 |
|
Photo Courtesy: Abod |
|
The World Bank and A Broken Trust
By Gideon Sackitey, Accra
Accra, May 20, Ghanadot.com - A common proverb in Africa
says, “The King Does No Wrong”. The implication is that
whatever and everything that the king does is right, correct
and cannot be challenged!
The other implication is that the king, by being a special
person with that special insight, is virtually considered
more or less perfect. We have so many of such people as we
grew up.
Therefore when news came that Paul Wolfowitz, then President
of the World Bank had engaged himself in a compromising
situation involving a woman and they had profited by it,
many of us were those who wondered how could the “king”
could be wrong? We thought it was one of those stories that
come and will go anyway. But alas, no! It is true and like
all men, the “king” can be wrong!
So it is true that Mr Wolfowitz will be leaving the World
Bank on June 30, 2007 accused of favouritism, despite being
a leading advocate of the fight against corruption! Mr
Wolfowitz was never a popular choice among development
agencies and many Europeans, with his background at the
Pentagon as a key architect of the US invasion of Iraq.
But the manner of his departure has rekindled a broader
debate about how the World Bank, and its sister institution,
the International Monetary Fund, are run.
By tradition, the World Bank president has always been
appointed by the US government, while the Europeans have had
the right to nominate the head of the IMF.
In a letter to the World Bank, 200 leading development
organizations have called for and open process for selecting
the new leader that includes "transparency of process, and
competence of prospective leadership without regard to
national origin".
"If the outdated convention is not abandoned, the leadership
crisis at the World Bank is unlikely to be fully resolved
even if Paul Wolfowitz decides to resign," they said.
Oxfam's Barbara Stocking said "the US and other rich
countries must now show that they are serious about good
governance by reforming the recruitment process to allow the
next head of the Bank to be appointed on merit and
commitment to alleviate poverty".
Japan, the World Bank's second largest donor, has also
called for the Bank to make a selection without restricting
itself to an American. But this seems to be what would
happen for see: “We want to make sure that we are selecting
the best individual for the job,” said Mr Tony Fratto, a
White House spokesman. “We want someone who has a real
passion for lifting people out of poverty.”
The Bush administration also reiterated that the next bank
president should be an American, as has been the case since
it was founded in the 1940s.
Many European leaders are on record as favoring an
international competition and are hoping that the United
States will consider people in other countries, but other
nations signaled earlier that if Mr. Wolfowitz resigned,
they would go along with another American as bank president.
"The nationality of the successor is a governance matter for
the World Bank," Japan's Chief Cabinet Secretary Yasuhisa
Shiozaki said. For many of us in Africa, this argument is
key. Very important because it is the World Bank and its
sister institution the IMF which has led governance reforms
and its introduction into our way of life as a people,
especially in the third world.
It is these organizations, these same people who have made
good governance, democracy major pre-requisites of
governance processes. Therefore, it is most bizarre to hear
that these same people do not or are not acceding to the
same governance structures, principles and processes they
profess.
Consequently, it is clear that President George Bush is
quickly finding someone to replace Mr Worlfowitz in the next
six weeks. But it is not clear if the Europeans or
especially the US are prepared to abandon their tacit
agreement, and give more power to other countries in the
selection process.
Therefore arguments that the World Bank should reform itself
and make itself responsive to the people, especially to
those in the developing world and for whom basically Mr
Wolfowitz engaged in setting up a corruption index, are most
topical and reasonable.
The leading contender appears to be Mr Robert Zoellick, the
former US trade representative who is reported to have been
lobbying hard for the role after quitting his job at the
State Department last year.
Other candidates include Mr Paul Volker, the chairman of the
Federal Reserve before Alan Greenspan, who is a respected
figure in Washington but rather old for the job; Mr Stanley
Fisher, a key official in the 1990s at the Bank and the
Fund, but seen as very much part of the Clinton
Administration era, and former USAID director Mr Andrew
Natsios.
But Mrs Nancy Birdsall, director of the Center for Global
Development thinks otherwise. She noted that the crisis was
a real opportunity for the World Bank to reform itself. "I
wish the Bush administration would announce its support for
an open, competitive and merit-based process. This whole
mess illustrates the need for change in how the nations of
the world oversee the bank."
The departure of Paul Wolfowitz as president of the World
Bank has indeed cast a cloud over the organisation and the
way that it is governed.
One reason why the Europeans for
instance may not lend themselves to open the selection
debate is that it is linked to the broader issue of who runs
the Bank and the Fund.
One disturbing knot here is the fact that currently the
votes on the executive board of the Bank and the Fund are
based on the size of a country's economy, not its
population. This is how it goes: The US, with the world's
largest economy, has around 17% of the votes, enough to give
it veto power as key decisions require an 85% majority.
But relative to the size of their economy, the EU is
over-represented on the Bank's board, and developing
countries, such as India and China, are under-represented.
Last September, the Bank and the Fund moved to increase the
quotas, and the voting rights, of fast-growing developing
countries like India, China and South Korea. But many
observers believe that a more radical redistribution of
power is needed, with either independent directors, or more
representation for developing countries who are the main
clients of the Bank.
Sadly the countries of sub-Saharan Africa, for example, have
only 5% of the Bank votes that takes them nowhere, except to
stretch out for funds from the others.
Fighting corruption
As said earlier, Mr Wolfowitz arrived at the World Bank at a
key moment in its development, with renewed calls for
Western commitment to end poverty in Africa and tackle
climate change.
But his most controversial policy was aimed at tackling
corruption and ensuring good governance. Mr Wolfowitz sought
to develop an index of corruption for each country, which
would show how easy it was for the private sector to do
business.
But it was his arbitrary actions in suspending development
aid without consulting the Executive Board that caused the
most friction. He argued that "when governments don't work,
the development assistance we provide to governments doesn't
work either".
It was unclear, however, what criteria he used in deciding
when to suspend World Bank projects. The work to be done
today is most ardous. Talk of change and reconstruction or
rebuilding the image of the institution would be most
difficult. The point is that when you are dealing with
financial institutions, especially a bank, there are so many
things that must be considered and trust is the most
paramount. Mr Wolfowitz broke that trust.
Now his successor will not only have to rebuild the image of
the Bank, but reassure its clients that it is living up to
its own ethical principles.
The most important reason that Paul Wolfowitz had to go,
however, may not have been the corruption issue. Rather, the
controversy over his role was threatening the future of the
World Bank's development funding which lends about 10
billion dollars per year to poor countries under its IDA
programme interest-free, but relies on rich countries to
replenish its funding for IDA every few years.
But he left behind a place that must heal its wounds and
divisions and overhaul a flawed, cumbersome structure that
had allowed the controversy to spread out of control.
President Bush earlier praised Mr. Wolfowitz at a news
conference but signaled that the end was near by saying he
regretted “that it’s come to this.”
Personally, I will not encourage an office relationship,
especially the type that Mr Wolfowitz encouraged to the
extent that he did all the things that he did. The kind of
relationship is bad enough.
For a lot more of us here, Mr Wolfowitz has been most
disgraceful. He broke the trust of an entire banking
community the world over for he was President of the World
Bank. Like I said, his successor has a lot of work to do to
make everybody including his staff believe that he was doing
the right thing on the job as well as in his relationship.
But like they say in the banking industry, banking is all
about trust. And quite often, trust when broken is almost
impossible to build.
Gideon Sackitey, Accra, May 20, 2007 Ghanadot
|
