The World Bank: the impossible job?


Philip Moore
Published on:

The World Bank is where finance and politics meet. The scope of its mandate and its ability to effect change have attracted some of both disciplines’ brightest minds to its presidency. But do the conflicting demands of the role mean that all careers at its head are destined to end in failure?

Illustration: Morten Morland


The first annual World Bank/IMF meeting attended by Euromoney, which took place in Copenhagen in 1970, was an unusually rambunctious affair. There had been plenty of animated disputes behind closed doors at previous annual meetings. But Copenhagen was the first occasion on which angry mobs had taken to the streets to protest against individuals as well as institutions they pilloried as agents of neo-colonialism.

The individual targeted by the Danish demonstrators, many of whom waved North Vietnamese flags, was Robert McNamara, who had taken up the World Bank presidency in 1968. Previously, he had served as defence secretary under the Kennedy and Johnson administrations, which is why he was denounced as a war criminal by the Copenhagen mob. 

Although it began menacingly, the Copenhagen rally was mild compared with the anarchic disruptions that would unnerve delegates at future annual World Bank meetings. As the sport of World Bank-baiting became more organized and increasingly sinister, the most notorious disruption came at the summit marking the institution’s 50th birthday in 1994. That year’s meeting in Madrid was infamous for being hijacked by the ‘Fifty Years is Enough’ brigade. 

Eugene Rotberg, who was the Bank’s treasurer at the time of the 1970 meeting, recalls having his car rocked by protestors as he and his wife drove from their hotel to the meetings soon after their arrival in Denmark. 

But, he adds, he had plenty of experiences at annual World Bank meetings more unsettling than the Copenhagen disruption. Especially unnerving, he says, was having the underside of his car checked with mirrors by security guards searching for defectors in Berlin in 1988. 

Instead of making [officials] feel like a poor relation who had to come to HQ to plead for money, we went and talked to them as equals, which made a huge difference 
 - James Wolfensohn

The Copenhagen protests were short-lived. But they were important in that perhaps for the first time in its quarter-century history, vilification of the World Bank had become deeply personal. 

The opprobrium directed at McNamara would also turn out to be deeply misjudged, not just because his 13-year presidency would be the longest in the Bank’s 75-year history but because it would also become recognized as its most effective. 

It was on McNamara’s watch, after all, that a greater emphasis was placed on the anti-poverty agenda outlined in the president’s address to 5,000 delegates at the 1973 annual meeting in Nairobi. 

Berating consumers in developed economies for their “endless spiral of demand... for additional goods”, McNamara outlined a five-year lending programme of $22 billion in support of the rural poor that had been bypassed by global economic growth. 

Threatening to stand down if he did not have his way, McNamara put his Bank’s money where his mouth was. During his tenure, the Bank’s headcount rose from 1,600 to 5,700. When McNamara joined, it was lending $1 billion a year. By the time of his departure in 1981, this had risen to about $12 billion. 

When McNamara arrived at its imposing headquarters on H Street in Washington DC, the World Bank had about $3 billion of debt outstanding, most of it in dollars, with a smattering in Swiss francs, sterling and a handful of other currencies. By the middle of 1981, this had reached close to $28 billion, denominated in 17 currencies. 

Eugene Rotberg, the Bank’s treasurer from 1968 to 1987

“McNamara recognized that if the Bank wanted to lend, it would also have to borrow,” says Rotberg, who was appointed by McNamara in 1968. 

McNamara was not the first World Bank leader to discover that, more than any other job in global financial services, running the world’s leading multilateral development bank is like pushing a wonky-wheeled trolley through a crowded airport. 

Nor was he the last to find that no matter how carefully you align its wheels, sooner or later your trolley will veer off course, upsetting the people it lurches towards. 

In the case of Jim Yong Kim, the wheels came off sooner than expected. Originally appointed by president Barack Obama in 2012 and unanimously reappointed for a second term in 2016, Kim stepped down abruptly, three years ahead of schedule. 

Many were unconvinced by the reasons he gave for decamping to the private sector, where he said he could do more to counter climate change and the infrastructure deficit in emerging economies. He may be right. But it was a devastating indictment of the World Bank. It was also a bewildering volte face after Kim’s proclamation in 2017 that he had “never been more optimistic” that the Bank could help people haul themselves out of poverty. 

Then again, Kim could have argued that he was simply observing a precedent set more than seven decades earlier by the Bank’s first president. 

