The Global Zeitenwende
How to Avoid a New Cold War in a Multipolar Era
Foreign Affairs: You argue that the World Bank is now trying to do too much all at once, and that one component of World Bank reform will involve "rationalizing today's proliferated development architecture." Are there any specific missions that you think the bank could now devolve to other institutions? In other words, in what activities does the bank have "comparative advantage," for example giving loans after a financial crisis, poverty reduction, education reform, or other tasks?
Jessica Einhorn: You are right to ask this question since the article was consciously written to avoid specific recommendations. My experience in public policy is that, if you describe a problem and then offer the solution, the solution gets most of the attention. Moreover, any single formulation will be subject to easy criticism and dismissal. And then, what happens to the problem? It is also dismissed because the solution wasn't "realistic," or whatever. The purpose of my article is to get people to agree there is a big problem in implementing the development vision today. I have said that the World Bank has a comparative advantage in economics as its professional discipline, and in dealing with governments as clients and shareholders. Headquartered in Washington, even with field offices expanding, the bank should focus on the biggest economic policy problems impeding a country's development efforts, and help establish the institutions that work to promote market-friendly solutions, while keeping an eye on the compatibility of the individual projects with the emerging liberal international system and concerns for global commons. As I write this, I see it is a "mouthful." I think government representatives need to exchange views on where they think the World Bank has the greatest contribution to make and where they think the bank could easily off-load lending programs; the article has illustrative suggestions.
FA: Although you say that it is now time for the World Bank to focus on internal management, you do praise James Wolfensohn's "comprehensive" vision and his "dream of a world free of poverty." Has Wolfensohn run the bank largely as people expected when he was appointed in 1995? If he has surprised in any way, how so?
Einhorn: I believe that Jim Wolfensohn responded to the concerns of the major shareholders (the industrial countries) by articulating a vision that was both idealistic and comprehensive. I also try to explain how the politics of building support for the institution can undermine its operational effectiveness and influence. As for surprises, I think we have learned from our own government appointments that it is very hard to predict the leadership style of someone who enters public service at the highest levels, with no prior experience in either public policy or managing a public corporation. In that sense, we knew much more about McNamara, Clausen, Conable and Lew Preston (who passed away tragically early in his tenure). We knew that Jim Wolfensohn was the "Renaissance man" with the "golden rolodex" and I suppose in that sense there were no surprises, since he embraced all constituencies with an expansive and optimistic vision. His intellectual breadth and his respect for McNamara's visionary leadership-those were apparent from early on. It is not a surprise to find a former head of the Kennedy Center and leader in rebuilding Carnegie Hall, believing that culture is part of the development process. Maybe the one surprise was the degree to which he embodied a "modern" approach to the public sector-in transparency, accountability, and looking for strategic partnerships. I don't know if that came from his business background or his broad non-profit work but it was a welcome tonic to some of our old fashioned ways.
FA: One seemingly intractable problem is the World Bank's political constraints, with both developed and developing countries participating in its programs and exerting political influence on the bank. How best could the bank minimize this political pressure? Can it recover its image of "professional impartiality"?
Einhorn: The question is whether the shareholders want a "professionally impartial" World Bank. In fact, different groups want to "capture" the bank for different purposes, but the goal is probably always to capture not to professionalize. So the professionalism falls to the World Bank itself, as its protection against competing interest groups. The alternative is to try to please all the groups but, as I think we have seen in the last few years, you can't successfully straddle the barricades. The one suggestion I would make is to give more voice to the middle- income countries, where substantial progress has been made. In another context, I have argued that the shareholder weights of the bank should be determined not only by economic size but, also, by best practice in public policy and finance. Shareholding in the International Monetary Fund and the World Bank should be linked to meeting the goals of the Bretton Woods system, as it has evolved. Starting, of course, with liberal trade and enlarged by the various codes of conduct that are being embraced, we should recognize the best performers by enhancing their standing in these institutions.