Not your father's World Bank

An interesting piece in the Washington Post dishing praise for the new World Bank president, Robert Zoellick.

After the failed presidency of his predecessor, Zoellick is off to a good start. His wonkish style goes over wonderfully: In my straw poll of World Bank insiders, the new boss gets a rapturous thumbs up. He brought nobody with him when he arrived, determined to avoid Wolfowitz's first error, which was to rely on imported aides detested by the bank staff. But if Zoellick's first hundred days at the World Bank have been a honeymoon, the reasons go beyond style.

The main thrust of Zoellick’s program is to provide some sort of political influence to help not reign in globalization per se, but steer it in a direction that will help include the billion or so people of the world who live outside its system. Sort of an advocate for the poor, I guess. In the words of columnist Sebastian Mallaby, it’s called “the political deficit of globalization.” We couldn’t reprint what the world’s poor called it.

Brush with greatness
When Wolfowitz traveled to Burkina Faso in June 2005, my friend Steve and I had the pleasure to meet some of his staff, including his assistant Robin Cleveland.

Here’s Robert Calderisi’s take on her (and Paul Wolfowitz) in the New Statesman:

She supervised the Pentagon's budget and is remembered for predicting that the war in Iraq would cost "only" $80bn (not $300bn and counting), after which its oil revenues would "pay for the rest". She also worked on Capitol Hill, where she was known as one of the meanest people in Washington. Her verbal outbursts and denigration of World Bank staff have made her infamous. And every Wednesday, I am told, she visits the White House for "instructions".

She was quite nice to us. As another (and much younger) aid straight out of the White House prattled on with the official photographer about the death of princess Diana, Steve peppered her with all sorts of questions on international aid and other sundry topics: I remember her being very adamant about speaking to her teenage kids about sex; she disliked the Peace Corps (a waste of money, I believe she said.); she thought the EU was a joke.

We didn’t ask her about Iraq.

All in all, an interesting conversation. She was engaging and in Burkina Faso we don’t get to speak to too many people who've sat near the throne of power. Anyway, the time to pay the bill came, and we put down our share of money. She wouldn’t take it; we insisted. She looked at the kid recently departed from the White House and said: “Please give these people their money back before I scream.”

So, you were saying?
As for the World Bank, it needs your help. I know a few people who have worked there and they’re all very nice and well intentioned and whatever. In my mind, however, the World Bank seems unsure of what it wants to do, what its role is in 2007. It certainly suffers from a clear case of scope creep. There’s the new good guys, who claim the Bank is a good tool for small-scale development. No, we’re a bank with funds to create large-scale projects, the old guys say. Why else would we be forced to push, push, push new lending. I want to be a bad-ass debt collection agency, opine a few guys in black. No, we’re soldiers in the war on corruption, Wolfowitz said before they pushed him out the door.

Yes, the bank has placed more people in the field; yes, its leaders have reigned in some of their support for large-scale one-size-fits-all projects; yes, they’ve started to address some of their abhorrence of transparency, especially their in-country decision making process. But the Bank has a long, long way to go. Part of me thinks that with increasing private capital from outside sources and falling loans from the World Bank itself, perhaps it’s time to find a better way to do this. Doesn’t Blackwater handle these sorts of things?

The grievances
Here’s a Carnegie Mellon professor’s take on the World Bank and its dependent audit sector, perhaps the single biggest problem the bank has. (Actually, auditing and project appraisal is a problem throughout the world of development. Along with paying per diem.)

After half a century and more than $500 billion, there is little to show for the bank’s efforts,” he writes.

He continues (and I quote):

• Thirty-eight countries have amassed $71 billion in unpayable multilateral loans, encouraged by the bank’s selfserving projections of country growth, on which rich-country taxpayers must now make good.
• Corruption has been exposed both within the bank and in its programs and is now estimated at more than $100 billion.
• Protest is rising among leading African scholars who seek to stop all aid because it serves only to entrench and enrich a series of corrupt elites.
• Massive anecdotal evidence of waste, ineptitude, and outright theft can no longer be ignored.
• Seldom does the bank return to inspect long-term project success, and many on-site investigations come up empty for lack of monitoring and records. The focus is on quantity of inputs with little effort expended to measure the effective output of programs. (His emphasis.)
• Performance measures have been manipulated to bolster management claims of success and refute critics.

Bent, not broken; kind of bad, but certainly not hopeless is how Nancy Birdsall (of the Center for Global Development) describes the bank. A fixer upper. Why? We need the Bank because it does what it does well well. Well, pretty well.

First, the U.S. alone cannot be the sole missionary for free markets and democracy. Bank staff bring to governments in the developing world -- many incompetent and some ridden at all levels with the curse of corruption -- solid expertise on how to foster poverty-reducing growth. Even China , India and Russia, which are flush with private capital and borrow little from the Bank, value its advice--be it on education, agriculture, debt management, or pension reform. They see the Bank as an imperfect but essentially honest broker, with staff who have worldwide, practical experience.

Second, the world needs the Bank to provide global public goods. With its financial heft and technical expertise, the Bank is arguably the best-armed institution to address urgent 21st century challenges that are beyond the scope of any single nation state: fostering an overdue green revolution in Africa; creating incentives for development of an AIDS vaccine and new solar energy and biofuel technologies; helping poor countries to adapt to accelerating climate change; and combating money laundering, cross-border bribery and other international corruption.

The speech
So what does Zoellick have to say for himself? Other than the advertised “globalization with a human face” theme, he laid a platform of six strategic areas where he will focus the Bank’s efforts.

Theme one: To help the poorest countries – especially Africa – overcome poverty and spur sustainable growth. He traveled to Africa during the summer and found that leaders want the Bank to help them build infrastructure (especially in the energy sector) that will help spur regional integration.

Second, to help address the special needs of countries coming out of conflicts. He admits the Bank’s understanding of these issues is modest at best.

Third, create a new business model for working with middle income countries. They may need social services and infrastructure, but what is most necessary is to increase the income of the poorest of these countries. Also, many face environmental problems.

Fourth, the World Bank must play a more active role in fostering regional development and integration and goods that transcend national boundaries.

Five (and an interesting choice of words): “One of the most notable challenges of our time is how to support those seeking to advance development and opportunities in the Arab World.”

Six, keep the multi-pronged approach alive and use the ability of the Bank to collect data to help the five other themes.

Finally, he spoke of the need to reflect on the bank’s internal challenges: Focus more on client services; strengthen ties with civil society; work more effectively with national aid programs; strengthen the approach with dealing with governance and corruption.