that have been ranked in both indexes, are basically in the same relative position. As it were, Sweden is first in both indexes while China is last.

The two main exceptions to this rule are Singapore which, in this group of 19, appears as 3rd in terms of the least corrupt nations but as number 11 in the Bribers Index and Belgium which, contrary to Singapore, ranks as number 15 of the least corrupt nations, but comes out somewhat better as number 8 among the Briber’s. Let us speculate a bit about the meaning of these results.

On Singapore the results would indicate that it behaves very well at home, but goes haywire and is a menace when abroad. Without a doubt, a country like this must be a formidable competitor in foreign trade and one would entreat the OECD to insure that it is also enrolled among those countries that have recently signed the OECD Anti-Bribery Convention.

But what about those Belgians? Surprisingly they seem to behave better abroad than at home. Could this be some kind of special “stealth” technology at work? Could it be that they on purpose wish to be perceived as corrupt at home, in order to enhance belief in their human nature? Or could it be that they simply have decided to invest in a change of their image abroad, and that this was ultimately successful?

We shall see what gives next year when new investigative technologies tackle the inexplicable.


From The Daily Journal, Caracas, November 4 1999

The index of perceived Corruption

Transparency International (TI) has developed an index by means of which it ranks countries around the world according to their perceived levels of internal corruption. I have a Danish friend who recently came to me for the umpteenth time with this list clutched firmly in his fist, proudly crowing over the fact that Denmark once again tops the list as the least corrupt country while Venezuela once again comes in toward the bottom, beaten out for the basement spot by only seven countries among which we find Colombia and Nigeria.

As a Venezuelan, I immediately went into a defensive mode. I argued that since the index is based on the perception of corruption, it could be that the results merely indicate a serious problem of exactly that, the perception, not the reality. Additionally, should this actually be true (evidently not the case), I told him that although I did lament the fact that Venezuela was not mentioned in the top half of the list, I was at least satisfied that we were definitely not occupying any “not too human” first place.

My good friend, observing my discomfort, realizing that I have some Swedish blood in my veins, and in a sincere effort to console me, blurted out that in reality he also did not understand why Denmark had been ranked first while Sweden was ranked third. My immediate reply was “Chico, Denmark must simply have paid more for it.” 

Jest aside, the index is the result of a serious effort on the part of professionals of diverse backgrounds who, using the few tools available, have managed to develop a system of evaluation which is useful and of great support for every citizen wishing to combat this age-old plague. 

Its importance is of even greater significance when we hear that Transparency International suggests that we don’t attribute more accuracy than necessary to its index. Venezuela’s ranking on this list of 85 countries is such that it is evident, to say the least, that the country’s level of corruption is far greater than average. This is bad enough!

Any debate over whether Venezuela should be ranked higher could be perceived simply as a strategy aimed at discrediting the index. Only the beneficiaries of corruption could possibly have an interest in doing this. A true patriot would not waste one single second of his or her valuable time in debating why people speak poorly of our country. On the contrary, he would dedicate all his time and energy to correct the reality instead of objecting to the perception.

This debate on corruption is truly difficult and complicated. Even though we should be pleased that such an index exists, I am worried that the mere fact that we are trying to reduce corruption to terms of a measurable dimension may lead us to oversimplify the problem dangerously.

The index, in principle, only measures the perception of corruption in general terms. This is defined in ample terms as “the abuse of public office for private gain.” In this sense, and because of the nature of the problem, I am sure that when using the term “gain” we are referring mostly to a monetary benefit. This avoids measuring other aspects of corruption that could be just as important or more.

For instance, I believe that the appointment of someone to public office for reasons other than his or her capacity or professional integrity is a corruption that is even more pernicious and costly to the country than the sum of all monetary corruption put together.

An example of this is our recent banking-sector crisis. The costs caused by the poor administration of this crisis are far and above the costs attributable directly to the bankers involved. It’s not that the bankers are free of guilt. They did undoubtedly start the fire. But whose fault is it that the financial firemen were caught napping and did not hear the alarms, and that once they finally got to the scene of the disaster they tried to douse the flames with gasoline instead of water?

I make these comments to remind all that the monster of corruption has a thousand heads. I would be sad if all the result of the efforts to slay this monster would simply be the elimination of the traditional offers of discounts for prompt payment, right then and there, and that we frequently receive when fined for a traffic violation.

