Wolf at the door

It seems almost a foregone conclusion that Paul Wolfowitz will resign his position as president of the World Bank. The position of 37 of the 39 directors of the Bank in this regard leaves him with virtually no room to manoeuvre. While his resignation will puts to rest some of the issues about personal conduct in a clear conflict-of-interest situation, it also provides an opportunity to air many significant issues about the institution itself, its relevance in today's global development context and the most appropriate way to govern it, given its mandate and responsibilities.

The old witticism about not wanting to belong to any club that would have one as a member aptly characterises the Bank's situation today. Countries that it would like to lend to, with relatively strong internal systems of governance and accountability, find themselves in decreasing need of its funds and, therefore, are able to resist the conditions that it tends to impose. On the other hand, global poverty is getting increasingly concentrated in countries with relatively weak institutional structures, and which, therefore, find it difficult to use bank funding in the way that it was intended. Clearly, there is a need for international funding of development activity, but whether the Bank is the right vehicle for this is a legitimate question. The question of relevance gains significance in the context of its organisational and managerial structure, given the location of its top management in Washington, D.C. and the power of the American administration in appointing the president.

The Wolfowitz presidency suffers from several disadvantages in this regard. He is closely associated with both the conservative extreme of the US foreign policy establishment and the administration's Iraq policy. He is reputed to have managed the institution with the help of a small coterie of people whom he brought in from his previous associations, to the virtual exclusion of bank professionals. A radical agenda with a closed-door approach is hardly conducive to the constructive debate that needs to go on inside and outside the Bank about its agenda and strategy. All of these issues, in any case, raise questions about the appropriateness of Mr Wolfowitz for the job at this point in time. These concerns are only aggravated by his conduct, which ironically came when he was emphasising the importance of good governance and the elimination of corruption in the Bank's scheme of things.

As Joseph Stiglitz and others have argued, his departure presents an important opportunity to bring relevance, strategy and governance centre stage in determining the Bank's future. If the US is genuinely interested in promoting the agenda of global poverty alleviation, it would make a lot of sense for it to move from the current approach to the appointment of the president to a transparent and professional process, which gives qualified people of all nationalities a legitimate chance, while ensuring that the person selected is from amongst the best available. After being appointed, this person needs to engage both internal and external interests in shaping a feasible response to the evolving global poverty scenario. Nobody should doubt the importance of good governance in addressing the problem, but it would contribute a great deal to the Bank's credibility on this issue if it was seen to be living by the standards it seeks to impose on others.