The end of the Wolfensohn era


Felix Salmon
Published on:
Wolfensohn: suffered a rare
disappointment when it became
clear the Bush administration
would not nominate him for a
third term as president of the
World Bank
Ever since George W Bush was first elected president in 2000, one of Washington's favourite guessing games has been who will be the next president of the World Bank. For the past five years, the correct answer has been ?James Wolfensohn?, the man now in his tenth year at the helm who would dearly have loved to see a fifteenth there as well.

Wolfensohn is the subject of a fascinating new book, The World's Banker. The author, Sebastian Mallaby, is not shy about expressing his opinions: former US Treasury secretary Paul O'Neill and World Bank economist Joseph Stiglitz are very unfavourably portrayed, and the NGO community is dismissed so soundly there is already talk of a ?Mallaby effect? diminishing their access and influence in the Bank.

Complex character

The most complex character in the book, naturally, is Wolfensohn himself. He said he would step down this June, after it became clear that the Bush administration would not nominate him for a third term.

It was a rare disappointment for a man who nearly always gets what he wants. Most famously, of course, the charming banker from Sydney was determined to head the Bank ? a job reserved, by tradition, for Americans. As early as 1980, when Robert McNamara retired from the job, Wolfensohn became a US citizen in an attempt to succeed him. But it was only after Wolfensohn lost out first to Alden Clausen, then to Barber Conable, and finally to Lewis Preston that he eventually got his wish, in 1995.

When Wolfensohn arrived, his three predecessors had buried the idea that the president of the World Bank should personally spearhead the global fight against poverty. Wolfensohn, by contrast, seemed determined to wade into such countries as Bangladesh and Uganda and put an end to it singlehandedly. He has so changed the idea of what a World Bank president can and should be that a candidate such as Peter McPherson, a former Reagan treasury official who used to run USAID and is now near the top of the shortlist, stands a good chance of getting vetoed by the Bank's European shareholders.

The field would seem to be wide open, since the original favourites for the job have both plumped for other opportunities: Robert Zoellick will be number two at the State Department, under Condoleezza Rice, and Stanley Fischer will be number one at the Israeli central bank. Perhaps the job will end up going to Anne Krueger or John Taylor, the present number twos at the IMF and US Treasury respectively; the ideal candidate would seem to be Bill Clinton, but he's unlikely to be offered the job, and even less likely to take it.

Whoever gets the job, however, will surely place Mallaby's book on their reading list, if they haven't already. As a guide to the Bank, how to run it, and how not to run it, it is indispensable.