IF-EYE Issue 3: Spotlight on the World Bank intensifies weeks before Spring Meetings
6 April 2006
Read BIC's newest edition of the IF-Eye newsletter: Spotlight on the World Bank intensifies weeks before Spring Meetings.
IF-Eye Issue 3, April 2006
A publication of the Bank Information Center
Spotlight on the World Bank intensifies weeks before Spring Meetings
Welcome to the third issue of the IF-EYE. We’ve incorporated many of the suggestions sent by our readers, including the request for a column on the relationship between the MDBs and the US government. We’ll also begin producing the IF-EYE fortnightly, beginning with this issue! Keep your eyes out for more new features in the weeks to come, and please continue to send comments and feedback to .
In this issue:
- IFI Highlights
- Wolfowitz Watch: Corruption, again
- Word on H Street: What future ESSD?
- The US and the MDBs: The Senate Committee on Foreign Relations and US National Security Strategy discuss the multilateral banks
- Spotlight: Spring Meeting Fever! Notes and resources on upcoming World Bank, IDB, ADB and EBRD meetings
- Book Notes: Noted economist reviews Washington Consensus shortcomings, prescribes new approach
- Dear BIC: Spring Meeting accreditation
- Announcements and Resources
- New at BIC: BIC welcomes new Europe and Central Asia Program Manager George Holliday
Complete text below.
1. IFI Highlights
- World Bank: CAO Finds Lack of Compliance by IFC in Uruguayan Paper Mills. March 31, 2006. The Compliance Advisor Ombudsman (CAO) recently found several compliance issues related to the International Financial Corporation's environmental and social due diligence in considering the Orion-Celulosas de M'Bopicua (CMB) paper mill projects in Uruguay.
- World Bank: International Finance Corporation announces Vice-Presidential reorganization and appointments. March 30, 2006. IFC Executive Vice President Lars Thunell announced the reorganization of IFC senior management along regional and industry lines.
- IDB: Annual Meetings in Belo Horizonte March 30-April 5. The institution’s Board of Governors will review the IDB’s lending program and analyze policies and new proposals. Read more on the IDB website. Read information from civil society (BICECA website)
- World Bank: Board approves Clean Energy Investment Framework. March 30, 2006. The paper will be discussed by the Development Committee during the Spring Meetings.
- World Bank: World Bank approves $37 billion in debt relief. March 28, 2006. The World Bank's Board of Directors approved the details of the institution's participation in the Multilateral Debt Relief Initiative (MDRI). Scheduled to take effect beginning July 1, the MDRI will cancel the debts of 17 countries to the World Bank's International Development Association (IDA). The cancellations are expected to total more than $37 billion over the next 40 years.
- World Bank: World Bank stops new lending to Uzbekistan. March 23, 2006. New lending programs halted due to allegations of ineffective use of bank funds.
- EBRD: EBRD to expand lending. March 16, 2006. The European Bank for Reconstruction and Development has expressed its interest and intent to provide more assistance to new underdeveloped markets outside of its usual lending sphere, especially those farther east.
- World Bank: World Bank suspends loans to Mumbai Urban Transport Project. March 08, 2006. The World Bank has temporarily suspended financial support to the Mumbai Urban Transport Project due to concerns about the equitable treatment and resettlement of affected communities.
- World Bank: World Bank Energy Week. March 6-9, 2006. The main theme this year was building on the G8 Plan of Action adopted at Gleneagles regarding the way forward on clean energy, infrastructure, climate change and Africa. World Bank President Wolfowitz emphasized the need to focus on Africa. Clean energy sessions mainly focused on concerns over profits to investors and not the significance of social and environmental benefits. Source: Extractive Industries Review Update.
- EBRD: EBRD Reviews Disclosure Policy. On March 1, 2006, the European Bank for Reconstruction and Development announced a review of its Public Information Policy (PIP). A draft PIP is now available for public comment until April 14, 2006, after which the EBRD intends to finalize the PIP prior to its Annual Meetings and Business Forum on May 21 and 22.
2. Wolfowitz Watch: Corruption, again
Visit BIC’s Wolfowitz Watch webpage
Wolfowitz's anti-corruption quest continues to generate debate in the press and within the institution. Since taking office, Wolfowitz has guided the institution’s suspension of some loans to Chad, Kenya, Bangladesh, India, Argentina, Congo-Brazzaville and Uzbekistan due to allegations of corruption.
