Felix Salmon

The ideal nominee for World Bank president

Felix Salmon
Mar 22, 2012 07:16 UTC

Now things are getting interesting. Lesley Wroughton has the wonderful news: two very highly qualified non-American candidates — Ngozi Okonjo-Iweala and  Jose Antonio Ocampo — are going to be nominated to be president of the World Bank. This really puts the pressure on the White House to knock it out of the park with their nomination, because Ngozi, in particular, is broadly regarded both within and outside the Bank as being pretty much perfect for the job. She’s a whip-smart economist, she’s honest, she’s imaginative, she’s dedicated, she’s expert at navigating the Bank’s labyrinthine bureaucracy and politics, and she’s passionate about the way that the Bank can really make the world a better place.

In 2008, I “interviewed” Ngozi for Portfolio magazine. Which means that I went down to Washington and got escorted in to her office. She then arrived, I asked her one short question, she gave me a fluent and wonderful 2,000-word answer while barely pausing for breath, and then she left for a meeting with Bob Zoellick.

It’s been five years since I first said that Ngozi would make an excellent World Bank president, and this nomination is long overdue. What’s more, she will have a lot of support within the World Bank’s board — the body which ultimately will make the decision as to whom to choose.

Of course, the board members do what they’re told to do by the bank’s shareholders — the world’s countries. And if the Europeans and the Americans all vote for the US candidate, then the US candidate will win. That’s the simple truth. But here’s the thing: everybody on the board pays at least a modicum of lip service to the idea that the job will go to the best candidate. When Christine Lagarde took over at the IMF, she got the job because she was European, and the European candidate always gets the job. But at the same time, everybody voting for her could say with a straight face that she was, in fact, the best candidate as well.

Now that Ngozi’s in the running, the US is going to find it incredibly difficult to nominate a relatively low-profile person like Susan Rice, because it’s almost impossible to make a credible case that Rice is a superior candidate to Ngozi on the merits. And other big names seem to be falling away:

U.S. Senator John Kerry and PepsiCo’s Indian-born CEO Indra Nooyi also made an Obama administration shortlist, according to a source, although Kerry has publicly ruled out the job and Nooyi is no longer in contention, according to another source.

This is really bad news, because by a process of elimination it more or less forces Obama to go with Larry Summers. Larry would be a dreadful nominee, and a worse president, in a job whose primary prerequisite is diplomacy. And before he’s even nominated, there’s already a website up, ForgetLarry.org, devoted to campaigning against him for the job. It covers pretty much all the bases, although it weirdly misses the Russia/Shleifer scandal: for that, check out Cathy O’Neil’s post from a couple of weeks ago.

I’ve talked to a fair number of people about this position, including a few who are quite sympathetic to Larry, and not one of them thinks that he would be good in the post. If the US forced the world to choose between Larry and Ngozi, it would have to expend an astonishing amount of diplomatic capital to twist the requisite number of arms to get him the job, just because no one would actually want to vote for him. Their hearts would be with Ngozi.

Remember that Larry has never held elective office: it’s pretty much inconceivable he ever could. And yet, in its own way, the president of the World Bank is indeed an elected office. The electorate is tiny and extremely elite, to be sure. But the board is still going to want to meet with him, and he’s going to give them his insincere I’m-just-humoring-you-because-I’m-smarter-than-you smile, and even the Europeans are going to start wondering whether they really have to give Larry the job, just because they want to retain their own grip on the IMF.

It’s entirely conceivable, in fact, that an anti-Larry faction might vote instead for Jeff Sachs, who has already been formally nominated by some very small countries, on the grounds that convention holds that the president of the World Bank has to be an American, rather than that it has to be the US nominee. Up until now, the US nominee has always been the only American nominee: this is the first time that isn’t the case. Which means that we might yet see Larry and Jeff split the status-quo votes, allowing unstoppable momentum to gather behind Ngozi.

So here’s one clever idea: Joe Stiglitz and Stan Fischer should throw their hats in the ring as well; I think that both of them would be able to find a country willing to nominate them. There would then be no fewer than four American nominees for the Bank’s board to choose from. Stiglitz is on the record saying that the most qualified candidate is likely to come from a developing country; his candidacy would be a way of providing the greatest possible range of candidates for anybody who feels like they have to vote for an American candidate but who doesn’t want to vote for Larry.

