First aid group meeting: Bangladesh wins the first round

It is not a formal oral history, and it is not a systematic overview of the work of the person interviewed.  At times the authors discussed the planned publication itself and the sources that should be consulted; at other times they talked about persons and publications extraneous to the Bank.  Some interview tapes and transcripts begin and end abruptly.  Nevertheless, the World Bank Group Archives believes that this transcript may be of interest to researchers and makes it available for public use.
SYEDUZZAMAN: I have been associated with the Bank from as early as 1968 when I used to work for the Pakistan government, but I have forgotten many of these things, so unless you ask me specific questions, I would not know what to tell you.
LEWIS: Well, let start with was this '68, then, and your working with the government.  What's your recollection of the role of the Bank in time of the cleavage of Pakistan, the origination of Bangladesh?
SYEDUZZAMAN: Well, in '68 I was a Deputy Secretary in the Economic Affairs Division, Pakistan, in Islamabad.  And later on, in '70, I worked as Joint Secretary in the government of Pakistan, External Finance.  And in both of these capacities I had to come in contact with the Bank from time to time.  In the external resources division-they called it E-A-D, Economic Affairs Division, E-A-D-I used to be responsible for coordinating aid work relating to the Pakistan consortium, latterly Bank's lending program, IDA [International Development Association] lending program, I was very much a part of that.
Of course, the big thing at that time was the Tarbela dam, that project which was being packaged together.  So I remember at that time there were several missions from the Bank, but I was not so much involved with the Tarbela negotiations.
But I was involved in preparation for the annual Pakistan consortium meetings.  And there, of course, what mattered was what happened to the lending program, what was the rate of disbursement, how the projects were behaving, how the projects were proceeding.  These were the main considerations.  The policy lending had not yet come in, so it was mainly project-related activities.  We used to process negotiating teams going to Washington because all the negotiations used to be in Washington.  And then there used to be an Executive Director, I think it was Osman Ali who was Executive Director, and we used to be in touch with him about various policy issues that were coming to the Bank's Board [of Executive Directors]; he wanted feedback from the government.  Those are the type of work that I used to . . .
LEWIS:  And you were at the Finance Ministry at the . . .
SYEDUZZAMAN: In the Finance Ministry, of course, I was more associated with the [International Monetary] Fund than the Bank.
LEWIS: I see.  This time that you're speaking of just now, you were then-that EAD, was that in a ministry or . . .
SYEDUZZAMAN: Yes, EAD's a ministry, it's Economic Affairs Division.
LEWIS:  Of which ministry?
SYEDUZZAMAN: This was part of the President's Secretariat.
LEWIS:  Okay, okay.  You were there when the, in 19 . . .
SYEDUZZAMAN: I was there from '67 to '70.
LEWIS: Oh, I see.  Where were you in '71?
SYEDUZZAMAN: In '71 I was Joint Secretary in the Ministry of Finance.  I was promoted to Joint Secretary in 1970, so I went over to the Ministry of Finance.  I stayed  there until probably February or March '72 when we were all laid off because we decided  to [inaudible]
LEWIS: All the Bengalis, you mean?
SYEDUZZAMAN: Right, right.  Well, in the Ministry of Finance my association with the Bank was that I was on the board of directors of the IDBP (Industrial Development Bank of Pakistan) and the PICIC [Pakistan Industrial Credit and Investment Corporation].  And they used to borrow money from the Bank, so that was my-and that was more businesslike and things were much easier than negotiating projects with the government.
KAPUR: Those were the DFIs [development finance institutions] with Bill [William] Diamond.
SYEDUZZAMAN: Pardon?
KAPUR: Bill Diamond of the Bank staff.
LEWIS: Bill Diamond was . .
SYEDUZZAMAN: Yes, Bill Diamond was-yes, Bill Diamond was working on that, that's right.  And from the Bank side it was Mr. [I. Peter M.] Cargill.
LEWIS: Yes, Peter.