Most recently, US News & World Report ran a series of articles on corruption at the World Bank. In “Cleaning up the World Bank”, Edward T. Pound and Danielle Knight trace the evolution of the institution’s anti-corruption efforts, beginning with James Wolfensohn’s establishment of the Department of Institutional Integrity (INT), the sanctions committee, and a financial disclosure program. Paul Wolfowitz has expressed his clear allegiance to the cause, overhauling INT and halting loans to countries and projects suspected of corruption. The authors cite an investigations bottleneck and senior staff failure to effectively review major projects as significant obstacles within INT. And the oversight of projects is made even more difficult by the institution’s secrecy and lack of transparency. “Policing the bank’s many complex projects and transactions is proving a Herculean task,” the authors write.
In his March 28 article "A hot seat for the World Bank's new president", Pound suggests that the division between World Bank President Paul Wolfowitz and some career bank staff is widening. Career staffer complaints might read something like this, Pound writes: "too much reliance on a few crafty conservative Republicans he brought with him; too little use of the bank's brainy economists, senior managers, and technocrats; and too much emphasis on corruption-busting to the exclusion of development." Some feel that experienced bank managers and economists have been sidelined, taking second place to the president's clique of close supporters with significant ties to the US Republican party. Tensions also stem from suggestions that the institution is rife with corruption – sentiments not necessarily shared by World Bank staff.
Indeed, on March 29 the World Bank Staff Association spoke out about some of the claims recently asserted in the press, in particular the suggestion that bank staff are either lax on corruption or are corrupt themselves. The association also refuted suggestions that bank staff and World Bank President Paul Wolfowitz are at odds over his efforts to stamp out corruption, although it did contend that Wolfowitz should better promote the long-standing efforts of bank staff to combat corruption.
Read the articles:
Read the Staff Association statement on the Wolfowitz Watch webpage.
3. Word on H Street: What future ESSD?
The future of the Environmentally and Socially Sustainable Development Network may be in question. Word on the street is that the World Bank is considering dissolving the network in an effort to streamline the institution’s management structure. Some fear that such a move would have a devastating impact on the institution’s ability to effectively address the social and environmental dimensions of World Bank operations in an integrated and effective manner.
4. The US and the MDBs: The Senate Committee on Foreign Relations and US National Security Strategy discuss the multilateral banks
The US Senate Committee on Foreign Relations met on March 28 to discuss corruption and effectiveness at the multilateral development banks. The fourth such hearing on corruption at the MDBs suggested the current administration's interest in gauging the effectiveness of development programs and funding.
A hot topic was the possibility of reforming the World Bank’s evaluation mechanisms. Panelists Bill Easterly, Ruth Levine and Adam Lerrick voiced concerns with the Independent Evaluation Group (formerly Operations Evaluation Department), questioning the true independence and objectivity of a department that reports findings back to itself. They discussed the merits of external evaluations, recognizing the potential unfeasibility of such instruments given the bank's strict information disclosure policies. The considerable amount of time that Senator Lugar devoted to a discussion about the independent evaluating mechanisms suggests that this could be an area where the US will attempt to exert its influence in the near future.
How it works: Congress is responsible for approving the US financial contribution to the MDBs. Official congressional involvement is divided between “authorizing” and “appropriating” committees in both the Senate and the House of Representatives. (An “appropriation” is a US financial contribution to a program or institution.) While the appropriations committees are charged with the allocation of budgetary resources, the authorizing committees are responsible for the enactment of legislation to authorize US participation in, and annual contributions to, the MDBs. Hearings such as these serve to gather information to support these decisions.
Read the testimonies:
United States National Security Strategy
On March 16, US President George W. Bush released his second term National Security Strategy (NSS). The strategy emphasizes the importance of realigning and refocusing the work of the World Bank and International Monetary Fund (IMF). In particular, the NSS states that the US will promote private sector investments at the multilateral development banks. It also calls for increasing the allocation of grants by these institutions in order to alleviate the “burden of unsustainable debt” that has locked many countries in an inescapable cycle of financial dependence.