More realistically, Obama is going to have to come up with a real knock-out of a nominee, someone who would waltz into the job no matter who she was up against. Which is to say, Obama is going to have to nominate Hillary. Hillary has, we’re credibly told, ruled herself out for the job. Well, she might have to change her mind.

If Hillary is nominated, the job is hers: it’s as simple as that. And she would be very good at it, too. She wouldn’t even need to serve out a full term. While she had the job, she might even be able to engineer a way in which she could be succeeded by Ngozi, or some other highly-qualified candidate without a US passport. Which alone would make her one of the most important and revolutionary presidents in the Bank’s history.

Hillary is 64 years old — easily young enough to have one more big job before she retires. Does she want the job? Probably not. But she’d be great at it anyway. And she might have to accept the nomination, if only to ensure what she will be certainly working behind the scenes to achieve in any case — US continuity at the Bank at least through the 2012 elections. After that, I’m sure she can find a way to ease herself out if she really wants.


FifthDecade, that clarifies, thanks. I would suggest that while education is indeed paramount, “the way forward” in eliminating corruption, as you suggest, is not just education, but a firm grounding in ethics. That is arguably even harder to achieve, but may be driven locally and rely less on foreign tutoring, which should restrict itself to technical assistance if certain conditions (in terms of accountability and cooperation) are met.

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Don’t send Easterly to the World Bank

Felix Salmon
Mar 5, 2012 20:50 UTC

Bill Easterly has a wonderful riff at Foreign Policy today, entitled “How I Would Not Lead the World Bank”. He urges us all not to pick him as the next World Bank president, and concludes that he wouldn’t even hire himself. And he gives lots of reasons why he’d be rather bad at the job, all of which, in a kind of indirect way, actually help to bolster my idea that Indra Nooyi would be perfect for it.

I would not lead the World Bank by assembling an expert task force of my fellow social scientists, natural scientists, and random unemployed politicians. I would not ask such a well-qualified expert task force to answer the question “What must we do to end world poverty?” — especially if we forget to answer the question “Who put us in charge?”

I would not lead the World Bank to ever use the words “civil society.” I would not emulate my deservedly respected non-predecessor as World Bank president by giving a speech on the Arab Spring without using the word “democracy,” even in a purely descriptive sense. I could not possibly attain a remarkable record of five years of speeches without ever using the word d_m_cr_cy at all.

I would not appoint U.S.-educated elites vetted by their autocratic home governments to represent the underrepresented peoples of the world. I would not negotiate the contents of World Bank reports with governments in either the West or the Rest, except possibly for correcting typos.

I would not lead the World Bank by perpetuating the technocratic illusion that development is something “we” do to “them.” I would not ignore the rights of “them.” If the New York Times should happen to report on the front page that a World Bank-financed project torched the homes and crops of Ugandan farmers, I would not stonewall the investigation for the next 165 days, 4 hours, 37 minutes, and 20 seconds up to now.

The point here is that the president of the World Bank is hamstrung in all manner of ways, both obvious and non-. There’s a reason why Bob Zoellick has never used the word “democracy” in a speech — and that reason is Article IV, Section 10 of the Bank’s Articles of Agreement. “The Bank and its officers shall not interfere in the political affairs of any member,” it says; “nor shall they be influenced in their decisions by the political character of the member or members concerned.”

The political structure of the bank is similarly responsible for the fact that substantially everything the president says, even more than the president’s subordinates, is vetted by the political appointees on the Bank’s board. The World Bank is owned and run by sovereign governments, who will talk until they’re blue in the face about how they’re working for the world’s poorest, but who ultimately are not going to sign on to anything which they don’t perceive as being in their own best interest.

As a result, what’s needed at the World Bank is someone who knows development, but who isn’t deeply invested in their own normative ideas of what must be done. Running the Bank involves a delicate dance with extremely important and powerful shareholders who can effectively shut you down at any time. As Moisés Naím says, “In this case you have to know how to get a large, culturally heterogeneous, technically sophisticated and, at times, recalcitrant bureaucracy to move in the direction you set.”

