Latest update April 20th, 2024 12:59 AM
Mar 23, 2012 Editorial
The International Bank for Reconstruction and Development, more popularly known as the “World Bank”, is a key institution in the struggle to develop the poorer countries in the world. It is about to appoint a new head and not surprisingly it has triggered heated discussions. Formed by the US and the other victorious powers after WWII, the US World Bank’s president is invariably an American, through its voting strength. Current president Robert Zoellick’s term expires later this year.
Earlier this year, President Obama floated the name of his former Director of the National Economic Council, Mr. Larry Summers. Mr. Summers has a rather extensive and prestigious resume, but his tenure at the various institutions – including a stint as a Chief Economist for the World Bank 1991-1993 –also earned him quite a number of detractors. There is even a blog site now dedicated towards derailing his chances. What are the objections against Mr. Summers?
In a famous faux paux, while at the World Bank he signed a memo that actually proposed: “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)? I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. … I’ve always thought that under-populated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City.” He later tried to extricate his foot from his mouth by claiming the memo was intended to be ironic.
What was not ironic however was the neo-liberal ideology that he pushed at the World Bank – financial deregulation, liberalisation, privatisation, etc – which has now been largely repudiated by the countries that were placed under its strictures. Guyana was one of the countries that went through the regimen.
Later, as Deputy to the Treasury Secretary in the Clinton administration, he intensified those same deregulatory policies in the US. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial industry. He also successfully fought attempts by the Chairman of the Commodity Futures Trading Commission to regulate the financial derivatives that caused so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernisation Act, which banned all regulation of derivatives, including exempting them from state antigambling laws.
According to one assessment of the job, the only way to be an effective World Bank President is to be an effective diplomat. Like all CEOs, the head of the Bank reports to a Board of Directors — but at the World Bank, the Board of Directors which meets twice a week. And they’re not friendly hand-picked board members, either — they’re political appointees who fight their geographical corners, who live full-time in Washington and who work full-time out of offices within the Bank itself. If you want to get anything done at the Bank, you need to persuade the board to leave you alone and not micromanage every decision you make.
You also need to be an almost superhuman manager. The World Bank has more than 10,000 employees from over 160 countries, with offices in more than 100 countries around the world. The range of cultural expectations they bring to their jobs is truly enormous, and the amount of political jostling and mutual incomprehension which results is entirely predictable. In order to manage this rabble, you need a very high level of cultural and interpersonal sensitivity.
“Sensitivity” is not a word that anyone has ever applied to Larry Summers. As Harvard University President, Summers set records for offending vast portions of the faculty. He also provoked a firestorm with comments suggesting that “innate differences” helped explain why relatively few women have top scientific positions.
The World Bank can do without Larry Summers as its head.
Where is the BETTER MANAGEMENT/RENEGOTIATION OF THE OIL CONTRACTS you promised Jagdeo?
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