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Sebastian Mallaby, Columnist

Clueless On the World Bank

By Sebastian Mallaby
Monday, March 7, 2005; Page A19

For sheer slapstick incompetence, 1986 marks a low point in American economic diplomacy. Now there's a small chance that 2005 will match it.

In 1986 the Reagan administration chose a new World Bank president. The Reaganites decided quickly not to reappoint the incumbent, but they were fresh out of ideas when it came to finding a replacement. They viewed anybody who knew anything about the "socialistic" World Bank as automatically suspect, which had an awkward narrowing effect on the potential field of candidates.

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After a long silence from the Reagan team, there were rumors that the bank's European shareholders might name someone, challenging the tradition by which the United States selects the institution's president. This caught the Reagan administration's attention: Even though it was indifferent to the World Bank, it cared a lot about White House prerogatives. So the administration called a retired congressman from New York and demanded permission to put his name forward.

The former congressman was Barber Conable, and he was not at all excited. He resented distractions from his retirement hobbies; he knew nothing about the World Bank or its mission. Conable refused to let his name go forward until he was assured that this was a mere tactical ploy, designed to show Europe that the United States was not bereft of candidates. Two weeks later Treasury Secretary James Baker returned to Conable with unhappy news. "Barber," he said, "I'm sorry to tell you that you're the only guy we can agree on."

This might be funny if it were not so serious. Because he was unprepared for the challenge, Conable spent an unsuccessful five years at the World Bank, and the institution suffered. After attempting a management reorganization that plunged the bank into chaos, Conable had the grace to admit the truth. "The average congressman doesn't understand the World Bank," he observed, "and I was the average congressman."

Two decades on, it's the Bush administration's turn to choose a World Bank president. Like the Reaganites before them, the Bush folk first decided not to let the incumbent, James Wolfensohn, continue for another five-year term; but they don't appear to have a better candidate. Last week the rumor mill spat out two extraordinary names: Paul Wolfowitz and Carly Fiorina.

This looks like a sign of desperation. Wolfowitz has most of what it takes to lead the World Bank. He is a persuasive communicator; he has experience in public-sector management; and he knows something about developing countries, having served as ambassador to Indonesia. But his association with the Iraq war makes him, unfairly but undeniably, anathema to most World Bank shareholders. The trial balloon soon popped: Wolfowitz declared that he would be staying at the Pentagon.

What of Fiorina? A straw poll of pro-Bush economists last week, including one who held a senior White House position, yielded a unanimous verdict: The idea is preposterous. Fiorina was fired from the top job at Hewlett-Packard because she proved incapable of running a large organization. How could the Bush administration, which claims to respect the judgments of the marketplace, entrust her with the formidable challenge of running the bank's 10,000-strong bureaucracy?

But the Fiorina rumor raises other questions. Does the Bush team understand that private-sector experience is only dimly relevant to the World Bank challenge? Corporate bosses are used to firing people, measuring performance by profits and dominating their boards of directors. But the World Bank, like most public institutions, is an entirely different beast. It's hard to fire people. Performance is measured not by the clear metric of profits but by poverty reduction, which takes years to occur and is hard to track precisely. And the board is composed of interfering governments that are forever rearranging the bank's development priorities. So it's not just that as a private-sector manager, Fiorina did so badly she was fired. It's that her experience doesn't fit what's needed in a World Bank president.

Equally, the Fiorina rumor forces the question: Does the Bush team mean to choose someone who knows nothing about development? Of course, this wouldn't be a first; witness the Barber Conable appointment. But newcomers to development are easily muddled by the magic-bullet claims that stalk this field -- claims that the key to development lies in micro-credit or female education or property rights, to cite three common examples. If you don't understand how to sort the snake-oil salesmen from the truth tellers, you can't set a sane course for the World Bank and stick to it.

Perhaps the Bush administration will yet unveil a brilliant candidate -- and do so in time to preempt the contemptuous buzz that will otherwise emanate from next month's World Bank-IMF spring meetings. But it better understand that naming a failed technology executive to run the world's premier development organization is like hiring a failed soccer player to coach the Redskins.


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