Naím does a very good job of laying out who the US should not nominate, but is weaker when it comes to who it should be:

Mr Obama should look for a professional who already knows this field, its ideas, players and traps, who has a vision for the World Bank rooted in practical experience with development and who has already run successfully a global organisation.

He does say that picking the CEO of a large multinational corporation is not necessarily a good idea, on the grounds that “the skills needed to survive and thrive” in the Bank “are closer to those found in a well-run public sector than in the private sector”. But the fact is that if you’re looking for an American who has successfully run a global organisation in the public sector, you’re going to end up with a very short list of possible candidates. Americans don’t run big multilateral organizations: the World Bank is the exception to that rule. And maybe Unicef.

Pepsico is big enough — with more than 285,000 employees spread across pretty much every country of the world — that it resembles to some degree the sprawling bureaucracy of the World Bank. At the same time, Nooyi is blandly corporate enough that she’d be able to build a strategy around the art of the possible, rather than around her preconceived notions of how development can and must work. She has demonstrated that she knows development; she’s well versed in the art of diplomacy; and she’s clearly capable of running a large global organization. She’s not the only possible candidate; I for one would love to see Nancy Birdsall nominated. But Easterly’s piece shows how nominating any kind of ideologue is almost certain to end in tears.



Bill Easterly’s rant is Exhibit ‘A’ for abolishing it.

btw, The Economist explored this in a survey in 1990.

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Send Indra Nooyi to the World Bank

Felix Salmon
Mar 2, 2012 20:08 UTC

When it comes to the World Bank presidency, pretty much everybody agrees on two things: (1) it shouldn’t be an American; (2) it will be an American. We can and probably should get hung up on (1), but given political realities, it makes sense to ask: if it’s going to be an American, then who should it be? It shouldn’t be Larry Summers, that’s for sure, and it shouldn’t be Jeff Sachs, either. But there’s another name floating around which is a much better idea than either of those two men: Indra Nooyi.

Nooyi, the chairman and CEO of Pepsico, has a lot of things going for her. Firstly, she’s a woman — and it’s generally understood that the Obama administration would love to nominate a woman to the job if it possibly can. Here’s Alan Beattie:

Bank policymakers say that the US proposing a female candidate – who would be the first woman to lead the institution – could help neutralise the charge that the appointment process was “business as usual”. Although administration officials have been cagey about likely contenders, candidates that have been discussed include Susan Rice, US ambassador to the UN, Lael Brainard, top international economics official at the Treasury, and Indra Nooyi, chief executive of PepsiCo. Laura d’Andrea Tyson, who was White House chief economic adviser to former president Bill Clinton, is also a possible contender.

Nooyi definitely stands out in that crowd. Rice, Brainard, and even Tyson are smart and capable technocrats — but they’re not leaders in the way that Nooyi is. One of the problems with US nominees to the Bank presidency is that they tend to be the kind of people who have risen to positions of importance (but never quite the very top) within their own organizations, without having ever had much visibility or power in the world more broadly.

The list of potential nominees from non-US countries is full of heavy hitters with serious global reputations, including quite a lot of former heads of state. The US nominee should be of that general caliber, if only to make it clear that the US takes the Bank seriously and isn’t steamrolling a number of extremely high-profile foreign candidates, only to install in their rightful place the Under Secretary of the Treasury for International Affairs. That’s an important job, to be sure, but it’s also a technocratic job where you always do what you’re told. It’s more fixer than leader.

Nooyi, by contrast, has led one of the world’s biggest multinational companies for five years, and has been in Pepsico’s C-suite for over a decade. During that time she has made a real and credible commitment to sustainability; she even managed to funnel $6 million to Sachs’s Earth Institute.

On top of that, she’s Indian. Born in Chennai, she didn’t arrive in the US until 1978, when she was 23. Nooyi’s an American now, and she’s certainly American enough to lead the World Bank, given the precedent of Jim Wolfensohn. But she wouldn’t only be the first woman to lead the Bank; she’d also be the first non-white person to lead the Bank. And that, of course, is something which is long overdue.

