© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice.
May 13, 2012 6:58 pm
It reflects the changes in the world economy since Robert Zoellick became head of the World Bank in 2007 that these days he is more concerned about the policies of developed countries than of developing ones.
“The issue that most plagues me leaving here is actually more the failures of the developed economies to learn some of the lessons that we’re working with developing countries on,” says Mr Zoellick, as he comes to the end of a term that began when he was parachuted into the Bank by former US president George W. Bush, as a replacement for Paul Wolfowitz, who resigned after an ethics investigation.
The five years of Mr Zoellick’s presidency have seen accelerating growth in the developing world even as rich countries went in the other direction, first hit by a financial crisis, and then by deepening concerns about low growth and the burden of public debt.
Mr Zoellick points to the eagerness of developing countries to get private investment into infrastructure, to invest in innovation and to adopt voucher systems for education. “But here in the United States, which is supposed to be the heartland of capitalism, a lot of the states won’t do what they’ll do in China or Vietnam,” he says. “There are things that the US and Europe should spend some time learning instead of teaching.”
Mr Zoellick’s willingness to range around the sphere of economic policy, rather than stick to “development”, has been typical of his term at the Bank and goes to the heart of the debate about the legacy he leaves behind.
Some critics argue that Mr Zoellick steadied the Bank, healing divisions left by Mr Wolfowitz’s crusade against corruption, but did not redefine its role. In a world where traditional Bank clients such as China and Brazil have become economic powers in their own right, able to mobilise huge amounts of capital, the Bank is no longer the only way to finance development.
Bank-watchers advocate a range of new roles. Some want it to finance “global public goods”, such as healthcare research, water supplies, or the reduction of carbon emissions. Others want it to focus on the poorest people in the poorest countries, a philosophy visible in the Obama administration’s nomination of Jim Yong Kim, a healthcare expert, who will take over the top job in July.
Mr Zoellick has not tried to focus the Bank on any one mission. That, he makes clear, reflects his view of what the Bank is – a crucial part of the international financial system – and of how it should function, pragmatically responding to the demands of its developing country clients rather than imposing a vision of what the world needs.
“Economists sometimes just view this institution in a narrow financial sense. I view it as one of the thin tissues of the multilateral system that connects sovereign states together in getting them to work cooperatively on problems,” he says. “If you take that strategic perspective, it would be a mistake of historic proportions to push out the middle income countries.”
Mr Zoellick can point to a number of achievements which may not have redefined the Bank but do leave his successor with a strong hand to play. He oversaw the Bank’s first capital increase in more than 20 years, opened up a lot of internal data, and won a boost to its concessional lending fund for the poorest countries. The Bank was an unsung hero during the financial crisis, ramping up its lending to offset the credit crunch, which earned it the good will of its clients.
It has enough resources to do the same if there were another financial crisis tomorrow, says Mr Zoellick, as long as it allowed to be flexible with its capital. “The key is an institution that still sees itself as a co-operative and could permit itself the flexibility to respond to a crisis,” he says. “Rather than any rejection of the Bank, our clients want more of the Bank, but to keep active we have be flexible.”
Mr Zoellick is a Republican and his name is often floated for a senior job, possibly secretary of state or the Treasury, if Mitt Romney wins the presidential election this autumn. He dismisses such speculation as “premature”. But he is clearly not finished with public life yet, and his thoughts are turning to the US and its fiscal woes rather than the developing world.
“I’ve been intrigued with trying to do some writing or thinking on this broader question of economics and security,” he says. “The most important foreign policy issue for America today is solving the budget problem in a way that supports the innovation agenda.”
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in