Wolfensohn Reflects on the World Bank

After 10 years, James Wolfensohn will step down as president of the World Bank later in May. He talks with host Steve Inskeep about the challenges facing the World Bank and the developing world.

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STEVE INSKEEP, host:

When you visit the office of James Wolfensohn, you see photos of his meetings with the powerful and famous. The pictures cover a cabinet that stretches along an entire wall. There he is with Nelson Mandela, with Dick Cheney, with Pope John Paul II, with Bono.

You've got quite a few pictures on the windowsill.

Mr. JAMES WOLFENSOHN (President, World Bank): They're all coming down. They're all coming down, get put in a black box somewhere.

INSKEEP: They're coming down because Wolfensohn is about to leave his job as president of the World Bank. President Bush's chosen successor, Paul Wolfowitz, takes over next month. The job is collecting billions of dollars from wealthy nations and lending to developing nations. When we met the departing bank president at a lunchtime meeting, James Wolfensohn grabbed a few strawberries off a plate, then dropped on the sofa to talk.

Mr. WOLFENSOHN: The task of dealing with giving hope, giving jobs, giving possibilities is a huge task. We start with knowing that half the world lives under $2 a day. So when I leave here, I'm not going to say I've solved that problem.

INSKEEP: His 10-year effort to solve it says a lot about the challenges facing the developing world. Journalist Sebastian Mallaby wrote about those years in a book called "The World's Banker."

Mr. SEBASTIAN MALLABY ("The World's Banker"): The World Bank itself is one of the most ambitious organizations in the world. It has projects in nearly a hundred countries. It's doing everything from engineering projects to fighting HIV/AIDS to fighting corruption. So it's really trying to change the world. So you've got this extraordinarily ambitious institution and on top of it, an extraordinarily ambitious man.

INSKEEP: James Wolfensohn is a former Olympic fencer from Australia. He's a longtime investment banker, known as a deal maker and a cello player who sometimes goes on stage.

(Soundbite of orchestra music)

INSKEEP: When President Clinton appointed him in 1995, James Wolfensohn tried to harmonize the bank and its opponents. Environmentalists criticized the bank for supporting projects like hydroelectric dams. Critics of globalization accused the bank of burying poor countries in debt. A few years ago, they were organizing protest after protest, including one witnessed in Washington by reporters like me.

(Soundbite of news report)

INSKEEP: Overhead, a police helicopter is passing. You can see the shadows of the rotor blades reflecting on the street. It's a very sunny, sunny day here. And directly in front of me is a line of protesters. The police...

Conservatives have joined liberals to attack the bank. They said its experts were out of touch, that they steered money to the wrong projects or even the wrong countries. The writer, Sebastian Mallaby, says James Wolfensohn threw his personality into winning over those critics.

Mr. MALLABY: People who had been frozen out of the bank and demonized by the communications staff suddenly found themselves invited round to Wolfensohn's home for dinner. And he would have them sit next to him and he would put his arm around them, and at the end of the dinner, someone would say, `You can't be our enemy anymore. We got on so well, it was so friendly. We can be frien-emies now.' And so there was this massive charm offensive.

INSKEEP: Mallaby ranks that charm offensive among Wolfensohn's failures in an otherwise impressive tenure. The bank president's dinner guests over the years included Bruce Rich of the Environmental Defense Fund.

Mr. BRUCE RICH (Environmental Defense Fund): Wolfensohn--I mean, he was great. He said I don't want you to stop criticizing the bank, but let's work together. He was kind of Clintonesque in that sense. He could charm people. He would say, `Well, I lay abed at night thinking about the poor and development.' Unfortunately, then the gap between that and what was actually happening on the ground actually got bigger.

INSKEEP: When we mentioned Bruce Rich to the World Bank president, a pained expression briefly crossed his face. Wolfensohn said the substance of his policies takes his critics into account.

Mr. WOLFENSOHN: We have to balance the interests of people to try and come up with a balance which protects the essentials of environment, which protects the essentials of hope for young kids, which protects lives.

INSKEEP: Can you describe a specific project from the time of your tenure and the way that it has evolved in order to take into account concerns from environmental groups or the borrowing countries or anybody else?

Mr. WOLFENSOHN: Well, I can, indeed. And if you take a recent project which is still to a degree being challenged. So let me take one that's very live which is the Nam Theun project in Lao PDR--Laos, I'll call it, which is very, very poor and which has one possible money-making resource, and that is hydro power. That project has now taken 10 years, 10 years to review because of all the oppositions to it. And certainly, we took greater provision in terms of the wildlife and the biodiversity in the area. Certainly, we've made much better provision for the people in the region. I think in this sense, the work of the critics brought very serious results.

INSKEEP: When it takes you a decade to get a project done like that, that does raise the opposite question about whether the criticism of this institution has slowed it down to the point where it's hard to get its work down, hard to be relevant.

Mr. WOLFENSOHN: In some cases, that would certainly be true. And we in this institution have to take into account all the criticisms of our critics, not just because they're from critics but because they're right. Our projects are not done on the quiet in a bar by a minister and somebody who then gets a payoff and then goes off and does the project. Our projects are an attempt to put in best practice and as a consequence of that, it takes a bit more time.

INSKEEP: Will the bank in the future need to change the kinds of countries in which it operates?

Mr. WOLFENSOHN: Well, they always change, but many of them will be the same. China and India, for example, are 2.3 billion people in the world, it's a third of the world, it will surprise me if we don't continue to do work in China and India.

INSKEEP: China and India are two countries that critics of this institution will point to and say, `Tons of capital flowing to China and India, don't need the World Bank there.'

Mr. WOLFENSOHN: Well...

INSKEEP: The World Bank should be focusing somewhere poorer.

Mr. WOLFENSOHN: Well, if they knew something about accounting, they would know that China has pulled 300 million people out of poverty, but there are still 50 million on their measurements left and on ours, probably nearer 200 million. What we cannot do is to ignore the middle-income countries because 70 percent of poor people live in those countries.

INSKEEP: Why should the United States, in particular, be subsidizing economic development in China and India which are increasingly seen as economic rivals to the United States?

Mr. WOLFENSOHN: Well, that's a very good fundamental question, but it gets to the essence of the way you look at the world. We are linked with every country in the world, with environment. We're linked with health. We're linked with trade. We're linked with migration. We're linked with wars. We're linked with terror. And, therefore, it's essential for a country like ours to seek to engage itself. Our country is a moral leader and it's in our self interest to be a moral leader.

INSKEEP: In his final weeks as president of the World Bank, James Wolfensohn is already turning his attention to his next job. Diplomats involved in the Middle East peace process named Wolfensohn as an envoy to oversee Israel's withdrawal from Gaza. He's been in the region this week and he says he wants to focus on Palestinian economic development. In his new job, like his old one, James Wolfensohn argues that development encourages peace.

KNSKEEP: This is NPR News.

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