Nooyi is very comfortable among the upper reaches of global VVIPs, and, like Wolfensohn, she also has the significant advantage, for a World Bank president, of being rich enough to afford her own private jet. What’s more, the Bank job would allow her to turn even the criticisms of her tenure at Pepsico to her advantage. Consider this:

“It’s a very enticing vision to be more focused on health and wellness, to be focused on global hunger and all of those things,” says Ali Dibadj, an analyst with Sanford C. Bernstein & Co. “The problem is, you have to remember where three quarters of the company comes from: sugary, salty, fatty” foods.

Nooyi has at this point made more money than she could possibly ever spend; she’s clearly committed to making a difference in the world. And she’d be more able to do that at the helm of the World Bank than she would be staying on at Pepsico with restive shareholders pressuring her to sell more soda. Nooyi and the Bank need each other; her nomination makes perfect sense.


PepsiCo was not created by Indra Nooyi but existed many years prior to her joining the company. Since then it has been selling salty snacks and sugary soft drinks – true. But Indra Nooyi has tried to steer the company towards a more sustainable business model while also sustaining earnings growth and profitability. So I believe one should get this straight. Indra Nooyi joined a company that sold unhealthy products. Since then, she has taken significant steps to improve the company’s product portfolio and its sustainability credentials. Definitely this shows that she has the best interests of the consumer and the planet and shareholders at heart. And let’s not forget, at the end of the day PepsiCO is a profit making company.

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Don’t send Sachs to the World Bank

Felix Salmon
Mar 2, 2012 16:59 UTC

In 2002, Jeff Sachs took the top job at one of the most ambitious university departments in the world: the Earth Institute at Columbia University. And he’s done that job very well, judging by the main metric that universities care about. When he re-upped his contract last April, the press release gushed about all the multi-million-dollar donations that the Earth Institute has received, including $20 million from the Gates Foundation and $28 million from the Lenfest Foundation to endow climate change research.

Now, however, Sachs wants to leave: he’s got his eye on a job where the sums of money involved make those numbers seem positively puny.

My quest to help end poverty has taken me to more than 125 countries, from mega-city capitals to mountaintop villages, from rain forest settlements to nomadic desert camps. Now I hope it will take me to 18th and Pennsylvania, to the presidency of the World Bank. I am eager for this challenge.

To a certain extent, Sachs’s job application reads almost like self-parody: “the president of the World Bank spends a lot of time travelling in first class to poor countries. I have been doing that for years, so I’m obviously highly qualified for the job.”

And of course Sachs has one crucial thing going for him: he’s American. The next World Bank president will, sadly, be an American, a fact which takes a lot of highly-qualified potential candidates, including many former heads of state, out of the running.

But even if the next president of the World Bank is an American, we can still do better than Sachs. The reason that Sachs shouldn’t get the job is basically the same as the reason why Larry Summers shouldn’t get the job: he’s an arrogant economist who nearly always thinks he’s the smartest guy in the room. The presidency of the World Bank is a diplomatic position: if you want to do it effectively, you need to be able to wrangle not only the vast staff working for you, but also the various executive directors who are your superiors and who have a tendency to want to micromanage your decisions. Insofar as Jim Wolfensohn, say, was a successful World Bank president, he was successful because he was a smooth-talking investment banker who was expert at schmoozing important people.

Sachs, by contrast, is angry; he’s one of life’s natural campaigners. That’s great when you’re hanging out with Bono, or even Bill Gates. But it’s less likely to get you very far when you’re trying to persuade the Nigerian president to revolutionize his domestic policy.

Which is one reason why Hillary Clinton would be much better than Sachs for the job: she knows the international diplomatic back-channels, while also knowing how to tactically assert power when necessary.

Besides, Sachs has two big strikes against him. One is the “shock therapy” he administered to Eastern European countries, especially Russia, in the wake of the fall of the Berlin Wall. It was a complete disaster, and Sachs has never accepted his share of the blame for it. He still thinks, as far as I know, that his ideas were good ones, and were just poorly implemented. But they weren’t good ideas, not least because the political institutions in the countries he was dealing with were obviously not up to the task of effectively and honestly implementing his drastic prescriptions.

More recently, Sachs has been investing an enormous amount of personal and financial capital in his Millennium Villages project — a well-intentioned project which attempts to demonstrate the power of investment to turn around poor villages, but which virtually nobody outside the project thinks is capable of demonstrating any such thing. Before even thinking about nominating Sachs to the World Bank, Obama should take a straw poll of Bank employees. Most of them have pretty strong opinions about the Millennium Villages, and it would be very useful to know if he would be entering an institution whose employees in large part consider him to be much better at public relations than at wrestling with messy empirical truths.

