WITH ALL THE VITRIOL aimed at Paul Wolfowitz, who was brought down as president of the World Bank, a visitor from Mars might think this fellow was right up there with Slobodan Milosevic. During his two years in office running the multilateral institution, the former deputy U.S. Secretary of Defense certainly did not endear himself to the bank’s bureaucracy by challenging hidebound policies and trying to stem corruption. The real troubles at the World Bank are not about allegations about personal behavior. Consider also that none of the Asian or African countries wanted any part of the coup. The EU’s ringleader was Germany’s development minister Heidemarie Wieczorek-Zeul, known as “Red Heidi” for both her hair color and politics.
The World Bank is an anachronism and ought to be disbanded. What sense does it make for it to lend money to a group of developing economies for projects that can readily find financing in world capital markets? Why does no one point out the bank’s dismal record in its lending strategy over the last 60 years in helping many of these countries climb out of poverty? China, for example, is one country that should have long since graduated from bank borrowing. It’s sitting on $1 trillion in international reserves and adding to this pile at a dizzying rate of $250 billion a year. Studies show that countries that are big recipients of World Bank loans perform no better and often worse than those that do not receive loans.
Barring dissolution, basic managerial hygiene demands that the institution empty the executive suite of overpaid, underperforming, self-protective staff and start afresh with market-centered manageable objectives for which the bank can demonstrate accountability and clarity of purpose. As long as the inmates are running the asylum, this is unlikely to happen. But then perhaps the President could put forward someone who knows how to lead institutions that need a whip hand.