BOB MOON: Directors of the World Bank met in Washington today to consider the future of Paul Wolfowitz. The head of the international lending institution is facing growing pressure to resign after acknowledging he arranged a pay raise for his girlfriend, a World Bank employee.
Today, the Bush administration repeated its support for Wolfowitz. Commentator Krishna Guha says there’s a crisis at the bank that’s even bigger than Paul Wolfowitz.
KRISHNA GUHA: As an institution, The World Bank can’t do a thing about Paul Wolfowitz.
You see, in theory, the bank’s board of directors, representing all the shareholder governments, appoints the president. But everyone knows that in practice, the U.S. president gets to pick who runs the bank. And that person is always an American citizen.
The board can’t fire Mr. Wolfowitz, because the board didn’t hire Mr. Wolfowitz. President Bush did.
If we’re going to fix the firing problem, we have to deal with the hiring process.
The time has come for the U.S. to give up its monopoly over deciding who should be bank chief. The World Bank president should be appointed on merit, and without regard to nationality.
There would be no threat to U.S. interests, because the U.S. would still have an effective veto on bank policies through its board director and its large share of the voting rights. It doesn’t need to own the bank president as well.
Appointment on merit would allow the bank to hire an outstanding developing country leader as its chief — someone like Trevor Manuel of South Africa, or Fernando Cardoso of Brazil.
These people have actually dealt with all the tough development issues it talks about. Who do you think would have more credibility talking to leaders in Africa or South America — Mr Manuel, Mr Cardoso, or Mr. Wolfowitz, a former U.S. defense official?
If the World Bank’s board as a whole hired the bank president — and did so on merit — it would be far more invested in that person’s success. The president would have real legitimacy, and he would know he could call on support if circumstances got tough.
He would also know that if he ever did something wrong that seriously damaged the credibility of the bank, the board would be able to fire him.
MOON: Krishna Guha is chief U.S. economics correspondent for The Financial Times.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Donate now to get almost any thank-you gift.