IFI governance


Wolfowitz gone: what next?

18 May 2007

After a six week fiasco and a three day European-US stand off (see US-European showdown: Watching and waiting over Wolfowitz ), Wolfowitz finally admitted defeat and resigned last night. However, any welcome that his resignation would receive has been tempered by the fact that that there has been no commitment for an open, transparent and merit based leadership selection process for the next president of the World Bank. Moreoever that he was allowed to resign without an acknowledgement of the serious ethical and governance violations that he committed in promoting and arranging a pay rise for his partner (see Wolfowitz saga turns ugly) and that he will remain in post until 30 June.

In a damning statement in response to the resignation arrangements, Alison Cave of the World Bank staff association called for Wolfowitz’s immediate removal, and said “He has damaged the institution and continues to damage it every day that he remains as its president. He can not continue to be the face of the World Bank. He has demeaned the bank, insulted the staff, diminished its clients and dragged this institution through the mud”

There is now growing speculation on who will replace him. The statement of executive directors says that “the board will start the nomination process for a new President immediately”. However, similar statements have also been made by US Treasury Secretary Henry Paulson. NGOs and governments alike have indicated that this whole fiasco has been emblematic of serious accountability and transparency issues that plague the Bank and that now is an opportune time for the World Bank to re-evaluate its leadership selection process. By a gentleman’s agreement, the US has always chosen the head of the Bank, while the Europeans pick the head of the IMF. Romilly Greenhill from ActionAid UK said the selection of the new president should be “open to all nationalities and based on merit, not cronyism. The world neither wants nor needs another White House appointee in this important position”.

He has demeaned the Bank, insulted the staff, and dragged this institution through the mud

Supporters and critics alike have long called for governance reforms at both the World Bank and the IMF, over which they have upped the ante over the past weeks. This has included an urgent recommendation for leadership selection reform, organised by the NGO coalition New Rules for Global Finance, which was signed by 165 civil society representatives and sent to executive directors and alternates of the IMF and World Bank on 14 May. This backs up earlier calls that the World Bank end the inequality in decision making at the institution; and introduce full transparency based on a presumption of disclosure for all documents (including board meeting transcripts). Even the boards of the Bank and Fund have tacitly admitted the flaws in their leadership selection processes in a research paper in 2001 and put forward procedures for open, competitive processes based on merit, not national origin.

In a statement in the UK parliament last week, Hilary Benn said. “The UK has a long-standing commitment to support developing country calls for a stronger say at the World Bank..the practice of picking the heads of the World Bank and the IMF based on nationality should end and both presidents should be chosen on merit.”

For up to the minute news and commentary see worldbankpresident.org