Recent questioning of the relevance of the IMF is echoed in the strategy’s call for a refocusing of that institution. With Turkey, Indonesia, Brazil and Argentina (representing 70% of outstanding loans to the IMF) repaying their loans earlier than expected, the IMF will likely be under significant pressure to find new borrowers to produce the loan interest necessary to cover the operational costs of the institution. The NSS supports an IMF that will “reinforce each country’s responsibility for its own economic choices” and “prevent crises before they happen” by returning to its main role of promoting international financial stability. Read the National Security Strategy online.
5. Spotlight: Spring Meeting Fever! Notes and resources on upcoming World Bank, IDB, ADB and EBRD meetings
The IMF/World Bank Spring Meetings will take place on April 22 and 23. World Bank/Civil Society Dialogues and other civil society events are scheduled from Thursday April 20 through Tuesday April 25. All civil society representatives planning to attend any World Bank events, including Civil Society Dialogues, need to be accredited. Accreditation closed on March 31. Please contact with questions or concerns.
The official Development Committee and IMFC agendas are not yet public. Check out civil society events scheduled for that week on www.ifiwatchnet.org. BIC’s IMF/World Bank Spring Meetings webpage also provides an up-to-date schedule of both civil society and World Bank events, as well as a list of CSO representatives attending the meetings.
Other MDB meetings:
IDB Annual Meetings: April 3-5, 2006. More information: www.iadb.org. Check out ifiwatchnet’s IDB Annual Meeting Weblog.
The BICECA website overviews key topics being discussed at the meeting.
ADB Annual Meetings: May 3-6, 2006. More information from the ADB's official Annual Meetings webpage. Contact: . The Peoples' Forum against ADB has called for mobilization against the institution at the meetings. Read more about the mobilization.
EBRD Annual Meetings: May 21-22, 2006. More information from the EBRD's official Annual Meetings webpage.
6. Book Notes: Noted economist reviews Washington Consensus shortcomings, prescribes new approach
Notes on selected articles and reports that have circulated in the past month
Goodbye Washington Consensus, Hello Washington Confusion?
Dani Rodrik, Harvard University
Journal of Economic Literature, January 2006
The Washington Consensus’ prescription of stabilization, privatization and liberalization to spark economic growth is broadly recognized as having failed to achieve its intended consequences. In “Goodbye Washington Consensus, Hello Washington Confusion?” Dani Rodrik questions what will replace this once-broadly-accepted reform program. Rodrik examines recent World Bank and IMF efforts to take stock of the 1990s, the decade in which the Consensus was most vigorously applied, and their divergent interpretations of why the program failed. He considers strengthening institutions and increasing foreign aid as two alternatives to the Consensus strategy, ultimately suggesting a series of reforms that balances the lessons learned from each approach.
The take-home message of the Washington Consensus-era reforms, the World Bank suggests in its 2005 publication “Economic Growth in the 1990s: Learning from a Decade of Reform,” is that there is no clear understanding of what works. Rather “the emphasis is on the need for humility, for policy diversity, for selective and modest reforms, and for experimentation,” Rodrik writes.(3) The report highlights several causes for the Consensus’ failures, including: failure to pay enough attention to the factors that underlie growth and the importance of context and government discretion. The reform objectives didn’t require the specific set of policy prescriptions that were so vigorously promoted; minimizing fiscal deficits, inflation and tariffs and maximizing privatization and liberalization were just some of the strategies that might have been pursued. Furthermore, reform efforts needed to focus on the binding constraints to economic growth, like property rights. This analysis is a “radical rethink of development strategies,” according to Rodrik, and “indicative of the changing nature of the debate and of the space that is opening up within orthodox circles for alternative visions of development policy.” (7-8)
Enter the IMF’s take on the decade. IMF publications and Deputy Managing Director Anne Krueger have both suggested that the Consensus approach was sound – it simply was not implemented deeply enough. In addition to lack of political commitment to reforms, insufficient attention was paid to institutional change.
