President's Corner: World Bank’s New President Faces Old Challenges

As the World Bank’s board of directors was meeting on June 25 to elect Robert Zoellick its next president, Mr. Zoellick was several blocks away meeting with leaders of non government agencies to discuss his new job. He made a good impression.

Mr. Zoellick listened carefully as two dozen NGO leaders described their hope that the World Bank would play a more aggressive role in reducing extreme poverty, provide quick support to peace building efforts in post conflict societies, step up the fight against corruption, improve consultations with civil society groups in borrowing countries, do a better job integrating gender issues into its programs and many more.

The bank’s mission is to fight poverty, and it devotes large resources to this task. Last year it committed $14.14 billion to 112 projects, while its International Development Association, which makes long-term, no interest loans to the world’s poorest countries, committed $9.51 billion to 167 projects. This is a lot of money by any measure, but, of course, the World Bank’s loans are dwarfed by international trade and investment flows, not to mention the remittances that migrant workers send back to their families in their home countries. Remittances alone total about $300 billion a year and help sustain about 5% of the world’s population.

Mr. Zoellick made it clear that we wants to find imaginative ways to combine bank lending with private capital, money from foundations and regional and sub regional organizations to augment the bank’s impact.

He has his work cut for him. He faces at least three major challenges. First, he takes over in the wake of Paul Wolfowitz’s resignation following a staff and board revolt against his leadership; Mr. Zoellick understands that he must win the confidence of the staff. Second, the bank has a reputation for long studies and slow action, meaning that Mr. Zoellick will face pressure—as he did from the NGOs with whom he met—to increase the bank’s developmental metabolism. Finally, Mr. Zoellick and his colleagues must balance seemingly contradictory demands—accelerate lending programs in post-conflict environments and consult more widely with civil society groups; reduce the conditions it places on loans and pay more attention to environmental protection, gender equity, and many other necessary considerations.

“There needs to be humility in this exercise,” Mr. Zoellick said at the end of the meeting. I have no doubt that Mr. Zoellick will approach this job with the proper combination of energy, imagination, leadership and humility. He will also need persistence.

In his two previous government jobs, Mr. Zoellick helped launch two important initiatives that have yet to succeed. As U.S. Trade Representative from 2001 to 2005, Mr. Zoellick helped launch the Doha Development Agenda to reform world trade rules, an ambitious task that has failed to win necessary support. As Deputy Secretary of State from 2005 to 2006 (before going to the investment banking firm of Goldman Sachs), he helped negotiate the Darfur Peace Agreement to end the genocidal war in the western region of Sudan. However, the agreement did not produce peace. If anything, violence and displacement have gotten worse in the 13 months since the agreement was signed.

He approached both challenges with determination and great attention to detail, but the challenges he took on were huge. Based on his past record, I am certain that Mr. Zoellick won’t shrink from tough challenges, and that he will work persistently to resolve them.

Ken Bacon