The following are excerpts from the interview.

Does the World Bank believe that an export led strategy is appropriate for Thailand?

As former prime minister Anand Panyarachun warned only a few days ago, to fend off foreign investors only means self-isolation. He asked if Thailand should blindly walk against the irreversible tide of a global society or whether (its people) should cope with it while adapting and preparing for the future.

Increasing Thailand's export competitiveness would take advantage of the global economy and could lead to potential benefits in numerous sectors. In particular, competing in internal and external markets sharpens the entrepreneurial ability of local Thai firms; since they must market against the best, keep pace with productivity enhancements, and develop products the world wants.

Ultimately, Thai farmers, manufacturers, transporters, and infrastructure would all benefit, thus helping to resume more sustainable, long-term economic growth. Export competitiveness is especially important as a potential tool to reduce poverty in developing countries, as it can lead to higher economic growth and can increase the likelihood of lower prices and better products for consumers.

World-wide experience has shown that inward-looking strategies eventually fail, for such policies almost always result in low-quality, high-cost products, greater poverty, disadvantaged consumers, and all with only a well-connected and privileged minority benefiting. Export performance is thus a key ingredient of Thailand's recovery and growth strategy.

The recent regional crisis has naturally led to a reassessment of the past development strategies in East Asia. However, we should not overlook some of the fundamental strengths of these economies including Thailand. High savings, sound fiscal policy, investments in human capital, and an outward orientation were key factors in sustaining high growth in the past.

Rapid growth, in turn, has pulled millions of Thai people out of poverty every year.

The recent crisis, nevertheless, has highlighted the need to better manage the downside risks of globalisation, in particular as they affect the poor and vulnerable.

Is there a conflict between an export driven policy and a self-sufficiency policy?

We must be clear about what is meant by "self-sufficiency". In most of the world the term is used to describe a single-minded pursuit of production targets for specific agricultural staples, such as rice, usually supported with heavy subsidies.

Pursuit of this type of self-sufficiency locks resources into the production of the target commodity, and thereby inhibits diversification into higher value crops including vegetables, fruits and horticultural crops that demand more agricultural labour and generate higher farm incomes.

Because of its negative effects on efficiency and equity, the Bank advises against the pursuit of so-called "food self-sufficiency".

The Bank, however, supports the less constrained objective of "food security", which is essentially a matter of producing what is possible and having the necessary income to buy whatever else is needed for adequate supplies of food staples.

In contrast, the current use of the term "self-sufficiency" in Thailand, appears to be quite different to how it is used elsewhere. In the context of the New Theory the term is used to imply self-reliance of farmers, including reduced dependence on government, and cooperation of groups of farmers at the community level.

It focuses on using the full comparative advantage of agricultural resources in rain-fed areas, emphasising on-farm water storage to address water shortages in the dry season, and diversification of crops away from the basic wet-season rice and field crops to include higher-value crops, such as fruits, vegetables, flowers and herbs, which can be grown at other times of the year. The objective is to reduce small farmers' household food expenditures and to generate supplementary incomes year round to ensure food security.

The Bank's view is that public policy should focus on stimulating income growth in rural areas, and supporting infrastructure that would assure both food security and more vibrant exports. There is no inherent contradiction in pursuing both of these objectives.

Farmers in Thailand are a diversified group, ranging from small to medium to large-scale. An adaptable strategy is needed to meet their diverse needs. For poor, small farm households, the Bank supports the ideas put forth in the New Theory, and recommends emphasis on sustainable agricultural production which is focused, first, on ensuring food security; and, second, on producing marketable surpluses, as well as engaging in non-farm employment for cash income.

For medium to large-scale farmers, an appropriate strategy focuses on creating the enabling environment for competitiveness in both domestic and international markets, by reducing government intervention into production and marketing decisions, removing input subsidies, increasing production efficiency and reducing production costs.

What is the World Bank's view on price-support mechanisms to protect Thai farmers from swings in world export prices?

In general, the Bank does not concur with direct intervention in agricultural production decisions by government, including price support programmes of this nature. This is particularly true for sugar, the only crop that is heavily protected currently. Experience worldwide has shown that these types of interventions do not work well. They are typically very expensive, difficult to target properly, and discourage diversification to other crops. While the increased pressure since the crisis for "temporary" price supports to protect farmer incomes is understandable, there is a danger that these supports will create permanent dependencies which will make their removal difficult even after the crisis. Therefore, if there were to be price support, there needs to be a proper exit strategy so that its impact on the people is mitigated.