Let me make one last comment on this quite tortuous subject. In Venezuela, perhaps more than in any other countries, there is more than sufficient evidence of the total administrative ineptitude of the state, and all of our governments have absolutely no results to show, considering all of their income. Nonetheless multilateral agencies, such as the International Monetary Fund, frequently come to the country and recommend an action that could only mean allowing the state to squander even more resources. For whom then is the IMF working? For the politicians? Could we then be staring at another unknown dimension of this monster called Corruption?

AIDS vs. Malaria

There we sat listening astonished to the Minister of Health describing that what she most needed was help in fighting the malaria that was killing more people in her country than the AIDS, but AIDS was what donors mostly prioritized. How sad! The high mortality rate of the malaria came as a surprise to me but from what I deducted the malaria strain in most of Africa is much worse that what we are accustomed to in South America. We were informed that the anti malaria drugs we have been supplied by the bank for the trip were not allowed in this country as they could create an even more drug resistant strain. Answering some nervous questions the Minister informed us EDs that the malaria mosquito attacked exclusively at night and only if the victim was still and that’s why the protective nets are so important. 

Malaria is a tragedy, and so you have to forgive me but I cannot refrain from telling you that after the minister’s mosquito comments, I detected immediate incipient salsa-like movements in my colleague’s limbs (mine as well) and that grew stronger as night approached. 

Giving away Bouncing Balls

During a previous trip I had learned from a grand lady colleague from the richest country to bring some bouncing balls to give away. I threw them at the dozen young kids standing there and only two of them moved. The rest did not even acknowledge it in their poverty and misery-filled glazed eyes. Per, what are you doing here? This is so far away from your realities that there is no way you could really add something useful. Yes. I know! But then again that is perhaps exactly what I needed to see … with my own tear-glazed eyes.

A too long C.V. or a too short memoir, and acknowledgements

My mother Ingrid is from Sweden and my father Tady was from Poland, and I was born in 1950, in San Cristóbal, Venezuela, close to the Colombian border. By the way, if you would end up thinking I am having an adventurous life let me assure you it’s nothing when compared to that of my parents.

Sweden: After Venezuela, Sweden is undoubtedly the country that has had the most influence on my life, and I will always harbor an immense gratitude to it. It is a truly amazing country, and I pray its future generations really get to understand and appreciate what it has been able to achieve and why they need and should defend their way of doing it over and over again. I am certain that our best chances for the ongoing globalization of the world to end in something good lies completely in the hands of being able to use Sweden (and their neighbors) as shining examples of roads worthy to follow.

Poland: Even though I do not know it (yet), and I do not speak a word of Polish, I have always felt very much identified with my father’s homeland. My third name is Stanislaw, and through it I feel connected to the rebellious spirit and freedom urge of my ancestors. It was indeed one of my proudest moments when I and my daughters received our Polish passports.

The United States of America and I: In a world where everything is radicalizing and so many believe that if you are not 100% for, you have to be 100% against, I need to make a very personal comment about the United States, because I refer to it frequently in this book, given its importance in the world.

My father, as a Polish soldier taken prisoner of war by the Germans, spent five years in concentration camps, from the last of which he was liberated by American soldiers. I was brought up on a pro-American diet and for many years counted To Hell and Back, the 1955 movie that recounted the life of Audie Murphy, America’s most-decorated soldier in the Second World War, among my favorites. There is no way on earth that I could suffer from any sort of real anti–United States of America phobia. If I criticize, make recommendations, or observe some things that I believe could be improved in the United States, I always do so as a sincere friend who truly wishes for that much-admired country to live up to those very high standards of which I feel it is capable. And when it doesn’t, I am just a much-saddened friend, but never a foe. The United States should not ignore the fact that out there it has many true friends who truly wish it well. It should never confuse them with all those who are plain bootlickers.

Also, if the ongoing globalization is to stand a chance to end in something good for the world, this will also very much depend on the willingness of the USA to do the right things right. 

But please, do not let the previous comments confuse you … I am foremost and above all a Venezuelan.


My studies started in Venezuela, in a kinder at a catholic nun school, with a 3-boys-to-100 girl ratio, unfortunately at a time when I had yet to grasp the significance of this numerical advantage. My primary school happened in a very small—really tiny—Evangelical school in San Cristóbal. Television had not yet arrived to the region and neither had telephones to Palmira, where we lived. My contacts with the outer world occurred, therefore, through radio and books … but so intensively that CNN never really surprised me.


