Saving the World Bank

Courtesy Reuters


In the past five years, the world has created the International Criminal Court; the Global Fund for AIDS, Tuberculosis, and Malaria; and the Kyoto carbon-trading system. Scarcely a month goes by without statesmen, high-level commissions, and civil-society activists calling for the creation of yet another institution: to manage postconflict reconstruction, to handle sovereign bankruptcies, to supplement or supplant existing bodies such as the United Nations. World leaders have focused less, however, on sustaining the good global institutions already in existence. A case in point is the World Bank, where an incoming president will soon confront a nearly impossible challenge: saving the bank from the same caste of statesmen, high-level commissions, and civil-society activists.

After 60 years of operation, the World Bank is large and lavish; it does not exude an aura of fragility. Its main complex in Washington, D.C., is an extravagance of glass and steel -- a contrast with the rundown UN headquarters in New York, where part of a ceiling collapsed two years ago. The bank's projects encompass an extraordinary range of goals, from road building to female literacy efforts to civil-service reform, and are spread across almost 100 countries. The institution gives out around $20 billion in loans and grants each year, a volume roughly 25 percent greater than total U.S. aid, three times the size of Germany's aid program, and seven times the combined output of all the UN agencies (although, to be fair, UN and government aid programs consist almost entirely of grants, rather than the bank's less generous grant-loan combination). When James Wolfensohn, the outgoing bank president, visits one of the borrowing countries, he is often treated like a head of state -- no surprise given the bank's financial clout in aid-dependent nations.

In terms of global governance, the bank's financial strength is a huge asset. Whenever a crisis demands an immediate big-money response, the United States and its allies, which dominate the bank's board, are quick to demand the bank's assistance. After the peso

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