Eugene Meyer was running The Washington Post, which he had acquired in a bankruptcy auction in 1933, when he accepted president Harry Truman’s invitation to lead the newly established International Bank for Reconstruction and Development (IBRD) in 1946. 

Meyer did not last long enough to oversee the IBRD’s first loan. This was a $250 million facility for France in May 1947, made in accordance with the Bank’s original mandate, which was to help Europe rebuild after the War. 

Our bigger enemy was public indifference and governments which simply didn’t recognize an interest in the heavy funding of development 
 - Mark Malloch Brown

Enmeshed in a series of clashes over the governance of the Bank, Meyer announced his resignation six months into his tenure, creating a conundrum that would arguably remain unresolved more than 70 years later. As The New York Times reported following Meyer’s withdrawal, his replacement would need to meet at least three basic criteria. In addition to being well-known, the new president would have to be experienced in the financial services industry. He would also need to command the confidence of banking officials and the investment community. 

It would not be impossible, the newspaper cautioned, to find candidates ticking all those boxes, but it would be tricky. In spite of the promise of a $30,000 tax-free salary, a number of respected financiers declined the invitation to lead the Bank. 

Among the most prominent of these was the then governor of the Federal Reserve, Allan Sproul, who apparently balked at the reputational risk involved in running the institution. Meyer’s eventual successor, former Wall Street lawyer, John McCloy, was hesitant about the position principally because he believed himself to be underqualified. 

One retired World Banker who spent three decades at the institution says that the roll call of presidents since McNamara has been “pretty mediocre”. However, mediocrity should not be mistaken for insincerity, or for a lack of dedication, professionalism and industry. 

One of several themes common to the tenures of virtually all the World Bank heads is that each has cared passionately about improving living standards and alleviating absolute poverty. Some may have been less effective than others, but it is mean-spirited to ascribe anything other than genuine social conscience to their motives, which is why some of the more extreme banners unfurled at Madrid and elsewhere were shameful. 

“All the presidents I served under clearly cared deeply about the World Bank’s anti-poverty agenda,” says Pedro Alba, who represented the Bank across several continents in a 32-year career from 1984 to 2016. “Even [Paul] Wolfowitz genuinely cared. I saw him send his security staff crazy when he insisted on walking through a market in Burundi because he was determined to see first-hand what the Bank could do to improve people’s lives.”

Presidents of the World Bank very quickly find that they are not the centre of the universe 
 - Eugene Rotberg

A second theme that is common to many of the presidencies of the World Bank is that in some cases the influence they were able to bring to bear over the Bank’s direction was more limited than is generally assumed. 

“To say they are figureheads is much too strong a word,” says one former World Banker who served under a handful of presidents. “But presidents have come and gone; they have seldom had much of an impact on the day-to-day work of the majority of the Bank’s employees.”

Others echo the view that most of those at the helm of the Bank have been too sensible to develop an inflated view of their importance or of their influence. 

“Presidents of the World Bank very quickly find that they are not the centre of the universe,” says Rotberg. “They soon discover that they are surrounded by very smart, talented and committed people, and that they would be well advised to listen to them.”

Insurmountable challenges

Perhaps that is just as well, because the third and most important feature that World Bank presidents have shared is that almost all have found themselves facing a set of virtually insurmountable challenges.

In part, this is the by-product of the impossibly idealistic mission that has confronted them, which has been to work for a world “free of poverty”. 


David Malpass, president of the World Bank Group, on his first day of his five-year term as president, on April 9, 2019 in Washington, DC

The daunting magnitude of this objective has been impressed upon many of them as early as their first overseas trip on Bank business. More often than not this has been to Africa, a tradition maintained this April by David Malpass when he chose to visit Madagascar, Ethiopia and Mozambique on his first trip. 

The 13th World Bank president returned in July with a glumly familiar message, which was too close for comfort to those transmitted by most of his 12 predecessors. This was that more than 700 million people were still living in extreme poverty, defined by the Bank as subsisting on a daily income of $1.90 or less. This is not far short of the figure of close to 800 million referenced by McNamara in Nairobi in 1973.

True, the world’s population has almost doubled since 1973, sharply reducing the global poverty level to 8.6%, which according to Malpass is thought to be the lowest global average rate in history. 

But in sub-Saharan Africa, he conceded, the number of people existing in extreme poverty is rising rather than falling. Besides, relative data does not mean much to the 700 million mired “in a condition of life so degrading as to insult human dignity,” which is how McNamara described extreme poverty in his Nairobi speech. 