Sachs’s worldview, boiled down, is that development is easy, we know how to do it, and that given enough money, it’s relatively trivial to spend that money in an effective way to reduce poverty around the world. When World Bank presidents come in with that attitude, the results can be wasteful at best and downright counterproductive at worst. I’m not, in general, a fan of politicians. But in this case, we’d be better off with a smart politician in charge of the Bank — someone able to build consensus and approach tough problems with modesty — than we would with an arrogant economist.


This is a poorly cited, ad hominem attack.
What him here, make your own assessment: http://www.youtube.com/watch?v=wf530FLMw 3w
The snarky claim that he is at the Earth Institute to raise wads of cash is downright low. My girlfriend’s work for the Red Cross relies heavily on the work of the Earth Institute, which Sachs founded.
Substantiate the “shock therapy” label that gets pinned on Sachs. In particular, research Sachs key proposition during his work in Easter Europe: having the international community inject large amounts of foreign currency into Stabilization Funds to help quickly stabilize currencies of post soviet nations. He succeeded in doing this in Poland (see Zloti Stabilization fund). He was blocked from doing the same for the Ukraine/Russia. Does that sound like shock therapy? Or is it painting of a whole profession with a single brush? Your claims about Millennium Villages are equally unfounded. Please do your homework next time. I’d be happy to see Sachs at the helm.

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Don’t send Summers to the World Bank

Felix Salmon
Jan 18, 2012 18:45 UTC

Please, Barack, don’t do it! Hans Nichols is reporting today that Larry Summers wants to be the next head of the World Bank — no surprise there — and that Barack Obama is thinking of nominating him. It’s a dreadful idea.

For one thing, Summers wouldn’t actually be very good at the job, since he doesn’t have any of the required qualifications.

The only way to be an effective World Bank president is to be an effective diplomat. Like all CEOs, the head of the Bank reports to a board of directors — but at the World Bank, the board of directors meets twice a week. And they’re not friendly hand-picked board members, either — they’re political appointees who fight their geographical corners, who live full-time in Washington, and who work full-time out of offices within the Bank itself. If you want to get anything done at the Bank, you need to persuade the board to leave you alone and not micromanage every decision you make.

You also need to be an almost superhuman manager. The World Bank has more than 10,000 employees from over 160 countries, with offices in more than 100 countries around the world. The range of cultural expectations they bring to their jobs is truly enormous, and the amount of political jostling and mutual incomprehension which results is entirely predictable. In order to manage this rabble, you need a very high level of cultural and interpersonal sensitivity.

And then there’s leadership: “the vision thing”, as Geoge HW Bush would put it, and the ability to get your organization to line up behind how you think the Bank — and, for that matter, the World — should work. Summers is not known for his work on global poverty reduction, and his previous tenure at the World Bank is remembered mainly for the pollution memo — an “ironic” proposal to increase pollution in poor countries, which resulted in the label “perfectly logical but totally insane” being attached to Summers for many years thereafter.

Summers, of course, lives in a world of ideas and debate — a world in which, it must be said, he invariably and loudly considers his own opinion to be correct. If he became president of the World Bank, it’s only reasonable to expect Cornel West-syle fiascos on a regular basis — with a concomitant steady erosion of the amount of faith the board has in the president.

And even Summers himself is the first to admit that he’s no diplomat: he prides himself on speaking the truth as he sees it. Which is fine if you’re making millions of dollars advising DE Shaw on their investments. But it’s not going to help you run the World Bank — or run anything larger than the Treasury Department, really. Even Harvard was too much for him to run; giving him the World Bank job would be a disaster.

On top of that, giving the job to any American is a bad idea. We’re long past the point at which it makes any sense at all that the president of the World Bank should always be an American, and I was quite heartened, back in 2009, when a trial balloon was floated suggesting that Obama might appoint Lula, or Manmohan Singh, to the job. My own favored candidate would be Ngozi Okonjo-Iweala — she should ideally have got the job back in 2007, but better late than never. And accepting it would give her a gracious way of departing her current gig, which doesn’t seem to be going so well.

