Bush Taps Robert Zoellick as World Bank President

Robert Zoellick

Robert Zoellick is President Bush's choice to head the World Bank, administration officials say. He is shown testifying before the House International Relations Committee on China's resurgence in May 2006. Mandel Ngan/AFP/Getty Images hide caption

itoggle caption Mandel Ngan/AFP/Getty Images
  • Timeline: Robert Zoellick

  • 1953: Born in Naperville, Ill.
  • 1981: Received J.D. from Harvard Law School.
  • 1985-1988: Served in a variety of government positions, most notably as counselor to then-Treasury Secretary James Baker.
  • 1988-1991: Undersecretary of state of economic affairs. In 1992, Zoellick was appointed White House deputy chief of staff and assistant to President George H.W. Bush.
  • 1993-1997: Executive vice president of Federal National Mortgage Association, commonly known as Fannie Mae.
  • 1998-1999: Held a variety of teaching and business appointments, including as an adviser to the investment firm Goldman Sachs.
  • 2000: Part of a team of foreign policy advisers to then-candidate George W. Bush during the presidential campaign. The team was lead by Condoleezza Rice and called itself The Vulcans.
  • 2001-2005: U.S. trade representative. Zoellick helped launch the Doha round of world trade talks, and led negotiations for the entry of China and Taiwan into the World Trade Organization.
  • 2005-2006: Deputy secretary of state. Condoleezza Rice hand-picked Zoellick for the No. 2 position at the State Department. There, he focused primarily on China policy and the crisis in Sudan's Darfur region. He supported expanding a United Nations force in Darfur to replace the African Union soldiers who were struggling to keep the peace there.
  • 2006-2007: Managing director, Goldman Sachs.

President Bush has selected former U.S. trade representative Robert Zoellick to replace Paul Wolfowitz as president of the World Bank, senior administration officials say. Zoellick's nomination, expected to be made official Wednesday, comes less than two weeks after Wolfowitz resigned amid a growing controversy over how he handled a compensation package for his companion, Shaha Riza, a bank employee.

Zoellick previously held two high-ranking jobs within the Bush administration. Until last summer, he was deputy secretary of state and played a key role in shaping the White House policy on Sudan. He previously served as the U.S. trade representative, negotiating trade deals with other countries.

The White House says Zoellick has the trust and respect of many officials around the world, adding that his experience in international trade, finance and diplomacy make him uniquely prepared to take on the challenge of leading the World Bank. Early indications are that Zoellick's nomination is being greeted positively by other countries, administration officials say.

Robert Siegel discussed Zoellick's nomination with NPR International Business Correspondent Adam Davidson. Excerpts from the conversation:

One can hardly imagine a better resume than Zoellick's for becoming president of the World Bank.

Yes, especially for a Republican Washington insider, Zoellick is about as golden as it gets. He has had very prominent positions in President Reagan's administration and the first President Bush's State Department. And the current President Bush has already appointed him to two prominent positions. However, Zoellick has let it be known quite openly that he was very upset that he was not named treasury secretary in 2005. And he was also upset that he was not named World Bank president in 2005, when Wolfowitz was given the job.

So Zoellick gave up Washington and entered private industry at Goldman Sachs — which is one of the world's most powerful and important financial institutions, so he probably had the same access to government leaders over the past few years.

There is a process for approval of the U.S. president's choice of a president of the World Bank. We assume Zoellick will be approved. But explain what the process is.

Since the World Bank started in 1946, the tradition has been that [the president] is always an American appointed by the U.S. president. Technically, that person does need to get approval from the World Bank's executive directors — a group of 24 people from different countries all over the world. But nobody expects them to turn this guy down.

There were some calls to reform that system, but it doesn't seem that the U.S. is interested in reforming that system and opening up the leadership of the bank to the world. It's just like the International Monetary Fund — traditionally, a European runs that, and Europe doesn't seem very interested in opening that position up.

Apart from the issues surrounding Wolfowitz's companion, there were questions about his approach to running the World Bank — the way he managed it and his concern with corruption. What challenges face Zoellick when he takes over?