Try telling a child in a slum in Lagos not to worry because the global community of the extremely poor is smaller in relative terms than it was in 1973. 

These are precisely the same challenges that the World Bank was wrestling with in the early 1960s, when a young Afrophile named Edward ‘Kim’ Jaycox arrived at the institution as one of a group of nine young professionals. 

Having joined in 1964, Jaycox went on to spend 12 years as regional vice-president in charge of Africa between 1984 and 1996. 

“I studied Africa in graduate school and was very enthusiastic about the continent,” he recalls. “But when I joined, Africa was in a truly pathetic shape. Economies were in freefall and the Africans I had known in graduate school and were now in charge of their countries were demoralized. Socially and politically, as well as economically, nothing worked.”

At first, the formula for addressing these challenges looked straightforward enough. Between 1979 and 2000, Masood Ahmed held various positions at the Bank, latterly leading its Heavily Indebted Poor Countries (HIPC) debt relief initiative during James Wolfensohn’s presidency. He says that the history of the Bank mirrors the broader evolution of global views on development. 

“In its first 25 or 30 years, the view was that if you could channel more capital into poor countries and build their basic infrastructure – roads, bridges, power stations – they would become rich too,” says Ahmed, who is now president of the Washington-based Center for Global Development (CGD). 

In other words, the prescription was to throw money at infrastructure projects and wait patiently for the trickledown to follow, attracting private-sector investment, creating jobs, generating tax revenues and stoking economic prosperity.

Don’t forget that the World Bank is a bank, not a UN agency. In order to be sustainable, a bank has to make a profit and work with a credible budget 
 - Bertrand Badré

One snag was that many of the governments most in need of infrastructure seldom had the local technical capacity or expertise to absorb funding from multilateral development banks (MDBs). 

As the World Bank said in its annual report as early as 1967: “We had proposals, to mention a few, for dams that would be starved for water, for electric power stations that would lack customers, and for highways that would not fit local traffic and terrain.”

Besides, as McNamara said in 1992, by relying on trickledown from infrastructure investment as an engine of poverty alleviation, the Bank was overlooking a range of other areas that were essential for supporting improvements in basic living standards. He cited primary education, population control and environmental assessment as examples of fields untouched by the Bank. 

The recognition of the need for what would later become known as societal development or transformation, stretching far beyond basic infrastructure, had several side effects. One of the most visible and intractable of these was mission creep. 

Before long, the bank was no longer acting only as the developing world’s infrastructure builder. As it added a panoply of other ambitions to its original mandate, it also became the developing world’s teacher. It became its doctor. It became its management consultant. And in some cases, it became its policeman and its peacekeeper. 

To those who questioned what the prevention or resolution of conflict had to do with poverty alleviation, the Bank would provide a compelling response in its ‘Pathways for Peace’ report published in 2018. This argued that preventing violent conflict would save between $50 billion and $70 billion a year. That would pay for an awful lot of primary schools. 

Nevertheless, as the World Bank evolved into a development Hydra, it became increasingly hard to manage. Jessica Einhorn, the World Bank’s first female treasurer, hit the nail on the head in a piece published in Foreign Affairs in 2001 and quoted by the journalist Sebastian Mallaby in his book on the Wolfensohn presidency. By then, she wrote, the institution’s mission had become: “So complex that it [strained] credulity to portray the Bank as a manageable organization.”

This is a problem not shared by the IMF, which has a mandate that is very different from its neighbour. 

Ahmed has first-hand experience of both, because when he left the Bank in 2000 he crossed the road to become director of the policy development and review department at the IMF. 

“The IMF is less innovative than the World Bank, but it operates in a much narrower field, and is generally engaged in a single programme in a country at any one time,” he says. “The World Bank can be involved in dozens simultaneously.”


The Bank’s expansion into an unwieldy range of activities coincided with an increase in the attention and opprobrium it was attracting from global non-governmental organizations, which were proliferating at a blistering speed by the 1990s. In his book published in 2004, Mallaby says the number of NGOs rose from 6,000 in 1990 to 26,000 in 1999. There are now a million and counting. 

Today, Wolfensohn looks back on his decade in charge of the World Bank with palpable pride and satisfaction. But he says he probably would have enjoyed his tenure considerably more had it not been for the hostility of the NGO community, particularly during the first two years of his presidency. 

He recalls that in those early days he often resorted to travelling by subway rather than in one of the Bank’s cars and would exaggerate his Australian accent as a way of escaping the intrusive attention of strangers. 

