And the World Bank president is

...Paul Wolfowitz. And you thought you couldn't be surprised

Published: Saturday 30 April 2005

And the World Bank president is

-- Paul Wolfowitz, deputy us defence secretary, will take over as president of the World Bank (wb) when James Wolfensohn steps down in mid-2005. The ultimate shareholders of the World Bank -- the people of the world with their shares held by proxy by their respective governments -- deserve better. Wolfowitz has been compared to Robert McNamara, who was a giant of a wb president after his controversial time as a warmongering us defence secretary. But McNamara had important pluses over Wolfowitz: he was full defence secretary, had experience as chief executive of Ford and lived in different times. Even so, he was controversial.

There are compelling reasons for rethinking the global financial edifice. For one, it was devised in the dying days of World War II, and most of today's economic powers were not involved. More importantly, the gas-guzzling, spendthrift, heavily indebted us is not a good model for global development. Is Wolfowitz's vision for democracy in Iraq -- brought by us guns -- a workable system for the world (or the wb)? Surely, the nominee for wb should not be a candidate pursuing George Bush's lawfully elected agenda, but the leader of a development mission for the world.

The sad fact of life today is that while new multibillionaires are being created in hundreds (though in the us they are often built on flimsily mortgaged paper called the us dollar), several billions are in danger of falling off the edge without the resources to survive. At the same time, China's tearaway economic growth since Deng Xiaoping opened its doors to the world has challenged conventional economic wisdom. India has also begun to show its potential and should demand a say in a crucial appointment for the world. A wb revamped under a leader of greater stature than Wolfowitz could have been the forum for better action on global development.

Whatever his many faults, Wolfensohn cared -- cares -- passionately about development and the plight of the poor. Still, after ten years in the job, Wolfensohn's achievements have been modest. He began dialogues with critical non-governmental organisations and tried to make them partners in his development dream. Wolfensohn refocused the bank to look at its clients, the developing countries, strengthened the country offices and created career opportunities outside the Washington headquarters. In the last two years, not before time, he also spoke out against corruption as a major stumbling block against economic development.

Wolfensohn's efforts to reform the management structure were more mixed and many of his best ideas were ruined by his volcanic temper and an appalling judgement of people, with some really poor senior appointments. And for all of Wolfensohn's efforts, the battle against global poverty is far from being won. It needs a general who can understand the issues, preferably a general who knows where the battlefield is.

There are some critics of course who say that the Bank is irrelevant to real development.They cite the example of China. But let's not forget that even China has benefited from the Bank's advice and aid. For smaller countries with fewer resources, a wb package might be a vital catalyst to unlocking private capital inflows.

Given that so many major development issues are linked to trade and that stalemate in negotiations under the World Trade Organization (wto) is a problem for many developing countries, I am surprised that no one has tried to link the two bodies. This is good opportunity to do so and then let the developing countries choose the wto head. Someone from Latin America might remind the us that it does not own all of America.

Kevin Rafferty was managing editor at the World Bank, 1997-99

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