The role of government in the agricultural sector should focus on provision of public benefits. These include providing better information on commodity markets, developing (with the private sector) futures markets for major commodities to assist farmers in managing price risks, and supporting greater research into and extension of integrated farming systems that increase yields while protecting the environment, diversifying production and minimising risks.

Does the World Bank advocate the construction of more dams for irrigation in Thailand?

In the Bank's view, supply-side options, such as new dams, should not be rejected out of hand. However, given the high financial costs, and the significant social and environmental risks associated with this type of option, their feasibility should be analysed very carefully.

Best practice would require a broad-based analysis of alternatives-including both demand and supply-side options-well grounded in the context of the basin hydrology. Basin hydrology sets the context. Some of the supply options considered may not produce "new" supplies, but rather in a sense "rob Peter to pay Paul.""New" water only comes from two in-basin sources: non-beneficial evapotranspiration; and run off to the sea above the volume which is required to maintain in-stream, wetland, estuarine and coastal ecological functions. In this regard, there are considerable wet season and flood stream flows which would provide "new" water if it could be captured and stored for use during the dry season. While there may be limited options for additional dam storage, the possible options for underground storage and recovery have not been sufficiently assessed and may be substantial.

While the Bank recognises that increasing demands for water and water-related services may lead Thailand in the future to construct new dams for multiple purposes-electricity generation, water supply, irrigation, flood control-our view is that developing new supplies for irrigation is not the highest priority in the water sector at this time.

The Bank is currently working with the Royal Thai Government and other stakeholders to develop a project for possible Bank financing focusing on improvement of water management in the Chao Phraya Basin. The focus is not on developing new water supplies through the development of new dams or other means. Rather, the focus is on developing more effective institutional arrangements for management of water resources at the basin, sub-basin and local levels, with a larger role for stakeholders (including users, the private sector, and NGOs) with a changed role for government; establishing a fair and effective system for allocating rights for the use of water and possibly for the trade of these rights to allow the voluntary movement of water among users; modernising water delivery and irrigation infrastructure to enable and support the institutional change objectives and new water allocation and delivery practices; improving groundwater regulation and management; and establishing a programme for dam safety.

Have past World Bank projects benefited Thailand?

The World Bank began lending to Thailand in 1950, a year after the country became a member in 1949. The first set of Bank loans, totalling $25 million, assisted investments at Thailand's request in railways, ports, and irrigation in the Chao Phraya Basin. In subsequent years through June 1999, Thailand requested and received loan or credit assistance of approximately US $8 billion for over 130 operations, including projects in the rural development, energy, education, transport, social, and economic/financial sectors.

To ensure that Bank-supported projects benefit Thailand, the projects must meet rigorous economic, financial, environmental, social, and technical criteria determined by both Thailand and the Bank. In addition, evaluations of project effectiveness are regularly conducted by the Operations Evaluations Department (OED), an independent "watchdog" in the Bank which reports directly to the Board of Directors.

Have any World Bank projects failed or brought about adverse consequences?

In such cases, how does the World Bank deliver on its responsibilities?Of a fairly large number of Thailand projects evaluated by the OED, nearly 90 percent were rated satisfactory. Some of these projects included work with structural adjustments, the power sector, highways, and land rights. For example, the Second Land Titling Project was set up to help provide landowners with secure titles to their land, improve land administration, and establish a good national property land valuation system. The project helped approximately 700,000 rural families, including many from the poorer areas in the northeast and upper north.

When Bank-assisted projects are rated less than satisfactory, the Bank works with the government to find viable alternatives. An example of an unsatisfactory project is the Tax Computerisation Project, which was designed to help Thailand establish a modern tax administration system. This complex information technology project required more thorough preparation involving recognised tax administration and information technology experts. Insufficient preparation made project implementation difficult, and the project failed to reach its objectives.