From there, at the age of 12, I took off to Sweden to a boarding school in Sigtuna. The school was quite renowned (in Sweden) as their future king of Sweden was studying there. Also, in the closet of my room, Olof Palme, the illustrious and later assassinated Prime Minister of Sweden, had also scribbled his name.

My Andean Pact Trip

In 1966 at age 16 and a week, I took a summer job on a Swedish merchant boat for four months mostly scrubbing dishes and rust. This trip took me from Europe to South America where I visited ports in Venezuela, Colombia, Ecuador, Peru and Chile. Bolivia did not have a port but luckily for me, as the vessel’s name was MS Bolivia, I was able to later argue that it was a full Andean Pact trip. I need not say that this type of summer jobs was not that frequent in my boarding school.


Between 1969 and 1971, very fast, two years plus many- many summer courses, urging to get back to Venezuela before the tranquility of Sweden got a final grip on me, I graduated as an economist in the University of Lund. 

Back to Caracas, between 1972 and 1974, fulltime immersion at the Instituto de Estudios Superiores de Administración, IESA, and where I earned my MBA, with distinction. Thereafter I started my professional life, with two initial brief and surrealistic experiences:

Diversifying into the blue

The first, in a local important commercial bank had me going, after just one week, to Panama, to participate in a workshop arranged by their associate, a big international big bank, to discuss the latter’s worldwide diversification strategy … Fortunately, it took us less than an hour to agree that no one of us had the slightest idea of what we were supposed to be doing, so we gave up on the intent, and had a good time over the weekend. (I still remember with much fondness a great show, in a very dingy place, by Daniel Santos, one of the long gone icons of boleros, that beautiful lamenting bluesy tropical musical that had everyone cutting their veins … normally because of non-answered love). 

Some weeks of public … disservice?

Back in the bank, after just another two weeks, and I guess because of my Panama experience, my name was put forward as a candidate for the post of Diversification Manager in the Venezuela Investment Fund that was being created to handle the oil income surpluses of the nation. I entered the Fund its very first day, and I left a couple of weeks later the same day my desk arrived, utterly frustrated when the Fund was requested to analyze, and obviously endorse, the economic feasibility studies of a 4-billion-dollar investment known as the Fourth Plan of SIDOR, the big Venezuelan iron and steel complex. With an “if something goes wrong with this project the Venezuelans might have the right to hang us in Plaza Bolívar, and I’m much too young for that” I slammed the door on the public sector … for the following 28 years.

Riding harvest combines

Urgently back to the real world … although I must say a bit too real for my taste. During the following year I traveled around Venezuela harvesting rice and sorghum, with a fleet of ten beautiful big light-blue combines, all perfectly inadequate for Venezuelan conditions. I got trapped into this when one of the partners in what seemed a viable agribusiness proposal, the agronomical engineer of the group, on the spur of a moment, decided to buy 10 totally untested combines, arguing that by doing so we had won the right for an exclusive representation of that brand in Venezuela. As we were never able to reduce the droppings of the combine to less than 20%, I guess it was pure beginner’s luck that we did not combine our problems by using these rights and selling these combines to others. Being that the concept of an MBA was quite new in Venezuela and no one really knew what they were for, least I, the group deemed me to be the right universal tool to get it out of its serious predicament … and so they sent me out as their line manager, all over Venezuela. 

Back to harbor … or new frontiers

A year later, tired of being pursued by angry farmers, I cut my losses, not by far short enough, and with a substantial negative balance (zero assets and a lot of debt) I went to do what an MBA is suppose to do, manage, for big bucks, other peoples companies. In a few years I managed to turn into an eminent financial leasing company expert and even the manager of one. In this I was greatly assisted by the fact that few in Venezuela really knew what leasing was all about … which gave me a lot of leeway

Personal blessings

I did well. Not only did I manage to repay my debts but also, most importantly, I married Mercedes. Besides being a wonderful wife and mother, Mercedes is an excellent lawyer with 20 years of corporate experience in Venezuela, recently overhauled with an LLM from Georgetown University. Besides, she also moonlights, for free, as my Spanish editor. To round up this personal paragraph let me say that Mercedes and I have been blessed with three beautiful and most talented daughters, Mercedes, Alexandra and Adriana, and who also, when push comes to shove, stand in as great friends. As the only man in the house, I have been staged in the role of the gentle and good World Bank, while Mercedes, poor her, has to play … and be … the strict IMF.

