Wednesday, January 5, 2005

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Imagine the following help wanted ad....

WORLD BANK PRESIDENT: Must attempt to eradicate poverty, AIDS, corruption, and illiteracy in developing world within five-year term. Desired skills include working knowledge of economics, management training, and the ability to cooperate and listen to G-7, IMF, NGO community, and the developing countries. People skills a plus. American citizenship a prerequisite.

Christopher Swann reports in the Financial Times that James Wolfensohn is out:

The search has begun for a new World Bank president, with James Wolfensohn indicating that he would leave that post after 10 years when his term expires in June.

The US Treasury on Monday said Mr Wolfensohn had not sought a third term at the bank, and that discussions with shareholders to try to determine his successor had already begun....

The post has historically been held by an American, but there may be pressure from developing economies for a wider range of candidates. Some poorer countries were disappointed when Rodrigo Rato, the European nominee, was tapped to be managing director of the International Monetary Fund in May 2004, beating Mohamed El-Erian, an Egyptian and a former member of the fund staff, now head of portfolio management at Pimco, the fund manager.

But World Bank watchers do not expect a break with tradition. Among Mr Wolfensohn's most widely mentioned possible successors are Robert Zoellick, the US trade representative; John Taylor, Treasury undersecretary for international affairs; Christine Todd Whitman, former director of the Environmental Protection Agency; and Colin Powell, US secretary of state.

The FT is being kind -- the BBC reports more accurately that, "Privately, [Wolfensohn] had let it be known that he would like to serve another five year term, but his lobbying efforts in Washington have failed."

I blogged last month about some of these candidates to replace Wolfensohn. The two I did not mention then were Taylor and Zoellick. Based on this Washington Post story by Mike Allen and John F. Harris on Whitman's forthcoming memoirs, I think it's a safe bet that Bush won't be too eager to appoint her to any position anytime soon (link via NRO's Ramesh Ponnuru. As for Taylor, my sources suggest that his lackluster performance in the G-7 process might prove to be a stumbling block (and there is the small matter of Taylor having advocated for some interesting IFI reforms in the past).


UPDATE: Paul Blustein's story in the Washington Post has other candidates, including, "Randall L. Tobias, the administration's global AIDS coordinator" and "Carla A. Hills, a former U.S. trade representative."

posted by Dan on 01.05.05 at 12:12 AM


Professor Drezner,

You must read Samir Amin. This talk of eliminating poverty is nonsense. I understand you are at the farthest right institution in economics, but how many case studies and data sets must be manipulated to fit the neoliberal framework? Poverty is necessary for capital accumulation and the US deficit is good foreign policy in that it wipes out the savings of Asia and Europe.

posted by: trinket on 01.05.05 at 12:12 AM [permalink]

a sample critique of what Pranab Bhardan label's "Group B" or the Sachs, Stiglitz, Wade remedies to poverty as written by Samir Amin:

"Conventional vulgar economic theory avoids the real questions that are posed by the expansion of capitalism. This is because it substitutes for an analysis of really-existing capitalism a theory of an imaginary capitalism, conceived as a simple and continuous extension of exchange relations (the market), whereas the system functions and reproduces itself on the basis of capitalist production and exchange relations (not simple market relations). This substitution is easily coupled with the a priori notion, which neither history nor rational argument confirm, that the market is self-regulating and produces a social optimum. Poverty can then only be explained by causes decreed to be outside of economic logic, such as population growth or policy errors. The relation of poverty to the very process of accumulation is dismissed by conventional economic theory. The resulting liberal virus, which pollutes contemporary social thought and annihilates the capacity to understand the world, let alone transform it, has deeply penetrated the various lefts constituted since the Second World War. The movements currently engaged in social struggles for “another world” and an alternative globalization will only be able to produce significant social advances if they get rid of this virus in order to construct an authentic theoretical debate. As long as they have not gotten rid of this virus, social movements, even the best intentioned, will remain locked in the shackles of conventional thought and therefore prisoners of ineffective corrective propositions—those which are fed by the rhetoric concerning poverty reduction."

I hope you do not delete this post because my intentions are to simply trigger intellectual debate, a debate that is sorely needed.

posted by: trinket on 01.05.05 at 12:12 AM [permalink]

Interesting - I also remember seeing Stan Fischer's name bandied around (I think it was AP or Reuters) Also, interesting that Bush is looking at politicals. With the exception of two, every World Bank Pres. has come from private finance. Personally I think Taylor is not a good fit - too much of a leap between managing IA and the Bank. I would like to see Bob Rubin or Larry Summers get the job - individuals with the financial accumen and the abilities to nuance politics are rare, as is Bush giving the nod to a dem, but I think this would be smart policy. Putting in a Hills, Taylor, or Zoellick could prove to be a very bad idea.

posted by: Marty W on 01.05.05 at 12:12 AM [permalink]

Uh, doesn't Taylor actually hate the World Bank with a white-hot passion? Why would he be a good choice?

posted by: praktike on 01.05.05 at 12:12 AM [permalink]

Zoellick is too valuable where he is. No one Bush would be likely to appoint as USTR would come close to being able to fill his shoes.