It is easy to see why. It was shortly before Wolfensohn joined that anarchic protestors had unleashed their most violent protests to date, at the annual meeting in Madrid in 1994. 

Mark Malloch Brown, the Bank's vice-president for external affairs from 1994 to 1999

Mark Malloch Brown (now Lord Malloch-Brown) who joined the World Bank as vice-president for external affairs in 1994 and whose first trip on Bank duty was to the Madrid meeting, describes the summit as a baptism of fire. 

He remembers watching demonstrators scaling the walls of the cavernous exhibition hall where the meeting was held. 

“At one point I thought someone might get shot because [US] Treasury Secretary Bob Rubin was sitting directly beneath one of them,” he recalls.

Managing the dialogue between the Bank and the NGO community was at times a Sisyphean task. 

Malloch-Brown says that the danger of engaging or building a partnership with any NGO was that the process of rapprochement would simply open a new flank that would soon be occupied by another – possibly more radical and intimidating than the one it replaced. 

“We had to learn to avoid appearing to turn NGOs into quislings, because that only helped to create new groups,” he says.

But Malloch-Brown adds that NGOs were not always the most obstructive force he encountered. 

“Most of the people in the NGOs – like most of the people in the Bank – cared deeply about development,” he says. “Our bigger enemy was public indifference and governments which simply didn’t recognize an interest in the heavy funding of development.”

You can judge it on how closely it has focused on poverty reduction and inclusive growth, by the efficiency of its financial models, by the scope of its presence on the ground and by the quality of the data it has collected 
 - Nancy Lee, Center for Global Development

It was not just the apparently irreconcilable interests of hostile NGOs, a suspicious media and uncooperative politicians that the Bank had to balance. There was also friendly fire to repel from parties that ought to have been on the Bank’s side. 

One of these was the global community of investors, either in the form of direct shareholders or portfolio managers being asked to buy World Bank bonds in ever-larger volumes.

For at least some of those fixed income investors, a notable source of tension sprang from the debate over the definition of the World Bank’s mission. This had simmered ever since McNamara insisted on calling it a development agency rather than a bank. He would later recall that this led some Swiss investors to regard him as “a god-damn fool” and a “red-eyed socialist”. 

Domestic investors could also be prickly, albeit for very different reasons. 

“The major problem we had in the US was not the credit standing of the Bank,” Rotberg recalls. “It was the perception that we were supporting left- as well as right-wing governments that would compete with the US. It was that political argument that I had to address more than any other.”

As if external disruption has not been unsettling enough, most World Bank presidents have also had plenty of internal restlessness to manage. 

Barber Conable discovered this to his cost the moment he put his feet under his desk at H Street in 1986. More or less immediately, budgetary constraints forced him to implement a brutal reorganization of the Bank, which called for 500 redundancies. 

“For two years my name was Barber B. Mud here because I created the terrible disruption of that reorganization,” he later recalled. 

He also came in for flak from executive directors of member countries who considered the reorganization a “plot” against their nationals who were fired.


A number of other senior directors have discovered to their cost how perilous it can be to rock the World Bank boat, especially if that means cutting costs and attacking some of the perks traditionally enjoyed by its staff. 

Few have set about addressing this challenge with more determination than the former Crédit Agricole and Société Générale CFO, Bertrand Badré. He says that when he became CFO of the World Bank in 2013, the Group was exhausted by the global financial crisis, which had stretched its resources and played havoc with its cost base. 

He also says that he was shocked by the weakness of the Bank’s budget process, which he describes as having been “ill-informed, to say the least.” 

Some of the inefficiencies he uncovered bordered on the comical. How could an institution committed to fighting climate change subsidize on-site car parking for its employees? Badré did away with that, insisting that staff make use of subsidized metro travel instead.

Why did an entity whose staff clock up some 140,000 flights a year not think of encouraging more intense competition among the world’s leading air carriers? Badré asked the three global airline alliances to provide more enticing discounts and shaved a hefty chunk off the Bank’s annual travel expenditure in the process. 

Above all, how on earth could the Bank look at its cost base through a lens that was as dated as it was distorted? 

“I think I was the first CFO in 70 years to recommend to the board that it adopted a combined perspective of the group’s costs,” says Badré. “When I arrived, I was astonished that many people within the group were still using figures from the Wolfensohn era [which ended in 2005] suggesting the Bank had 10,000 staff and annual running costs of $2 billion.” 