Learning how not to bike

I made some splash with my statement of learning how to bike during the debates about using Country Systems. Therefore I believe I should confess here (in an appendix) that my youngest daughter, Adriana, set out to bike with her roller skates on—and crashed. We had to look in the dark for her two front teeth and, instructed through cell phone by my favorite dentist, my brother Sven, I reinserted them. I got it wrong the first time, so I had to take them out and do it again. But, don’t worry, Adriana’s fine. Her confidence did not take a beating; she stills bikes, but does not rollerblade, at least not simultaneously. As for me, I had the type of experience you just don’t really need as a father. 

An intermezzo

From mid 1979 until mid 1980, before the girls were born my wife and I also took a year out in London. There I practiced at Kleinwort and Benson, one of the truly old English Merchant Banks that has since then, as so many others, gone down, disappeared or been diluted, in the oceans of globalization. During this year I also had the chance to attend London School of Economics, as a listener to International Commerce and take the Corporate Finance Evening Course at London Business School. I made some money investing in currency futures … but I got out of it … as I did not see a real win-win opportunity in it … more the contrary.

Financial brewer

Back in Venezuela, by mid 1980, I signed up as Finance Director for a brewery that was facing serious troubles as their market share was dropping from 30% to 8%, over few months, so fast that it finally could not service, even the first quarterly installment of a huge international bank syndicated loan. The scandal, not of my doing, resulted in the first real Chapter 11 type of proceedings ever initiated in Venezuela for a public listed company, and helped me (and some others) build a small reputation in work-outs.

At last my niche

In 1983, I had had enough doing just one thing all the time, and so I entered into private consultancy, that allowed me to suggest other people what to do … all of their time. 

From then until 2002, I enjoyed 19 years of great and varied experience. In areas of hotels, resorts, industries, hospitals, aluminum, oranges, chemicals, real estate, paper, printing … and so on. Mostly for local clients, but also for some multinationals, some which even led me to negotiate a deal with IFC during the early nineties. I worked mostly in traditional corporate financial and strategic planning and marketing, but I also got seriously into some exotic products such as debt equity conversions. I worked mostly in Venezuela, but also managed to get some interesting assignments in Colombia. 


With the aid of friends, I dappled in some ventures and one of them was exporting mangoes. We actually managed to get into Harrods’ delicacy department with our beautiful multicolored and individually wrapped mangoes and we were doing great … until. Our largest individual cost was the airfreight to London, that we had to pay in advance and so when a finance minister woke up in Venezuela and announced, that according to him, the Bolivar was undervalued and then he executivized it from 36 to 24 to the dollar (something perfectly feasible in the short term in an oil country) the day before we were to convert into Bolivars all our British Pounds, he bombed our cash flow. Having to fight against the mosquito in the mangoes or the flight schedules of British Airways was one thing, having also to fight against the ego of a finance minister, was just too much.


For a very brief moment, 1974-75 I taught corporate finance at Universidad Metropolitana in Caracas. Also at IESA, I shared for a couple of years the responsibility of lecturing in International Finance. Teaching has always attracted me but somehow no one ever baited me irresistibly enough. Even nowadays, I still toy with the idea of going back to get my PHD, not because I am truly convinced about it, but because it seems to have turned into an obligatory requirement for allowing you to either teach or research. (Might there be a market opportunity for a University principled on No Ph.D.s allowed?)

Bank representative

For about 10 years I acted as the representative in Venezuela for the O’Higgins Bank of Chile, later Banco the Santiago … until the Banco Santander of Spain purchased the Chilean bank and globalized me out of a nice and cozy relation. During those years I had the chance of frequently going to Chile and study their real and their not so real progress. While doing so, I had to hear so much hoopla about their social security system that I guess I developed some antibodies that might currently affect how I look on this whole issue. Nonetheless, I do admire many of their other efforts and I wish them all of the best as they are really great people. 

