The departure of Paul Wolfowitz as President of the World Bank has been celebrated by many in the NGO sector. They did not support his original appointment, issuing press releases with titles like “Christian Aid condemns Wolfowtiz nomination”. The World Development Movement described it as a “truly terrifying appointment”. Even the less shrill NGOs were unkeen on the man. On Friday, CAFOD welcomed his resignation, with its head of Policy George Gelber, saying: “Paul Wolfowitz’s tenure at the World Bank and the recent scandal raises questions as to whether he was the right man for the job of fighting poverty in developing countries.”
Many NGOs are now calling for the Bank to be made “more democratic”. The Economist Group newspaper European Voice has accepted the superficially appealing arguments and argued in the current issue that the “current stitch-up” whereby the US decides the Bank president and the EU decides the IMF president is an example of bad governance. Quite correctly, though, the paper says that getting rid of this arrangement “is wishful thinking”.
But the problem with the Bank is not that it is not democratic, but that it is being run like a public sector body. It is a bank. It makes loans. It is a social enterprise. But it should not be seen as an aid agency. One of the biggest weaknesses is that it is accountable, via the World Bank board, to politicians. Through the board, Britain in particular has had a very damaging effect on the World Bank. Britain’s quasi-religious belief that it is inputs that matter in international development makes it an unhelpful influence.
But, though the allegations against Wolfowitz were groundless, perhaps his resignation will help us start to rethink the Bank more fundamentally. Many campaigners are pushing the “democratic” card in the belief that a non-US president would be less likely to favour the sort of thinking behind the Millennium Challenge Account (where corruption and governance are top priorities) and instead get on with what they see as the important job of getting the donations out to the people who need it. Yet, if the anti-corruption programme that Wolfowitz wanted to complete is no longer possible, people are going to start looking at more dramatic possibilities.
What’s needed is for the World Bank to be privatised. The World Bank would make more rational investments and have a better chance of fighting corruption and promoting growth if were truly accountable for the money it lent, rather than simply under the pressure of politicians. If the World Bank is capable of delivering good economic growth in developing countries through its investments, it would successfully raise funding; if it was failing to deliver growth, its funding would be cut. That would focus minds very effectively on stamping out corruption.