SYEDUZZAMAN:  Then [Rudolf] Hablutzel, there was a gentleman called Hablutzel, who probably-I think he, Hablutzel, I don't know whether he's still at the Bank.  Then we had a gentleman who died later on when I was in Washington, became director of the South Asia Department, Manfred Blobel. Manfred was, I think he was division director at that time, and then Mike [Michael] Wiehen, who is currently director of that, they were working on Pakistan.  Mike Wiehen was the division chief in the later days of Pakistan.  
Then when I came to Bangladesh, I was appointed Secretary, Ministry of Planning, and Secretary, External Resources, so these two jobs were combined.  And I had very-how should I say-intimate interaction with the Bank.  But at that time, you know, the relationship between the government and the Bank was very difficult because the Bank on behalf of the donors-well, before that I think I should mention a little bit about what happened in '71.
In '71, as you know, the Bank stopped its disbursements on projects in Pakistan.  And then these famous report which Bank staff had brought out, led by a young Dutch staff member [Hendrik] van der Heijden.
LEWIS: Van der Heijden.
SYEDUZZAMAN: Yeah, later on I saw him; he was with the OECD [Organization for Economic Cooperation and Development]. I met him a couple of times in Paris.
That report really brought out what was happening in East Pakistan in those days, the atrocities and the complete cessation of all economic and business activities, all these.  And interestingly-you know, I was at that time, as I said, I was in the ministry of finance, I was an alternate governor of the Fund.  In that capacity I had to attend the 1971 annual meetings in Washington.  
Well, I should also probably mention that my first annual meeting was 1970 Copenhagen meeting when Mr. [Robert S.] McNamara received a lot of, you know, eggs and so on.
LEWIS: From the left, yes.
SYEDUZZAMAN: Yes, from the left, so I remember that distinctly.  That's also the first time I saw Mr. McNamara, and I met him as part of the Pakistan delegation.
Anyway, at the '71 annual meetings, the Pakistan delegation was led by a man called S. U. Durrani.  He was the governor of the central bank.  We went and saw Mr. McNamara.  And Durrani was, of course, explaining that things were going all right in Pakistan and in East Pakistan.  
And I remember one particular incident that-during our meeting with Mr. McNamara, Durrani was saying, "Oh, Mr. President, you don't worry.  Things are going all right; economic activities have revived. We're trying to give full support to the jute trade; we're flying cash to the various centers of trading for buying of jute so that farmers don't suffer; and we are giving police escorts to all these special teams who are carrying gas because we want really to help the farmers."
And Mr. McNamara grimly said, "Mr. Governor, in a situation where you have to fly money out in a helicopter with a police escort is certainly not a normal situation."  That stopped all further discussions.
So that was . .
LEWIS: He himself was-wasn't he perceived as being quite sympathetic to the east, to Bangladesh?
SYEDUZZAMAN: Well, I could not decipher that, but obviously he was in favour of stability and law and order and equity and justice and an equitable and just response to the political aspirations of the people of East Pakistan who were--of course, by that time it was too late.  It was September, and the-it was--the war of liberation had already started in full fury and there was already the point of no return.
KAPUR: The report which you mentioned, the van der Heijden, I guess it was leaked out.  This was in June of '71 . .
SYEDUZZAMAN: You're right.  June, July it was leaked out, that's right.
KAPUR: Right. Do you remember the reactions from government?
SYEDUZZAMAN: Oh, the reactions in the Pakistan government, the Pakistan government people, the senior officials, they were completely-what should I say-they were furious. They were very angry, very unhappy, and I think the government of Pakistan suggested that van der Heijden should be removed from the Bank or something like that.  
And then I also remember that during the annual meetings in 1971 there was a special meeting of donors for Pakistan called to consider Pakistan's request for rescheduling some of its debts.  I think that was the first time that Pakistan-Pakistan was in very bad shape as far as balance of payments was concerned.  And there was a special meeting requesting for rescheduling some of these debt obligations.  So that's all I remember from the '71 annual meetings.
KAPUR: The official reason for the Bank suspending further loans to Pakistan was debt, because of debt repayment problems.
