James Wolfensohn, the president of the World Bank, has announced his intention to leave, and the search is on for a new head of the world’s most important multilateral organization promoting development. The choice is especially important now, when poverty in the Third World is finally being recognized as our greatest problem and challenge.
The World Bank’s designation as a “bank” understates its importance and its multifaceted roles. It does lend money to countries to undertake a variety of projects, and to help them through crises (such as the $10 billion it provided to Korea in 1997-1998). It has been, and is, playing a vital role in post-conflict reconstruction around the world.
But the Bank also provides grants and low-interest loans to the poorest countries, particularly for education and health, and advises these countries on development strategies. It has often joined with the IMF in strong-arming countries into accepting this “advice”: unless they do, they will not only be cut off by the IMF and the World Bank, but also by other donors, and capital markets will be discouraged from providing funds.
Sometimes – its critics will say often – the advice provided by the IMF and World Bank is misguided. This was certainly true in the 1980’s and early 1990’s, when right-wing ideology dominated, producing a one-size-fits-all prescription entailing privatization, liberalization, and macroeconomic stability (meaning price stability), with little attention to employment, equity, or the environment.