THE BUSH administration has improved this nation's contribution to economic development in the poor world, launching a new Millennium Challenge Corp. to dispense aid in a more rational way and boosting global AIDS spending. But it faces a decision that could be as important as both of those initiatives. James D. Wolfensohn, the president of the World Bank, has announced his intention to step down. The White House must come up with a worthy successor.
It matters who takes over the World Bank, because the institution is both powerful and fragile. It is powerful because it pumps out around $20 billion in commercial loans, subsidized credits and grants each year and because its 10,000-strong staff represents the strongest concentration of development expertise anywhere. This combination of financial and technical muscle has given the bank a lead role in many ventures that affect American interests, from reconstruction in the Balkans and Afghanistan to the campaign against AIDS to the refining of development theory.
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But the bank is fragile because its financial model is creaking. Its commercial loans are often unattractive to successful developing countries that have access to the capital markets, because they come attached to well-meaning but burdensome social, environmental and anti-corruption conditions. The bank's subsidized credits, which are offered only to its poorest borrowers, are under attack for contributing to these countries' debt burdens. As a result, the bank may be gradually pushed into becoming an institution that awards grants. That would deprive it of the earnings from its loans, forcing it to shrink substantially. The world already has a shortage of competent institutions to manage transnational challenges. Hobbling the best one would be irresponsible.
The United States, by tradition, gets to choose the World Bank president, but it has sometimes exercised this prerogative carelessly. In 1981 the United States gave the job to A.W. Clausen, a commercial banker with no knowledge of development; in 1986 it picked Barber B. Conable Jr., an ex-congressman who was so uninterested in the World Bank that he had to check his own voting record to see whether he had opposed appropriating money for it. In 1991 the White House installed Lewis T. Preston, another commercial banker with no aptitude for the job. Mr. Wolfensohn, a dynamic if sometimes volcanic leader who has done the bank a lot of good, is an exception.
The next World Bank chief should ideally be an experienced manager familiar with the complex politics of public-sector organizations; management of private firms is an almost separate discipline. He or she must be a persuasive communicator -- the bank is surrounded by critics, and must constantly defend itself -- and must understand development. Some of the rumored candidates, including Labor Secretary Elaine L. Chao, Treasury Undersecretary John Taylor and the director of the president's AIDS initiative, Randall L. Tobias, fail one or more of these tests. Departing Secretary of State Colin L. Powell passes them, but his appetite for the job is uncertain. If Mr. Powell is not interested, the Bush administration should think outside the box.
