TCS Daily

What Zoellick Should Do

By Desmond Lachman - June 27, 2007 12:00 AM

Robert Zoellick assumes the presidency of the World Bank at what is probably the most challenging moment in the Bank's sixty year history. For not only will Mr. Zoellick need to rebuild the Bank's tarnished credibility and restore its staff's battered morale in the aftermath of Paul Wolfowitz' disastrous presidency. Rather, Mr. Zoellick will also need to start reforming the Bank in a major way if that institution is to remain relevant in today's very changed world of international finance.

Judging by Mr. Zoellick's very impressive academic resume and by his highly successful career in public service, there can be little gainsaying his many fine qualities to deal with many aspects of his new job. However, it remains to be seen whether he will be any more successful than any of his predecessors in undertaking the Herculean task of radically reforming and refocusing the lumbering and unwieldy bureaucracy that he will soon head.

In the immediate term, Mr. Zoellick will need to restore the Bank's tattered credibility after the protracted and unseemly dismissal of Paul Wolfowitz raised basic questions about the Bank's own governance. In a similar vein, Mr. Zoellick will need to boost the Bank staff's morale after no fewer than 14 of its 29 most senior staff members left the Bank during Mr. Wolfowitz' short tenure as president. As if that were not a sufficient short-term agenda, Mr. Zoellick will also need to replenish the Bank's depleted coffers for lending to its poorer member countries by revitalizing the presently stalled US$28 billion IDA round.

Fortunately Mr. Zoellick's immediate challenges play to his strengths. Free of scandal in his long and distinguished public service career, he is well placed to soothe concerns about integrity at the highest level of the Bank. As a seasoned diplomat and dealmaker, he could not be better qualified to boost Bank staff morale and to revive the flagging IDA round. And Mr. Zoellick's initial press interviews since being nominated all lend assurance to the strong likelihood that he will use his well-honed skills with his characteristic high level of energy to meet his immediate challenges.

While one should not downplay the enormity of Mr. Zoellick's immediate challenges, the real test of his five year tenure as Bank president will be whether he will succeed in making the Bank a more relevant and efficient institution in alleviating global poverty in today's radically changed world. How might the Bank respond to the fact that most of the Bank's middle income clients, which still receive over one-third of the Bank's overall lending, can now raise as much money as they need at very good terms in the international capital market? How might the Bank respond to the emergence of many philanthropic non-governmental organizations, perhaps best exemplified by the Bill and Melinda Gates Foundation that are very much more effective than is the Bank at narrowly targeting their efforts at specific impediments to growth in the emerging market economies?

And will Mr. Zoellick be any more effective than his predecessors in establishing a truly independent evaluation office World Bank lending programs? Or will he be any more successful in routing out corruption in all too many of the World Bank's member countries? By the Bank's own measure, as much as 70 percent of World Bank IDA loans are lent to blatantly corrupt governments.

As an outsider to the Bank with little experience in development economics, one should not expect Mr. Zoellick to move swiftly in the direction of radical reform. Instead, one should expect him to spend his first year in office listening and learning before he introduces any major changes at the Bank.

The danger of course is that in the process of listening and learning, Mr. Zoellick, like so many of his predecessors, might be co-opted by the Bank's all too powerful staff. In this context, Mr. Zoellick's recent pronouncements on the need for the Bank to continue with its large lending program to a China, which is presently flooded with foreign exchange reserves, are hardly encouraging. If Mr. Zoellick truly thinks that China should still be a large recipient of Bank funds, is he really likely to refocus the Bank's lending activities away from the middle income countries that can borrow freely in the global capital market to those poorer countries that still desperately need the Bank's support?

Only time will tell whether Mr. Zoellick will rise to the many new challenges that now face him. However, it is not too early to ask whether the international community would not have been better served by putting an end to the antiquated practice of restricting the choice of Bank president to US citizens. By casting the net wider, one could very well have come up with a candidate for Bank president, who could have hit the ground running a lot faster than Mr. Zoellick in radically reforming an institution that is long overdue for radical reform.

The author is Resident Fellow, American Enterprise Institute.



World Bank
Since we know that bearocracies have immense incentive and power to sabotage leaders who try to rock the boat, we can assume they will also try to emasculate Zoellick. I like the irony thought from this disfunctional organ of governments that after all the fuss about Wolfowitz' girlfirends salary, someone let out that there are at least 1000 other snivelling beaurocrts there that get just as much, and more(and also thru nepotism), for doing nothing useful; their function is to shovel money from the in door, over to the out door to subsidise autocrates in crappy third world countries. I can hardly believe that americans put up with it considering their ever diminishing station in life.

No. Here's What Zoellick Should Do
He should either close the doors forever or move the bank to North Korea, where that monument to socialism belongs.

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