Obama is the most multilateral president the US has ever had, and as such it makes perfect sense for him to show a bit of modesty with respect to the World Bank. An American has run it since 1946; it’s about time some other nationality got a chance. (And yes, Jim Wolfensohn counts as an American.) If Obama must appoint an American, it should probably be a Clinton — either Hillary or Bill, with Hillary being the much more likely of the two. But ideally he shouldn’t nominate an American at all. And if he does, it certainly shouldn’t be Summers.


Why not Joe Stiglitz?

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Should bloggers get embargoed World Bank reports?

Felix Salmon
Apr 8, 2011 22:56 UTC

Does the World Bank have a beef with bloggers? According to Aidwatch it does:

This morning we learned that the World Bank does not consider bloggers journalists. According to Bank policy, it won’t give press accreditation to bloggers, denying them access to the media briefing center where new reports are released under embargo before they are published for the public.

In this case, the report we won’t be allowed to see an advance copy of is this year’s World Development Report, on Conflict Security and Development.

The Bank’s David Theis responds in the comments that they offered to email the report to Aidwatch in advance, but the blog’s Laura Freschi is having none of it:

I applied for the user name and password required to enter the Online Media Briefing Center through the World Bank web page this morning.

After several phone calls with other press center staffers who told me the registration was pending, we spoke and you told me that as a matter of policy, the World Bank does not give early access to blogs.

Your offer to email Bill the report directly a few hours early is not the same as allowing us access to the protected areas of the site for “accredited media outlets.” I don’t know when the WDR report was put online, but presumably those journalists registered by the Bank have had access to that report for days, and did not have to send several emails and make phone calls to get it.

My sympathies are with Freschi on this one. “Bill”, here, is William Easterly, the proprietor of Aidwatch and a former senior Bank staffer. Offering to email an advance copy of the report to Easterly is absolutely not the same as letting Aidwatch bloggers onto the same playing field as other journalists. Reuters, for instance, was shown a summary of the report weeks ago, and was also offered an interview with Sarah Cliffe, one of its lead authors. The full report arrived yesterday, and then there was a conference call today where journalists were walked through its main points. Come Sunday evening, when the embargo is lifted, there will be an informed story up and ready to go.

At the same time, however, Reuters doesn’t have the same specialized interest in the World Development Report that Aidwatch has. The Bank puts out a lot of enormous reports in advance of its two big meetings, in the spring and the fall, and generalist reporters simply don’t have the time, in a world full of important breaking news stories, to give them all the attention they deserve. Dedicated bloggers, on the other hand, do. As Freschi says, you’d “think they would WANT bloggers to write about it”.

On the other hand, I’m not entirely clear why bloggers like Freschi want this kind of insidery pre-publication access to the Bank’s reports. The value of blogs is their status as outsiders — what’s wrong with just downloading the report on Sunday, when it’s made public, taking as much time as is necessary to read it, maybe even phoning up the authors to talk about it, and then writing about it on your blog? Do blogs like Aidwatch really want to play the Bank’s PR game — the one where they put an artificial embargo on reports so that everybody will write about them at the same time without really having digested their contents or having had the opportunity to get reactions from people who know what they’re talking about?

The more media outlets which ignore embargoes the better, as far as I’m concerned. When the World Development Report goes live, Aidwatch should link to it, download it, and start reading it. As and when they find interesting bits, they should blog them. A discussion, ideally, will ensue, around a document which is public. That’s the heart of blogging — not the privilege of being told in advance what to write by a bunch of Bank staffers. So while the Bank’s refusal to grant Aidwatch media-outlet status is silly, Aidwatch’s dudgeon is I think misplaced. Honestly, try being on the embargo list sometime. You’ll love your life once you’re off it.

Update: If Aidwatch adopted the policy of Universe Today, there wouldn’t be an issue here. (h/t Oransky.) Embargoes are a bit like the VIP room at Lot 61: the only reason you’d ever want access is just because you don’t have it.



The idea that the world bank would exclude people like you from an “approved access list” is absurd. Isn’t Krugman considered a blogger at this point… I mean he has a blog?

