Easterly calls for regime change. In a Washington Post comment, long-time Bank economist, and now professor of economics at New York University (bio), William Easterly says that the Bank is facing the greatest crisis in its history.

According to Easterly, Wolfowitz's problems at the Bank are caused by the same thing that got him into trouble in Iraq: "intellectual hubris at the top that disdained the messy realities at the bottom. He imagined it would be as easy to clean up the pathologies of foreign aid as he had thought it would be to create democracy in the Middle East."

Easterly believes that while many within the Bank opposed Wolfowitz's corruption crusade because it threatened lending volumes, the president's modus operandi was "compromised by selective prosecution". Pakistan, US ally in the 'war on terror' "continued to receive oodles of World Bank money".

The misguided attempt to tackle corruption is only part of the problem. "The best and the brightest of its staff have been leaving in a steady, demoralized exodus, and poor nations are now deserting the bank to seek loans from private capital markets or grants from aid donors like China, who are in it for No. 1. Meanwhile, new private foundations (the Bill and Melinda Gates Foundation, Google.org and so on) are taking over traditional bank areas such as health and agriculture. Add to that the debacle over Wolfowitz's sweetheart deal, and you have a bank facing the gravest crisis in its six-decades-old history."

UPDATE, 23 April, 03.50 EST. Posted by Alex Wilks.
The Easterly Op Ed is also picked over by Pundita. She starts by appreciating Easterly's denunciation of the Bank's ever-spreading agenda:
"Wolfowitz also continued a disastrous trend begun by [James] Wolfensohn, whose answer to every bank failure to meet a goal was to add three new goals. The pair have supplemented the bank's original objective -- promoting economic growth -- with everything from securing children's rights to promoting world peace. In so doing, they've sacrificed clarity of direction for ludicrously infeasible by PR-friendly slogans like "empowering the poor" and "attaining the Millennium Development Goals".
(For the same argument see my 2001 short briefing: Overstretched and Underloved: The World Bank Faces Strategy Decisions).

Where Pundita parts company with Easterly is on the question of what should be done with the Bank. She complains loudly about what she calls the Hilary Benn fallacy on corruption (that money should still flow even if there are problems in a country/with a project). She suggests spinning off the International Development Association (the Bank's low-income country window), leaving the rest of the Bank to concentrate on infrastructure and government services.

Many NGOs have argued the same: that IDA should be out of the Bank - as was the original idea.

Jeff Powell ~ April 22, 2007

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