Time to wind up the World Bank now

Time to wind up the World Bank now
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First Published: Sat, May 19 2007. 12 04 AM IST
Updated: Sat, May 19 2007. 12 04 AM IST
Paul Wolfowitz’s ouster was probably deserved; to crusade against corruption while bending the rules for your partner is just silly. Continuing corruption and poor developmental results demonstrate that change is badly needed at the World Bank. However, the bank’s governance problem appears insoluble; it should be wound up.
Like most global institutions, the World Bank has no clear governance structure. Its board consists of political appointees, with little experience of development banking, so are dependent on the bank’s senior staff. In practice, the bank’s record is not good, either in preventing corruption or in fostering economic development. Countries like China, India, Japan, Taiwan and Singapore, in which the World Bank has played either a modest role or none, have done better than its principal customers in Africa and Latin America. If anything like $100 billion (Rs4.1 lakh crore) has gone missing from World Bank loans, as the Senate Foreign Relations Committee claimed in 2004,?then?the?bank’s?unweildy control procedures don’t work.
Reform is difficult because of the resistance of the bank’s senior staff and the impotence of its directors. Admittedly, Wolfowitz wasn’t the ideal reformer. Intelligent and emotionally committed to global development, he was nevertheless associated with Bush administration policies that were unpopular internationally. A professional banker or a representative of the modest foreign policy approach on which Bush was elected in 2000 would have faced less opposition.
It’s not clear whether any World Bank president, whatever his background, can clean the place up. The selective leaking to the media, jockeying to put Wolfowitz’s relatively minor transgression in the worst light, and politicization of the review process suggest that the Bank’s senior staff have a sense of entitlement and a determination to pursue their misguided path that make effective leadership impossible. The World Bank’s loans have reduced from a peak of $122 billion in 2002 to $103 billion in June 2006. Surely now is the time to put the institution out of its misery and encourage its senior staff to get real jobs.
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First Published: Sat, May 19 2007. 12 04 AM IST
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