The World Bank has just issued its gloomiest assessment ever of the global debt crisis, but it gives no sign that it has the political courage to grapple with the problem on any basis that might possibly offend the United States.

When the annual debt tables -- which now show the Third World owing $1.1 trillion -- were issued on Jan. 19, the bank's international economics director, Jan Baneth, said plainly: "The debt problem has not begun to near a solution. By many measures it has worsened."

The grim nature of the situation has also been acknowledged by Michel Camdessus, the managing director of the International Monetary Fund.

Despite a bitter internal debate within the bank's professional staff, the official viewpoint expressed at the top policy level is that it is best to muddle through with the debt strategy devised by Treasury Secretary James A. Baker III.

That approach calls for heavy additional loans to key debtor nations -- mostly in Latin America -- that promise to adopt free-market economic systems. But piling more debt on countries already saturated with huge debt is hardly calculated to stimulate their economic growth or to ease their annual burden of interest payments. Mostly, the new loans take care of old interest payments, a paper shuffle that makes the banks' loan books look healthier than they really are.

The only realistic approach is some form of debt relief, and the process is already underway, if not officially acknowledged. The Bank of Boston wrote off a good share of its loans to Third World countries. Mexico and Morgan Guaranty contrived a scheme, acquiesced to by the Treasury, under which Mexico offers new bonds in exchange for old loans written down by 40 or 50 percent. That all but pulls the rug out from under the World Bank and other opponents of debt relief as a legitimate instrument.

But Baneth -- like Baker -- rules out any scheme for substantially easing the middle-income Latin countries' burden by outright debt relief.

According to Percy Mistry of Oxford, a former adviser to the World Bank, the debt problem "ball" has been fumbled by the creditor banks and governments, and not yet been picked up by the debtors. "It's somewhere on the ground," Mistry said in an interview.

He thinks that this may be the last chance that "the World Bank will have to grab the ball," and is bitterly critical of what he charges is Bank President Barber Conable Jr.'s willingness to be completely dominated by Baker.

Having been pressured by Baker to join in his "flawed strategy," the bank has been "spraying" money among the Latin countries, thereby assuming more risks and becoming "less relevant" to other borrowers, Mistry says.

In a privately circulated paper, Mistry raises a fundamental question about the bank's financial stability: "In financial terms, the bank has achieved little more in the debtor countries than putting its own balance sheet at considerably greater risk in these last four years."

He suggests that in this circumstance, Congress should question the Conable approach when the Reagan administration shortly proposes a major general capital increase for the bank.

Baker's original plan opposed debt relief, but lately he has spoken of a "menu" of modest new gimmicks, including debt/equity swaps and other devices as alternatives to new loans.

Officially, Baker and the World Bank insist that the problem for the big Latin debtors is one of temporary "liquidity" -- a shortage of ready cash, not the more serious problem of "solvency," where the viability of the country and its political system hang in the balance.

But this is a delusion: the problem for the some big debtors is a solvency problem, as Swiss banker Franz Lutolf had the guts to say at a conference on debt last October in Basel, Switzerland. Lutolf said bluntly that the Baker strategy is making a bad problem worse.

Last week, Sen. Bill Bradley (D-N.J.) said again at a Washington Post luncheon that writing off a portion of the debt, or somehow easing the repayment terms, is the only solution. He suggested that the Mexican-Morgan Guaranty plan is no different from "the way local real estate investors get out of their pickle" when they've made bad loans.

"That's ultimately where we're headed," Bradley said. "The assumption that Mexico, for example, is a better credit risk when it owes $120 billion than when it owes $80 billion is not a good approach."

But Conable's bank seems frozen in a time warp. Mistry, in his paper, said the bank is suffering "an identity crisis," unsure of how to differentiate itself from the IMF on the one hand and the regional development banks on the other. "The bank is today a hesitant, unsure institution, focusing increasingly on activities it has demonstrated no particular competence in mastering," he says.

In his pointed criticism of Conable, Mistry says that "the leader of the bank has a much wider constituency of interests than representing the immediate agenda of the U.S. administration."

He said in an interview elaborating on his views that his highly negative perspective of Conable is widely and privately shared by the top staff of the bank, which is trying to get its president to take some bold initiatives, but does so "with the defeatist view" that Conable has already decided to do nothing.

He concludes: "The U.S. does not need two executive directors on the board of the bank" -- the duly-appointed one and Conable.

But the real shocker that Mistry comes up with is that the costs of running the bank and the IMF and the other multilateral institutions exceeds the net transfer of real resources to the countries the institutions were set up to help. That, as he says, "calls into question their raison d'etre."