SYEDUZZAMAN: I don't think so.  I think it was-in East Pakistan it was obviously the conditions did not permit smooth implementation of projects and the regular disbursement of funds. That was the reason.
KAPUR: Right, but they stopped also to West Pakistan.
SYEDUZZAMAN: But that was-well, that was probably a little later.  That was probably a little later.  Whether that was related to debt, that I don't at this stage recall fully.
LEWIS: At minimum if they suspended East Pakistan because of turbulence..
SYEDUZZAMAN:  Yeah.
LEWIS: . . and they thought there was a certain equity of being, arising between East and West Pakistan, they would not have continued to lend to the West, I should think. I mean, that would be a tilt to the . . .
My impression at the time, of being just recently associated with the U.S. Government, was that when the U.S. tilted, the [Henry A.] Kissinger-[Richard M.] Nixon tilt towards Pakistan at the end of '71 was very much in contrast to the posture of the Bank under McNamara, that he parted company with the U.S. Administration.
SYEDUZZAMAN: Well, I must say that at that time, it was the later months of 1971, I was not-I mean, this should not go into the record-though I was in the government of Pakistan I was in a very key position.  Joint Secretary, External Finance, was the linchpin regarding management of the foreign exchange budget, relationship with the donors, relationship with the Fund and so on, but I could feel that I was being left out of some very important discussions, like I was supposed to monitor day to day the foreign exchange reserves. Then from a point of time the gold reserves were removed, first they were brought to Islamabad, then they were shifted to China by the Pakistan government. I was kept completely out of that.  So at that time there were many occasions when I was not in the privy to the discussions the government had. But then in 19--sorry.
LEWIS: I was just going to pick up-you had led us to your position as Secretary here at the beginning.
SYEDUZZAMAN: Yeah.  When I came to Bangladesh from Pakistan it was early '73, January '73. I was stuck up for one full year in Pakistan.  The whole, throughout '72 I was in Pakistan, laid off and living on small doles from the Pakistan government.  Then I escaped with my family through Kabul, through the tribal areas with the help of tribal people.  They brought us across the border, and then we came to Kabul.  We stayed there for two weeks, and then we came to Delhi, from Delhi we came here.  
So when I reached Dhaka I was appointed Secretary, Ministry of Planning, and concurrently Secretary, External Affairs Division.  And that was the main link with the donors; Secretary, External Resources Division, was the main link with the donors.  
At that time the relationship between the Bangladesh government and the donors was a bit difficult.  Mr. McNamara made a visit-that was before I reached Bangladesh-and the main thing was the debts.  Donors were suggesting that Bangladesh should take over the liabilities for debts, foreign debts, foreign loans, which were spent in East Pakistan.  
So we had the first aid group meeting in, I think it was March of 1973, two months after my arrival.  And that meeting-I remember distinctly because I was handling that meeting myself-that the main issue was whether Bangladesh should agree to accept the liability for foreign loans taken by Pakistan government and spent in East Pakistan.  And obviously the position of the Bangladesh government was that we were not willing to take this; this was the legal liability of the government of Pakistan.  And the donors were indicating that unless the government of Bangladesh agreed on this, there would be difficulty in pledging new aid for Bangladesh, which Bangladesh badly needed.  
So moral number two was: how would the meeting be conducted.  The World Bank insisted that the meeting insisted that the meeting should be chaired by the Bank.  Peter Cargill was the person; he wanted to preside.  And the Bangladesh government's position was that no, it is the government who should preside over the meeting. And ultimately government won that round, and the Bangladesh government delegate, Nurul Islam, presided over that meeting.  And that was the first meeting of the Bangladesh aid.
But the message came quite clear in that meeting, though there were some pledges of humanitarian aid, food aid and so on, but development aid, the donors made it quite clear that they won't be able to move until there was a decision on the debt obligations.  And this was widely discussed within the government, and there was no-there was no two opinions.  The government was pretty firm that these loans legally were incurred by the Pakistan government, so they're legally liable.  [The Second Part will be published  tomorrow]
The interview was taken on  November 19, 1991 in Dhaka, Bangladesh