Where will the World Bank be heading under its new president Bob Zoellick? What is the real extent of the damage done by Paul Wolfowitz to the Bank? The FT has today a quite amazing analytical piece on the matter (walled for non-subscribers).
Here a few extracts:
The former US trade representative and deputy secretary of state says his immediate priority will be to restore calm and purpose to bank staff, who rebelled against Mr Wolfowitz over his handling of a secondment package for his girlfriend (…).
Mr Zoellick is careful not to set out publicly his initial thinking on the bank’s future, for fear it would be mistaken for an agenda he intends to foist on the bank. Instead, he talks about the need for the bank to adapt. “We are now in a much more networked world. We have got much better regional banks, vertical funds, private foundations, the private sector and non-governmental organisations,” he says. “We have to see how we can work more effectively together.”
Mr Zoellick is keen to bring to bear lessons from his most recent job as a Goldman Sachs investment banker. “You will hear me talk a lot about client focus and working in partnership,” he says. “I also want to connect the asset and liability side of the balance sheet” – using expertise and possibly even the bank’s own balance sheet to develop innovative financial products. This could require changes to bank rules.
On the bank’s multiple roles, Mr Zoellick says: “I think in terms of a portfolio of complementary investments.” He is sceptical of those who argue that it should focus narrowly in an interconnected world. “There are no magic silver bullets – the world is too complicated.”
Beyond that Mr Zoellick is unwilling to go, except to say he hopes to “plant seeds” and allow the debate on the bank’s strategy to grow. However, his conversations with development experts – three of whom have also spoken to the FT – suggest that his early queries revolve around six subject areas.
First, a focus on the poorest countries, particularly in Africa, left behind by the globalisation of trade and private capital flows. Here Mr Zoellick sees the importance of the IDA, the bank’s concessional lending arm. He seems keen the bank should continue its work on social sectors, seeking to help, for instance, countries ravaged by HIV/Aids. But he has also floated a renewed emphasis on infrastructure and growth, with particular focus on regional integration and mobilising African savings through financial sector reform.
Second, work in middle-income and emerging economies, with the bank continuing to lend even to countries such as China that have access to private capital, but contributing most through its know-how in helping to build the infrastructure of a modern economy. Mr Zoellick appears hopeful that by helping address their needs, the bank will be able to build partnerships in third countries, for instance with China in Africa.
Third, a larger role in fragile and post-conflict states – an idea lately pushed by Mr Wolfowitz. This would require the bank to develop a rapid response capability. However, Mr Zoellick has said he is aware this raises difficult questions about how to ensure security for bank staff.
Fourth, a role in providing public goods, which prominently includes climate change but also combating disease or even supporting a trade round with aid for capacity building.
Fifth, Mr Zoellick has told people he is interested in exploring how the bank could better support modernisers in the Arab and Muslim world. Some of the people he has spoken to see this as potentially controversial. However, Mr Zoellick stresses that he envisages the bank working in partnership with local entities and funds, taking the modernisation of Asia as his model.
Finally, he has stressed the bank’s role as a learning institution. He has indicated that finding a world-class chief economist to succeed Mr Bourguignon when he leaves this year is a priority.
On the fundamental error of having had, with outgoing Paul Wolfowitz, a neo-conservative leading a multilateral development institution:
Many bank insiders claim that Mr Wolfowitz’s misadventures stemmed from his reliance on a close circle of like-minded aides with little knowledge of development. “The first thing he did was to isolate himself from the bureaucracy by bringing in three or four Americans who surrounded him – including Robin Cleveland, who operated as a chief operating officer,” a former senior bank official says.
A serving senior official says Mr Wolfowitz’s inner circle did not trust career executives to make decisions. There was “a confidence in their view of the world, a confidence there that is unshakeable almost to the exclusion of facts”. Anyone who raised reservations, for example about the anti-corruption drive, was considered suspect, he adds. “There was a sense that these guys, because they are not on my side, are the enemy.”
Where to find Wolfi next? The FT announces that he will be working at the American Enterprise Institute think tank…. Watch that space.