Almost banking

As the Chile representation was almost a sideline, and as the name correctly indicates, mainly a representation, I never actually worked in real banking. That said, I had a lot to do with many banks, developing for some great strategic plans that were never executed, and holding the hand of others in difficult times such as interventions. These close but afar relationships with the banks and their clients, is what inspired me later to set out on my Get-Basel-Bank Regulations-Under-Control mini crusade.

Honduras & Guatemala

A friend, Christopher Jennings whom I had met when the company he worked for was trying to get the mandate to operate the Caracas water system and I initially handled this quest, made it to the Inter-American Development Bank. From there he called out for assistance in setting up the financial mechanism of some water projects plus some other tidbits and I will always be very grateful for these opportunities, as they became the looking glasses with which a private sector man like me could peek into the public ... and opine. Many of my Central American experiences were made much more enjoyable through the great support I always received from Ian Walker and all his associates in ESA Consultores.


In July 1997 I suddenly got the chance to write some articles … and have them published. This turned out to be a blessing. Not only was the writing an escape valve that released the pressure I felt as an unsatisfied citizen in a country with very unsatisfactory showings, but also a very energizing tool as it forced me to get close to what was going on in the world as large. Soon I will have written four hundred articles and I might have a loyal following that, unfortunately, does not always guarantee the inclusion of my three daughters … Daddy what have you been writing about lately?


I cannot come close to describing my life without including some lines about music. I play the guitar and harmonica … as a totally self-taught amateur … who is at his best when there is no real musician close by as a reference … and I love it. In fact there was a time when my sound engineer (Mercedes, my wife) and I escaped to the Island of Margarita over weekends so that I could play incognito for foreign tourists at a small hotel where I as a small shareholder could exercise some influence. Once after my concert (concert … no understatement there), I was tipped by a German tourist, and I still remember that as a very proud moment … by the way, my sound engineer was also once approached in terms of what she would be doing after she got off her duties. During three consecutive years, I participated in a choir at my alma mater IESA, twice a week, from 6 to 8 p.m. … what a lovely way to catch up with life. At the World Bank, to help show that we EDs could also be “somewhat” human, I could not resist Tara Sharafudeen’s very insistent invitation to participate in the Celebration of Cultures show with my guitar and my harmonica. Because of logistical considerations, it had to be during an Asian show where I, among a lot of participants from India, sang about Venezuela … I defended the whole mix up by advancing the thesis that India was quite naturally doing a little bit of musical outsourcing to South America.

And that was when …

In August 2002, the Planning Minister of Venezuela, Dr. Felipe Perez, a man who, I feel, deeply believes in transparency, local participation … and open systems (Linux), communicated, on the Web, about Venezuela’s turn to nominate an ED in the World Bank, asking for candidates. With probably unwarranted but still unchecked optimism, I went for it.

CV Acknowledgements

There is no way I could write this type of CV memoir without also including my thanks to the rest of my family and some very special friends. First of all Fredrik, my younger brother, who by relieving me of many of the older-brother-duties, helps me to travel lighter in life and also Sven and Karin, my still younger siblings, without whom family would not remotely be family. From my Sweden of so many years ago, I still feel next to me Klas Gierow, Otto Ramel, Lars Henriksson, and Anders Hedborg. Of course there are others from the opposite sex, whom I have not forgotten, but here I am perhaps better off by cryptically referring to a Willie Nelson and Julio Iglesias song. From my professional years in Venezuela there’s no way I can get by without mentioning Jose Manuel Egui and Antonio Iszak. And through my years as consultant, what would I have done without my partners in crime, Daniel Boersner and Rafael Lorenzo. Let me also give some special thanks to all of Mercedes’ family. Her father, Jose Antonio Cordido-Freytes, a young judge in Venezuela, officially married my parents soon sixty years ago … talk about conspiracy theories … and her mother, Eva Mercedes stands out as a model for the mother in law you all would have killed for. 

Finally I must acknowledge the great help received in putting together this book from my editor in chief, James T. McDonough, Jr., and his personal editor, his wife Zaida. As he wrote his Ph.D. dissertation on The Structural Metrics of the Iliad and among his many editorial credits lists a World Dictionary of Foreign Expressions and a couple of medical dictionaries, I found him perfectly suited to guide me through a globalization book without taking any of my uttering for granted. I let many of his comments be a part of the book without even talking about copyright issues with him. I guess that if we run into some problems, we can both count on Zaida and Mercedes to bail us out.