Avoiding Weimar Russia
links for 2007-05-09

Joe Stiglitz Pushes Arminio Fraga or Kemal Dervis for World Bank President

Joe Stiglitz writes:

FT.com / Comment & analysis / Comment - The Wolfowitz affair and its consequences: The current crisis at the World Bank is a chance finally to fix the governance problems.... Had the process of picking the president bee... fair... Paul Wolfowitz would never have been selected..... [L]eadership requires the confidence of those being led. Mr Wolfowitz has lost that confidence.... TMoreover, the bank relies on voluntary contributions.... It is a matter of good governance that taxpayers in the European countries that provide the overwhelming majority of those funds (the US does not even pay its proportionate share) have confidence in the institutions that administer their funds....

What is at issue, of course, is not just a violation of ethics or bank procedures, though those are important. Nor is it just the distortions of the record that Mr Wolfowitz’s team have repeatedly put forward in defence of this and other highly criticised decisions, though those too are important....

George W. Bush sealed Mr Wolfowitz’s appointment with a few phone calls to friends, such as Tony Blair.... The development and finance ministers who should have been intimately involved... were left to ratify... a done deal.... Wolfowitz... brought in political allies and supporters of the Iraq war and gave them top-level positions in the bank administration. At the same time he pushed an anti-corruption agenda, which (while laudable) was highly politicised... anti-corruption and good governance efforts... need... good-faith processes.

Good governance in a democratic, multilateral institution starts from choosing the best individual... [with] command of development economics, political experience and demonstrated managerial expertise in running a large multilateral organisation... characteristics that are likely to have earned the respect of the bank’s multiple constituencies: its staff, the countries receiving assistance, the countries contributing assistance and the non-governmental organisations.... It may not be necessary that the head come from the developing world, but certainly someone from the developing world has a natural advantage....

There are first-rate individuals who meet the criteria, including Arminio Fraga... [and] Kemal Dervis.... The World Bank is the most important global institution spearheading the fight against poverty. It was right to emphasise good governance. But it cannot play any significant role in the fight for good governance unless it reforms its own. Mr Wolfowitz’s exit is but a first step. How his replacement is chosen is no less important.

I cannot say I know either of them well enough even by reputation to have an informed opinion, but from what I know and have seen they are both very impressive.