World Bank: Drastic Reformer Needed to Right a Failing Agenda

Whomever is going to run the World Bank next should pledge some dramatic changes -- changes that might actually bring the Bank in line with its proclaimed mission of ending global poverty.
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The blogsophere and Washington rumor-mill are working overtime right now on the question of who might be the next president of the World Bank -- whispers, rumors, and what the AFP just called a "brewing battle!" Will it be failed-Harvard President Larry Summers reborn yet again? Crusading economist Jeff Sachs? Hillary Clinton or John Kerry?

The Bank, which this year will distribute somewhere around $26 billion in mostly-loan funding, has a huge footprint in international development. But the model of the bank, while it's arguably improved some in recent years, is still deeply flawed from the perspective of those of us who care about global health and pro-people policies. And that shouldn't come as a surprise for an institution that's been run for decades by American Wall Street types and politicians.

Whomever is going to run the World Bank next should pledge some dramatic changes -- changes that might actually bring the Bank in line with its proclaimed mission of ending global poverty. And they should be held to account in actually enacting the reforms, not just paying lip service. Here's a few:

1) Drop the IFC. The International Finance Corporation is the arm of the World Bank dedicated to the dubious mission of fighting poverty through financing "companies and other private sector partners." Promoting an expansive neoliberal economic agenda to privatize basic services and deregulate, the IFC is at the center of what's wrong with the Bank.

But don't take my word for it. A recent internal independent evaluation found only 13 percent of IFC projects had any objectives related to people in poverty. The report found that the majority (60 percent) of their advisory programs actually delivered no identifiable benefits to society, let alone to the poor. Another internal report found that the IFC was too busy trying not to lose its "investments" during this financial crisis to actually do any good for the poor.

Ironically, the IFC also showed it doesn't know much about running a business when its PR-focused café in Washington, D.C. went out of business recently.

2) Focus on actually delivering on health.
For those of us who care greatly about ensuring people have access to health care, the World Bank's role in health has been, at best, a mixed bag. Of late, it has seemed much more worried about "harmonizing" amongst donors than impacting health of people in impoverished countries. The World Bank's anti-AIDS program, for example, has very little funding flowing to life-saving medicines. The most recent ten-year evaluation showed that three quarters of World Bank health programs in Africa failed by their own unambitious measures!

If the Bank is to be taken seriously as a poverty-fighting institution it needs to completely overhaul its approach to health. With the Global Fund to Fight AIDS, TB, and Malaria -- an overwhelmingly successful entity -- currently billions short of what it needs, we cannot afford to be wasting money on failed technical assistance efforts. We need those dollars to put pills into bodies, midwives into communities, and health workers in clinics.

3) Break the connection to the IMF. The IMF claims to have broken from its history of forcing countries into the pro-cyclical economic policies of forced privatization, deregulation, and austerity that proved so disastrous in previous crises. But the evidence suggests the opposite: They're still prescribing exactly the opposite of the kinds of policies for developing countries that they encourage in rich nations. So why does the World Bank still condition its assistance for most poor countries on a clean bill of health from the IMF and compliance with its standards of fiscal turpitude? It's time to break the link completely or the Bank will never fulfill its mission.

So who should be Bank president?

Not Larry Summers.
This one is a no-brainer. The
that President Obama is thinking about nominating Larry Summers -- former president of Harvard and former Obama and Clinton economic adviser. I cannot think of a worse choice. Just a few of the elements that disqualify him?
  • His disastrous advice to the president that torpedoed a robust stimulus package and leaves millions out of work here in the U.S.
  • His "academic" musings about whether women are inferior.

If that doesn't disqualify you for a job that's one-third economics and two-thirds diplomacy I'm not sure what does.

A non-American? Through a "gentleman's agreement" among rich countries, the U.S. gets to appoint the head of the World Bank -- which is, of course, not the least bit neo-colonial for the World's trans-national development agency. But there's nothing that formally requires this -- President Obama could declare his support for an open, democratic process to find the most suitable person in the world to run the bank. Fifty organizations globally have put forward a request for just this and one blog even held an online poll in which over 15,000 people voted for highly qualified folks--none of them American. But it seems unlikely: just hours after the current occupant of the office announced he was stepping down Treasury Secretary Tim Geithner confirmed the U.S. would be rolling ahead with a nomination.

It's also worth noting, though, that while a few decades ago a candidate who could gain support of the most of the global South would have had to be less of a rigid market fundamentalist, much has shifted and a Southern candidate who could get through could actually prove move problematic than some of the Northern options.

Jeffrey Sachs. What we need is a true reformer -- somebody ready to ask some big questions and make some big changes. And by most any measure Dr. Sachs is the kind of guy who fits that bill -- bold, outspoken, and committed. Now Sachs has made mistakes -- especially during the Clinton administration when he promoted economic shock therapy that proved disastrous in several countries. But for the past decade from Columbia's Earth Institute he has been working, studying, and actually learning about development. His work has pioneered approaches to development that are community-based and he is one of the few voices in the world demanding that the global financial crisis not to become an excuse for rich countries to drop their commitments to those who had nothing to do with creating the crisis.

The U.S. could send a strong signal if, instead of putting forward yet another banker or politician with no actual experience, it chose someone like Sachs who has real relationships with developing country governments. Imagine: an actual expert in development to head an international agency claiming to work on it.

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