Rodrik details the perceived merits of institutional reform, a strategy which although not included in the original Washington Consensus has appeared in the so-called “second generation reforms”. Although the World Bank analysis acknowledges the importance of institutions, it’s not quite as committed to their importance, Rodrik notes, mainly due to lack of clear evidence tying effective institutions to economic growth. Rodrik seems to agree, noting that “the obsession with comprehensive institutional reform leads to a policy agenda that is hopelessly ambitious and virtually impossible to fulfill.” (13)
The author also considers the potential of significant increases in foreign aid, as suggested by some of the most visible proponents of this strategy – Jeffrey Sachs and the United Nations Millennium Project. In addition to promoting “quick-wins” like bed nets, chemical fertilizer and free education and health services, the Millennium Project calls for more than a doubling of annual official development assistance, to $195 billion by 2015. “The UN Millennium Project is based on the view that we basically know enough to mount a bold, ambitious, and costly effort to eradicate world poverty,” Rodrik comments. “We have successfully identified all the margins that matter, and we better move on all of them simultaneously.”(16) The author suggests several criticisms to these approaches, including arguments that a significant amount of aid is already being provided, and that many countries are already growing without significant amounts of foreign assistance. “The trouble seems to be not that poor African countries are unable to grow, but that their growth spurts eventually fizzle out. This suggests a rather different remedy,” Rodrik remarks.(16)
Rodrik concludes by suggesting his own agenda for promoting growth. The first step is to identify growth constraints, prioritizing the most binding constraints. Second, attention must be paid to the market failures and distortions causing the growth constraints. And finally, reforms must be institutionalized. Domestic institutions of conflict management, including participatory mechanisms and strengthening democratic institutions, are key, as is maintaining productive dynamism. Targeted policy prescriptions might be sufficient to spark growth and institutional reforms will sustain it.
7. Dear BIC: Spring Meeting accreditation
Dear BIC,
Every spring and fall I apply for accreditation for the World Bank/IMF meetings as a member of a civil society organization. Why does it take so long for a response? If I haven’t heard anything yet, have I been denied?
Signed,
Anxiously awaiting accreditation
Hi AAA,
What a timely question! Let me walk you through the process. The World Bank requires all civil society representatives to apply for accreditation to participate in World Bank-sponsored events. All CSO requests for accreditation are initially reviewed by the External Affairs Department of the Bank (EXT) and the External Relations Department of the Fund (EXR). EXT/EXR will then send the applications to the Executive Director's office representing the country from which the request originates for clearance. The Executive Director has 8 working days to approve or reject the request. At that time the participant will be notified of the decision. So expect to receive approval about two weeks after you submit your application. This year, accreditation will give participants access to World Bank buildings from April 17-23. So, in addition to attending Spring Meetings-related events, you can enter the buildings for any other meetings you’ve arranged with World Bank staff during that time. Contact the External Affairs office with additional questions: .
See you soon!
BIC
8. Announcements and Resources
- The Joint External Debt Hub (JEDH) is a new website compiling external debt statistics: www.jedh.org. The effort has been launched by the Bank for International Settlements (BIS), the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD) and the World Bank.
9. New at BIC: BIC welcomes new Europe and Central Asia Program Manager George Holliday
BIC is pleased to welcome George Holliday as our new Program Manager for Europe and Central Asia (ECA). George will build upon the excellent contributions of Heike Mainhardt-Gibbs, BIC's outgoing ECA Program Manager.
George joins BIC from the Trade Directorate of the Organization for Economic Cooperation and Development in Paris, where he specialized on foreign economic relations of countries in Central and Eastern Europe, Central Asia and China. In his five years at the OECD, he was responsible for conducting research and facilitating dialogue on trade and economic issues between representatives of countries in the region and OECD member countries. George also has extensive experience in the U.S. Government. He worked as a specialist in international trade and finance with the Congressional Research Service, where he conducted research and advised Members of Congress on a wide variety of international economic issues. He also worked in Russia as a representative of the Commercial Law Development Program of the U.S. Department of Commerce.
George has authored and coauthored numerous reports and publications on international economics. His major research interests include trade policy, technology transfer, and economic conditions in Russia, Eastern Europe and China. He received his BA and PhD degrees in International Relations from the George Washington University. He speaks Russian and French.
Heike Mainhardt-Gibbs, outgoing ECA Program Manager, will continue to actively support the program and the organization as a consultant.
You may contact George at or 1.202.624.0634 and Heike at .