In a fair and balanced world news gathering orginizations like NPR, NYT, WSJ, and your beloved Reuters should be awarded credentials at the entity level and then assign them to who ever they wish.

Best hopes for grayhairs everwhere (a demographic I very recently joined) realizing that web baised journalism is now the most widely consumed.

Keep up the great writing Felix.

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Zoellick’s failure of nerve

Felix Salmon
Apr 6, 2011 17:31 UTC

When I talked to Chrystia Freeland on Monday about World Bank chief Bob Zoellick’s big speech on the Middle East and North Africa today, I said I was looking for two things: concrete promises to do specific things, on the one hand, and a recognition, on the other hand, that the World Bank was working for the struggling citizens of these countries rather than their entrenched elites. The revolutions in the region have shown that politics is inextricably bound up with economics, and that you can’t affect the latter without dealing with the former.

I don’t think I’m going to get what I wanted. Here’s the closest that Zoellick comes to a policy-related promise:

I suggest it is now time for the World Bank to examine, with its Board and shareholders, whether the Bank needs new capabilities or facilities that could leverage support from countries, foundations, and others to strengthen the capacity of CSOs working on accountability and transparency in service delivery. We could give priority to countries in the Middle East and North Africa, and in Sub-Saharan Africa. We could back this work with seed capital, and with knowledge exchange and research aimed at improving the enabling environment for social accountability.

Too political?

No, Bob, this isn’t too political. Instead, it’s not remotely political enough. Setting up a committee with the World Bank board and shareholders will achieve precisely nothing. The World Bank “board and shareholders” comprises precisely the entrenched elites who have the most to lose from popular emancipation. To take an extreme example, the Saudi royal family are World Bank shareholders; I doubt they’re going to be particularly enthusiastic about accountability, transparency, and the like.

This is precisely the sort of issue where Zoellick should just go ahead and do something, daring his board to slap him down: asking forgiveness can work, while asking permission just means certain bureaucratic sclerosis. Zoellick had his opportunity to lead, here. Instead, he’s chosen to kowtow to the representatives of the very regimes who are most at risk. Which is an entirely predictable shame.

Update: In the Q&A period following the speech, in response to a question along these very lines, Zoellick first said that maybe the work could be done bilaterally, by the UK or the US or even by various foundations. Then he said there were “questions” — which he would take to his shareholders — “whether the bank should have a role in this and if so what form.” And he continued by declaring that he’s actually agnostic on these issues, saying “I’m not sure I have a view of whether there is a role for the Bank”. Weak.


What is this, Fox News?

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Zoellick’s excerpts

Felix Salmon
Sep 27, 2009 23:25 UTC

Bob Zoellick will say in a speech tomorrow that central banks have proved that they can’t be trusted with regulatory authority, and that in the US Treasury, rather than the Fed, should be the main risk regulator.

It’s an interesting idea, and I’d love to read his argument; weirdly, however, the World Bank has released only excerpts from the speech, rather than the speech itself.

I can understand why the Bank might not want to release the speech until after it’s been delivered. But in that case, why release the excerpts now? It smacks of trying to artificially manipulate the news cycle in a manner unbecoming to a major multilateral institution. On the other hand, Zoellick clearly doesn’t think the Bank’s present form is sustainable:

Bretton Woods is being overhauled before our eyes. This time, it will take longer than three weeks in New Hampshire. It will have more participants. But it is just as necessary. The next upheaval, whatever it may be, is taking form now. Shape it or be shaped by it.

Maybe trying to manipulate news coverage is part of Zoellick’s attempt to shape the new World Bank?


On the other hand, most elected officials shouldn’t have any impact on regulation either. What to do, what to do?

A big step forwards for Bretton Woods

Felix Salmon
Apr 3, 2009 21:06 UTC

Dani Rodrik spots a particularly bright bit of the G20 communiqué:

We agree that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process.

This is spectacularly good news: as Dani says, it “may mean that the era of the World Bank and the IMF being run by Americans and Europeans, respectively, is over. And good riddance too”.

Might Ngozi Okonjo-Iweala become the next World Bank president? Might Mohamed El-Erian be the next managing director of the IMF? Suddenly, there are all manner of tantalizing and exciting possibilities. It’s taken long enough, but I’m very happy this day has finally arrived.