Moving Forward after Wolfowitz–Will the United States play its role?

As the world has moved on to speculating about Paul Wolfowitz’s successor, a special article in the Economist points to the challenges ahead for the Bank and the development business more generally.

The protracted and very public end, the backroom ‘no-fault divorce’ deal struck between PW’s lawyer and three rogue EDs, and the exchange of amicable, if somewhat hollow, statements are intended to get people back to work and the Bank’s stakeholders focused on “what next?” and the business of fighting poverty. 

How quickly that happens, or whether it happens at all, depends on the United States.

Quote the Economist

“The bank has a set rhythm,” says Ashraf Ghani, chancellor of Kabul University, who once worked there. “Anyone who masters its rhythm, runs the bank.”

But the next president will not have much time. He (sic) will arrive in the middle of a campaign to coax new money from donors; the very governments that last month fretted openly about the bank’s credibility and reputation. He will need to raise at least $25 billion this year just to keep the bank’s aid from shrinking in the medium term. Even before the past month’s controversies, some donors were balking at this bill. One or two European governments, Mr Wolfowitz thought, saw his troubles as a convenient excuse to renege on their financial commitments.

“A bigger worry must be America. It remains the bank’s single biggest contributor, stumping up almost 14% of the money the last time the begging bowl was passed around. Given the tenacity with which it fought for its man, one might assume the White House cherishes the institution he led. In fact it cares little about the bank, and knows even less. The armistice it agreed on May 17th might have arrived sooner, but Mr Wolfowitz’s former colleagues seemed to put personal loyalties above their country’s interest, let alone the bank’s. Now some of the agency’s more hysterical critics think it has fallen to a European coup. The risk is that Mr Bush will take revenge by steering America’s money elsewhere.”

A blogger at the Council on Foreign Relations makes a similar point, and how damaging a contentious nomination process would be.

What the United States might do now to demonstrate its commitment to the Bank, and earn its right to nominate someone capable and ready to start over the summer, is pretty simple.

First, call Europe’s bluff on the importance of the Bank by announcing that the United States will increase its contribution to IDA, and that it looks forward to other rich countries being equally generous.  This would be a brilliant move if the White-House-demanded face-saving is to continue and Paul Wolfowitz’s last trip to Africa is to include remarks at the IDA Deputies meeting in Maputo in late June.  It would also demonstrate their commitment to getting the Bank back to work on poverty, in Africa, and with a strengthened hand on the governance side.

Second, Secretary Paulson should consult privately with other nations about possible candidates.  Paul Wolfowitz’s ‘charm surge’ after his unexpected nomination in March 2005 led to substantial arm-twisting, linkage to the deal for the head of the WTO to placate President Chirac, and left a bad taste in everyone’s mouth.  Serious consultation, as Secretary Paulson has said he intends to do, would go back to the long history of building genuine consensus over the US President’s choice.  It would be consistent with Paulson’s own stature as a successful corporate leader.  The process of rebuilding staff cohesion and morale, of completing the IDA replenishment talks, and moving forward on debt, aid and trade needs to put this distraction behind us, so the luxury of the right thing–a global, merit-based selection–may be unavailable in June 2007.  However, as he seeks ideas about candidates, Secretary Paulson may also press his G7 peers to agree to open, merit-based selections for all the IFIs in the future  The Bank’s Board was millimeters away from putting that forward to the Development Committee at the Spring Meetings. It was only a last minute manoeuvre that derailed the “voice” report, when the US said “OK, we’ll agree to an open selection for the Bank and Fund, provided it applies to all the IFIs” which threw the Japanese for a loop since, like the United States, they have their own preserve in Manila, the Asian Development Bank.

Third, whoever is put forward, and whoever is selected, has to be prepared to spend time listening, demonstrating leadership and showing independence.  He or she has to be of unquestionable integrity, with a strong management record.  Not all the rumored candidates measure up.  While the best candidate need not be an American, there are many Americans in banking, in finance, in academia, in foundations and in the corporate world who have the skills.  Now is the time to go beyond Republican donors and supporters and find one, if a lame duck White House and its remaining supporters are determined to place an American in this important global job. 

It shouldn’t be so hard.

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