Originally published on the CGS blog on May 14, 2007.
Paul Wolfowitz’s tenure as President of the World Bank continues, as does the soap opera surrounding what will come out of Wednesday’s meeting of the World Bank’s board.
Of all journalists and columnists, Sebastian Mallaby , former editorial board member of The Washington Post, is probably best positioned to opine of this subject. Today, in a column in the Post , Mallaby hits it out of the park, or as my British friends would say, ‘hit it for six.’ (hint: it is a cricket term).
If the World Bank were a company, its share price would have fallen 25 percent amid the current leadership scandal. The board of directors wouldn’t care about the scandal’s details; it would have replaced the beleaguered CEO with someone who could lead effectively. Justice for the boss would matter less than restoring the company to good health.
Mallaby also knocks out fellow Post columnist George Will’s uninformed piece from last Wednesday:
My colleague George F. Will asserts that 90 percent of the bank’s loans go to 27 middle-income countries that can get all the development finance they need from private capital markets. But this statistic leaves out the bank’s soft-loan and grant-making arm, which serves countries with gross domestic products of less than $965 per capita. Counting that, just under half of the bank’s money went to poor countries in 2006. The middle-income countries that received the rest of the cash include such places as China and Brazil, which are home to millions of poor people.
The bank’s critics ought to understand that while capital markets are marvelous things, they can’t be expected to do everything. Private investors won’t provide loans in the midst of a crisis, as the World Bank did during the East Asian meltdown a decade ago. Private investors tend not to finance global public goods — projects that are important for the world but not a priority for any one country. The world needs to curb carbon emissions, for example, but an individual country won’t capture all the benefits of a clean coal plant, since these benefits are shared globally. Because of this “externality” problem, there is a role for the World Bank in subsidizing anti-carbon policies.
So, tune in for more of “As the World Bank Turns.” Riveting Washington political drama.