The Pak Moon project, closed in March 1995, was concluded by the OED and the Bank's Implementation Completion Report to be satisfactory. Therefore, the responsibility for its management and for addressing any issues that may arise thereafter rests solely with the government and its agencies. The Bank's role is to review whether the government continues to undertake periodic monitoring and evaluation of the social and economic conditions of the people affected by the project, and adequately funds the fisheries development, and health programmes.

In this case, some concerns regarding inadequacy of compensation and adverse impacts on health and fisheries came up, though (lacking sufficient) data and evidence. Before the Bank can take the matter up with the government, there is need for a thorough review to be undertaken of the project to establish what the facts actually are. To this end, the World Commission on Dams (WDC) is proposing to conduct such a review and has drawn up a very detailed scoping paper.

Does the World Bank have an alternative development strategy to that incorporated in the Country Assistance Strategy?

Alternative assistance strategies were considered and the Thailand Country Assistance Strategy (CAS) is what the Bank has found to be most viable for Thailand. As such, the CAS is the single, central vehicle for World Bank strategy for all our client countries, including Thailand.

Reviewed by the Board in July 1998, the Thailand CAS (a) describes the Bank Group's strategy based on an assessment of priorities in Thailand, and (b) indicates the level and composition of assistance to be provided based on the strategy and the country's portfolio performance.

The next Thailand CAS, scheduled for World Bank's internal Board review in July 2000, will cover the World Bank's role in Thailand for the following three years.

Does the World Bank attach conditions to its lending operations?

In regard to policy dialogue in Thailand, the Bank holds ongoing and intensive discussions with the Thai government and stakeholders on a variety of development issues. It is ultimately up to the Thai government to decide whether a project (or programme) is advantageous for Thailand. When preparing a project or programme, the Thai government and the Bank together identify a series of agreements and necessary actions to meet project (or programme) objectives.

What are the major environmental problems identified by the World Bank and which of these does the Bank propose to tackle on under its CAS?

The World Bank's Country Assistance Strategy articulates that sustainable recovery is possible only if adequate attention is given to preserving the natural environment through improved management of natural resources, effective enforcement of regulations, and implementation of prudent taxation policies.

In collaboration with the Ministry of Science, Technology and Environment (MoSTE), the Bank has formulated an environment strategy for Bank assistance. This strategy identifies the following as major environmental issues:Reforming Environmental Institutions: The need for restructuring environmental institutions to improve their operational performance, strengthen the enforcement mechanism and enhance opportunities for public participation has emerged as a high priority issue. The Bank is providing assistance to the relevant agencies through the public sector reform programme and priority needs will be supported through a quick response project.

Improving Environmental Conditions in Bangkok: Urgently tackling air pollution and waste management in Bangkok. The BMA (Bangkok Metropolitan Administration) has sought World Bank financing and assistance to target the reduction of particulate matter from motor vehicles and roadside dust. Concurrently, the World Bank is also assisting the BMA to develop a wastewater and solid waste management project. Scarcity and declining quality of water in the Chao Phraya River Basin: This is a major environmental problem that affects both the urban and rural sectors. The Bank is working with the Ministry of Agriculture and Cooperatives to prepare an investment project that will address priority issues.

How does the World Bank's poverty line survey help to alleviate poverty?

Poverty in Thailand has been analysed through various indicators (e.g., levels of income and consumption, and social indicators). The most commonly used poverty measurements are based on income or consumption levels. A person is considered poor if his or her consumption or income level falls below a minimum level (or "poverty line") necessary to meet basic needs. This "poverty line" varies across time and societies, and each country uses poverty lines that are appropriate to its level of development, societal norms, and values.

In Thailand, information on consumption and income is obtained on a regular basis by the National Statistical Office through sample surveys. Data from these sample surveys has helped the Thai government to: strengthen its poverty-alleviation strategies; better target programmes to focus on the poor; improve monitoring progress; and apply evaluation results.

In sum, the World Bank's short-term support to Thailand is focused on economic stabilisation, while the Bank's medium-term response to Thailand's sustainable growth objectives focuses on renewing competitiveness, improving governance, sharing the benefits of growth, and ensuring quality of life through lending, guarantees, and other services (including analytical reports, informal policy notes, and international knowledge exchange).

The Bank's key partner is the government, but progress in implementing the strategy depends crucially on the capacity of the Thai authorities and requires broad ownership by involving civil society in shaping and carrying out the agenda.