As for Whitman, what does she know about development? What does Carla Hills know about development? Why should we think either of these worthies would be more effective managers of the World Bank than Wolfensohn has been?

Larry Summers, on the other hand, was (I believe) considered for the job before Wolfensohn was nominated ten years ago, does understand something both about development and financial markets, and now administers a large institution with deeply entrenched special interests and traditions, Harvard University. As a patronage plum, the presidency of the World Bank isn't much; its greatest visibility is overseas, not here, and its occupant can't do many political favors for members of the President's own party.

The way I read the Post and BBC stories, the White House decided some time ago it didn't like Wolfensohn and hasn't a clue as to who it wants to replace him. It might as well try to get some points for bipartisanship, assuming of course that Summers wants the job.

posted by: Zathras on 01.05.05 at 12:12 AM [permalink]

Treasury doesn't like Wolfensohn. Condi likes him, but apparently she doesn't have the last word.

posted by: praktike on 01.05.05 at 12:12 AM [permalink]

Larry Summers is the best American for the job, and if the Bushies were smart, they would give it to him. At the Bank, he cannot criticize the Administration's fiscal policies (that is the role of the IMF, not the Bank), and Larry Summers' views on development are not entirely out of line with the Bush Administration's general views, though they are not identical either. He is pro-grants, for example, and believes you need sound macro and micro foundations in place for development aid to be effective. He certainly is not Wolfensohn 2.

No chance it will happen, though.

I also suspect the Bush economics team does not like the obviously qualified Stan Fischer enough to consider him -- he is probably seen as too pro-big bailout from his time at the fund. Of course, the post-fischer IMF has done just as many big bailouts, with the full support of the Bush Administration.

If the American's only rule is dropped, Kemal Dervis (formerly of the world bank, formerly Turkey's economy minister, now an MP) would be an interesting choice. He has experience both in the bank and in managing a crisis stricken emerging economy. His macroeconomic policy preferences are orthodox ... and he has strong ties to the development policy world.

No chance that will happen either.

A Wall Street name (with a record of having supported Bush in the campaign) is another possibility. Treasury is not open for now ...

posted by: brad setser on 01.05.05 at 12:12 AM [permalink]

you must not forget m. peter mcpherson. he just ended his term as president of michigan state university, he was an under sec. for the treasury during reagan, and he was picked to rebuild the banking system in iraq under the cpa. plus, he has said he wants the job.

posted by: joe on 01.05.05 at 12:12 AM [permalink]

Well, at least McPherson did a better job in Iraq than Kerik ... I don't think stuck around long enough to implement most of his grand plans though. Right now Iraq's economy is a rip roaring example of the success of conservative economic policy. that iraqi flat tax triggered a huge boom ... Clearly, spending the summer of 2003 in baghdad is the path to fame and glory in Bush 2.

But I am not sure McPherson will easily get sufficient support from the rest of the world. Remember that the US vetoed (more or less) Germany's first choice for the head of the IMF back in 00 (Caio Koch Weser), and settled for Germany's second choice (Kohler). McPherson might be hard for some in Europe to swallow -- and not just the usual suspects.

Remember that "development" and "aid" and such are big issues for Blair and Brown in the UK, and a big theme of Blair's G8 presidency (see his piece in the economist). I don't know what McPherson's vision of development is, but if it not at least somewhat sympathetic with Blair and Brown's, the UK government may feel that the US is not paying back their loyalty in iraq on an issue that matters to them.

posted by: brad on 01.05.05 at 12:12 AM [permalink]

Frankly, Jan Egeland, the 'stingy' UN undersecretary doesn't have a background
in development or humanitarian relief, either
just a wunderkind former Norwegian foreign
minister. Besides, wasn't Barber Conable, the
second to last World Bank chair, a long time
NY congressman. Summer's is good, but they'll
probably bring up that memo on third world
waste disposal. Besides, he does more good
at Harvard.

posted by: narciso on 01.05.05 at 12:12 AM [permalink]

The third world memo is old news, and i think most folks around the bank would prefer Summmers to some of the other leading candidates.

Zoellick is out, got another job. Taylor? or someone else?

posted by: brad on 01.05.05 at 12:12 AM [permalink]

Actually I would rewrite the ad by saying that the less you know about development the higher will be your chances of being hired as least that is the gist of Mallaby observation as how WB Presidents are selected. I recommend Larry King. The other night he asked one of his panelist what is the function of International Red Cross and Red Cresent Society!!!

posted by: Asif Dowla on 01.05.05 at 12:12 AM [permalink]

Chris Nelson says Clinton is pretty close in the running. Wow - wouldn't that make the next five years interesting!

posted by: marty W on 01.05.05 at 12:12 AM [permalink]

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