This post is from Bank Information Center - Amplifying Local Voices to Democratize Development.
Article originally published in the April 2016 edition of welt-sichten magazine under the title Der orientierungslose Riese
The World Bank aspires to be a global leader in development, the go-to expert on data, policy, and best practice. Over time the Bank’s role has evolved to address the contemporary global issues of the day, from debt crises to Soviet collapse to climate change. Throughout its history the Bank has maintained a position of prestige and authority at an international level – though debates about whether or not this position is deserved have been just as omnipresent throughout the Bank’s history.
At present the Bank faces new challenges, possibly more serious threats to its development dominance than ever before. The World Bank’s influence may shrink with the rise of banks based in the Global South, including the New Development Bank (NDB, or BRICS Bank) and the AIIB (Asian Infrastructure Investment Bank). This has led to a race to improve efficiency and increase desirability of World Bank loans, including through weakening environmental and social standards (as exemplified by the dilutions to World Bank safeguards proposed in its new draft Environmental and Social Framework). There is speculation among observers that cheaper, quicker loans from other lenders will render the Bank irrelevant.
And yet, the Bank finds itself in a much different position than the newer development banks. Beyond addressing market failures and gaps in global capital, the Bank’s contemporary significance draws from its generation of development knowledge through data collection and policy influence. The World Bank’s primary value added to the international community historically has been its unparalleled credibility in policy discussions and its influence on donor flows. The Bank’s impact extends far beyond its own lending by setting standards and shaping trends for bilateral, regional, and private development assistance – for better or for worse. The Bank has proved this in the past through “Washington Consensus” liberalization and deregulation in the 1990s, the movement for universal primary education in the 2000s, and the recent spread of Conditional Cash Transfer policies.
Unfortunately, even as a “Knowledge Bank” the World Bank is struggling to justify its reputation by producing high-quality and high impact information. The current quality of the Bank’s research is uneven, self-referential, and often of negligible impact. Reports are subject to long review processes, often making them outdated, and contain little emphasis on their ultimate policy implications.
Adding to the Bank’s woes are its issues with governance. The Bank has often been accused of reflecting the interests and domestic politics of its major shareholders, especially the US. However, in recent years the US government has not prioritized its leadership role within the Bank as it once did. Since the mid-2000s, the direction of the Bank is increasingly guided by the Global South. While this on one hand this is a welcome sign of the democratization of global power, Southern government leaders at the Bank are not necessarily representative of their people. To the contrary, World Bank Executive Directors from borrower countries all too often lack accountability and transparency at home. Rather than give voice to the communities the Bank is meant to serve, borrower government representatives are sometimes drawn towards decisions that erode rather than strengthen the Bank’s mission to serve the global poor – including through weakened social and environmental standards.
Rather than bring borrower and lending countries together, World Bank president Dr. Jim Kim’s leadership has steered the Bank into even more troubled waters. The Bank’s internal reorganization, initiated by Dr. Kim, has been costly and turbulent. The effort to transition from regional and country-specific focuses to “global practices” (thematic categories including agriculture, education, and health which are intended to enhance internal collaboration) has been costly and fraught with staff reshuffling and turnover. Kim’s plan to cut the Bank’s operating budget by $400 million has also led to hundreds of layoffs. The Bank relies increasingly on short-term consultants. According to retired Bank employee Paul Cadario, borrowers are reacting. “People are saying, we can get the money elsewhere, what we want from the World Bank is the skills of real expert staff,” Cadario said, “not just the parachuting in of consultants.”
There has been an erosion of employee confidence in the institution and its effectiveness during Kim’s tenure. The leaked results of a 2015 staff survey shows that Bank staff are more dissatisfied with the institution than ever before in its history. Staff doubt that Dr. Kim’s cuts to the operating budget and broader reorganization have been worth their immense cost. “It seems that little has changed in how work is actually done by staff,” said Cadario.
Protesters gathered during the 2016 Spring Meetings of the World Bank and IMF in Washington, DC
Staff also convey deep misgivings about the Bank’s culture of fear and retaliation, which has reached a fever pitch during Kim’s tenure. Whistleblowers and internal critics have been targeted by inquiries characterized as “witch hunts,” such as the former Middle East and North Africa Senior Country Officer Fabrice Houdart – now working at the United Nations – who was investigated for allegedly leaking documents that cast the Bank in a negative light.
Dr. Kim has also clashed with the Bank’s Board and senior management, dismissing a long list of senior managers. Notably, Kim appears to have clashed disproportionately with female senior staff. While these women have not spoken publically about their departures, this worrying pattern has drawn raised eyebrows among Bank observers. Previous World Bank President Robert Zoellick committed to having one-half female senior management, but any hope of achieving this goal has been decimated by President Kim.
From a public perspective, Dr. Kim has dodged responsibility for prominent scandals involving social and environmental issues. He has not adequately addressed studies demonstrating widespread insufficient compensation for resettlement and forced eviction as a result of Bank-funded projects, and has not taken initiative in ensuring new safeguards prevent further injustices. President Kim has also pushed forward on environmentally damaging projects despite rejection from some influential Bank Executive Directors, including a coal mine in Kosovo and a coal-fired power plant in India. Kim has largely failed to react to these controversies, let alone respond with the integrity required by the leader of a world-class institution.
How should the World Bank proceed going forward? The first step must be finding a new president once Dr. Kim’s term ends in 2017. He could be reappointed to another term, but an honest evaluation of his presidency shows that moving on is the best option. Challenging times call for a strong leader – and Kim has lost his chance to prove he can steer the Bank towards becoming a global institution worthy of its inflated reputation.
In selecting the next World Bank president, the time is ripe to look beyond American nationality and select a candidate most qualified for the job based on merit alone. This would not only add legitimacy to role of the presidency, it would lend credence to the “World” part of “World Bank” more generally. The Bank should also consider a female president, which would be another first in an institution vocal on its support for global gender equality. She or he should have the communication and political skills to bring major shareholders together in supporting this vision, as well as strong senior staff.
Most importantly, the new president must have a strong vision for the direction of the Bank, combined with the flexibility to adapt to a changing world.
The post The World Bank Group – Will it earn its place at the top? appeared first on Bank Information Center.
Read Full Story from Updates | Bank Information Center http://www.bankinformationcenter.org/the-world-bank-group-will-it-earn-its-place-at-the-top/
This article by Julia Radomski originally appeared on bicusa.org on June 06, 2016 at 08:42PM