Paul Wolfowit'z problems at the World Bank started long before any issues about his companion surfaced. This is one of the most complex, bureaucratic institutions that man has ever devised. It is 10,000 people from all over the world with very different politics. It's one of these places where you really need a brilliant, bureaucratic mind to negotiate, and Wolfowitz was seen as unsuccessful.

Now, Zoellick almost universally is considered a brilliant, capable person. But he has never run a huge staff. At the State Department, he was technically in charge of much of the staff, and people say he didn't do a great job with the politics, so that is a concern. Is he an idea man? Yes. Is he a manager? We'll have to see.

This transcript includes only a portion of the conversation and has been edited for clarity.

Q&A: The World Bank at a Crossroads

The World Bank was founded in 1944, charged with the monumental task of eradicating global poverty. It offers loans to countries that might not otherwise get them. Since its inception, the bank has lent or given $400 billion.

Yet critics say the World Bank is a bloated, corrupt organization that has outlived its usefulness. Those criticisms have gotten a boost from the scandal involving outgoing bank president Paul Wolfowitz. He will step down from his post June 30 following accusations that he arranged a sweetheart promotion and pay deal for his companion, bank employee Shaha Riza.

Sebastian Mallaby is a senior fellow at the Council on Foreign Relations and author of The World's Banker. He spoke with NPR about the challenges facing the World Bank.

If you were appointed World Bank president, what would be your first priority?

To rebuild a very bruised institution. If the World Bank were a private company right now, its stock price would be down about 25 percent because of a loss of confidence from the staff and from the borrowers — and also, a loss of confidence from the shareholders, the rich countries who give the bank money. Everybody is down on the institution now.

Are the bank's problems a direct result of the Wolfowitz scandal?

I think Wolfowitz's management style has a lot to answer for. Part of it is that he came in with a strike against him because of the Iraq war, and part of it is he made it worse by appearing not to listen to people. He was just a bad leader.

For a long time, the World Bank was criticized for funding large projects, such as dams, in developing countries—projects that these countries didn't necessarily want but were, in a way, foisted upon them. Is that still a fair criticism?

That criticism was probably accurate around 1980. That criticism had some truth to it, and the World Bank responded. By the early 1990s, the more responsible critics were saying that, actually, when it comes to the interaction of the environment and development, the World Bank was the most responsible institution in the world. And yet the criticism carried on. It was almost because people had scored such dramatic success pointing out the World Bank's problems a decade earlier that they didn't want to give up on that shtick.

Critics of the World Bank argue that it is a vestige from another era and it is no longer needed. Do you agree?

No. I think that's wrong. The reason you need a World Bank is twofold. First of all, there are poor countries that still don't have much access to private capital markets, and these countries benefit from the World Bank.

Secondly, there are projects that support global public goods. Take the concern over global warming. If China is building a coal plant, the whole world has an interest in making sure it is a clean coal plant. The Chinese could borrow money themselves and make a clean coal plant, but they are more likely to do that if they are offered subsidized lending from the World Bank. Otherwise, the borrowing countries will say 'Why should we pay extra for a cleaner coal plant?' The benefits are shared globally, so shouldn't the cost be shared globally? That's where the World Bank can help.

Another critique of the World Bank is that it encourages imprudent borrowing and feeds an addiction to cheap loans. Is that a real problem?

It seems to me that private capital markets can easily create an addiction to cheap capital, too. That's what you've seen ever since Mexico defaulted in 1982 because it borrowed too much from New York banks. Another argument for the World Bank is to be a counter-cyclical lender, to lend more in the wake of, for instance, the Asian financial crisis in 1997, when all of a sudden, Southeast Asia didn't have any private lenders.

What sort of person would make an ideal president of the World Bank at this time?

You need, first of all, someone who understands the institution and doesn't need to learn on the job. Typically the World Bank leaders spend the first six months figuring out what this complicated animal is. A couple of names come to mind. One is Stanley Fisher, who is now the governor of the Central Bank of Israel, although he's an American citizen. In the past, he was the chief economist at the World Bank. He's an insider with man-of the-world experience. He's not purely a creature of the bureaucracy.

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