Ronald Reagan and Jimmy Carter deserve a lot of credit for cutting a deal prior to the election that put partisan considerations behind, by (in effect) jointly endorsing the appointment of California banker A.W. "Tom" Clausen to succeed Robert S. McNamara as president of the World Bank.
Carter saw the need of proposing a high-caliber executive to the bank as assurance of a smooth transition in case, as one aide put it, "the unthinkable happens on election day." Reagan, on the other hand, could have chosen to reject in advance anyone selected by Carter, on the ground that it was not his responsibility. Instead, Reagan aide George Schulz publicly praised Clausen's selection.
The "unthinkable" (and more) did, of course, happen on election day. Given the result, it would have been impractical for Carter to propose a nominee for the bank job. And while Reagan on his own might have named Clausen or someone equally competent, the issue would not have been decided until next March or April. The job might even have shifted into the hands of an ultra-conservative Reagan supporter like former Treasury Secretary William E. Simon.
In Clausen, the bank and world community get a George Bush Republican, a conservative but broad-gauged man, sensitive to the need for maintaining the fiscal integrity of the bank yet not oblivious to the massive needs of Third World countries.
When he takes over in mid-1981, he will face the difficult task of finding ways to finance the enormously enlarged lending program designed by McNamara.
Around the World Bank, there is a certain amount of natural uneasiness about the changes a Clausen regime will bring. An executive there noted "Clausen knows retail and commercial banking. But in a development bank, you need a wider and more global perspective. You look at a whole country, not just the project, to decide on creditworthiness. This is a bank like no other bank."
When McNamara took over the bank from George Woods 12 years ago, it was lending very little money relative to its potential. But McNamara has expanded the loan program so dramatically that the bank at this stage either must have more capital or change the rules so that it can lend more generously from its existing equity base.
That will require a first-class sales job by Clausen. Both the capital markets and the governmental shareholders will have to go along, and the perception inside and outside the bank is that this will not be an easy assignment.
Clausen also has to deal with the World Bank bureaucracy -- 4,000 employes of many different nationalities, including 3,000 professionals. "Clausen will find that coming in here is more like taking over the presidency of a university than running the Bank of America or General Motors," says one bank insider. "He'll probably have to develop a new technique for communicating with them, getting their confidence and support."
My guess is that Clausen -- who is less up-tight in personal relationships than McNamara -- will adjust easily to such problems. Basically, in time I have known him at the Bank of America, and as one of the key forces in the private but influential International Monetary Conference (sponsored by the American Bankers Association), he has always been pragmatic.
Clausen was one of the few big commercial bankers outside of New York who saw the need in 1976 to prevent the Big Apple from going bankrupt. Two days after former president Ford had announced he would veto any New York bail-out bill, Clausen told me that "there is no other way" out of the New York City financial mess than a substantial program of temorary federal aid.
Republican banker Clausen thus understood what Republican President Ford did not -- that New York City going belly-up, triggering in all likelihood a New York State default -- would be a shock to the stability of the whole world. (If Ford had sensed that as well as Clausen, he might still be in the White House today.)
Clausen has a good feel for the increasing interdependence of the world's individual economies. One of his pet private projects has been to try to bring Presidents Carter and Lopez Portillo of Mexico together in a way that will help develop the Mexican economy and assure the U.S. increasing supplies of natural gas.
Now Clausen must face the awesome task of trying to ease the huge financial burden triggered by skyrocketing oil prices. He acknowledged in an interview with Washington Post reporter Peter Behr that the next few years will be critical. The old-line, industrial democracies face economic stagnation and aren't anxious to cough up lots of new aid money. The wealthy Arab nations want more control in both the bank and the IMF before they put additional money on the line.
The problems seem so intractable that Clausen deserves a tip of the hat for agreeing to leave his 40th floor Bank of America office in San Francisco, with its magnificent view, for the murkier perspectives in Washington. He must have been swayed by McNamara's job description of the bank presidency: "It's a helluva job if you're excited by the prospects of it.I would have paid to have it."