Those numbers, he says, referred only to the IBRD. Group-wide, they were closer to 17,000 and $5.5 billion.

With Kim’s support, Badré single-mindedly set about rebuilding the financial sustainability of the group as a whole, encompassing the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), along with the Bank itself. 

If that meant offending some people along the way and attacking one or two structural anachronisms, it was a price that Badré says was worth paying. 

“Don’t forget that the World Bank is a bank, not a UN agency,” he says. “In order to be sustainable, a bank has to make a profit and work with a credible budget.”

The World Bank was the first borrower to use a Bloomberg terminal, the first to issue an e-bond, the first to issue a global bond, and the first to issue a green bond 
 - Afsaneh Beschloss

To rebuild the group’s financial credibility, Badré took a scalpel to its costs. He insisted that its budget be anchored in its operational profits rather than on treasury functions that were hostage to volatile interest rates. And he squeezed more efficiencies out of the group’s balance sheet by increasing its leverage.

Badré also overhauled a financing strategy that was managed more like a foundation than a bank before the Kim presidency, according to Alba, who was then vice-president of budget, performance review and strategic planning. 

“Interest spreads should be used to cover your cost of capital, but we were using them to fund our current expenditure,” he says. “This had left the Bank vulnerable as Libor declined. So Bertrand proposed a package that was supported by senior management, which increased spreads and raised prices as well as cut costs.

“This package turned the institution around by increasing net income and allowing the Bank to charge more and lend more, all of which has helped strengthen its financial position today.”

If he expected a medal for all of this, Badré was to be disappointed, with press and staff alike excoriating him for the bonus he was offered for his cost-cutting. 

“When I proposed reducing expenditure by $400 million from the baseline assumptions, people called me a brutal Wall Street guy who was trying to cut costs by 20%, which they based on the old figures,” he says. “That made me an easy target, although in fact I was reducing them by closer to 8%, by reviewing every department and combining a top-down and bottom-up approach to increasing efficiencies. 

“If I had to do it again, I would,” is Badré’s postscript on his unpopular programme. “When people say it’s impossible to reform the Bank, I tell them that in two years I overhauled its budget, cut costs and increased its lending capacity.” 

Perhaps. But for Conable, Badré and many others, the struggle of reconciling so many irreconcilable demands might have been less painful had World Bank presidents and their staff at least been given some recognition for their endeavours. Few, however, have been given any credit, chiefly because failure is easier to see and simpler to measure than success. That has made World Bank presidents very convenient targets at which to throw rotten eggs. 

“It is virtually impossible, scientifically or intellectually, to prove the positive impact of direct World Bank lending,” says Rotberg. “You can show that India’s mortality rate has fallen from 245 in 1960 to 43 today. You can point out that China’s GDP per capita, which was $500 a couple of decades ago, is now approaching $10,000. Over the years, tens of thousands of World Bank staff have helped bring about these improvements in global living standards. But none of them will ever be given any credit for what they have achieved.”

Two extremes

The question of whether the World Bank has succeeded or failed over the last 75 years depends almost entirely on who you ask. Put the question to an NGO and it will probably brand the Bank as a failure at best and as a self-interested, capitalist tool of neo-imperialism at worst. 

Put it to almost anybody who has dedicated most of his or her professional life to addressing the goal of poverty reduction, and he or she is equally likely to mark it as a rip-roaring success. 

The truth almost certainly lies somewhere between these two extremes. 

Nancy Lee, a senior policy fellow at the Center for Global Development in Washington

“The answer depends on the standards and criteria by which you judge the Bank’s performance,” says Nancy Lee, a senior policy fellow at the Center for Global Development in Washington. “You can judge it on how closely it has focused on poverty reduction and inclusive growth, by the efficiency of its financial models, by the scope of its presence on the ground and by the quality of the data it has collected. By all those measures, the Bank has done pretty well, as have all the multilateral development banks.”

The most conclusive proof of this is that in spite of repeated calls for it to be abolished, the Bank has continued to stand tall. Career World Bankers say that the survival of the institution in the teeth of relentless external criticism and internal turbulence bears witness to its resilience and adaptability. 

“At a time when multilateralism is once again under attack, I think it is worth asking how it is that the Bank has survived and prospered for 75 years,” says Alba.

I always said that there were challenges facing all of us that were harder and more important than getting another five basis points out of Goldman Sachs 
 - Kenneth Lay

Rotberg is in no doubt that one of the distinguishing features of the Bank’s performance has been the efficiency and innovation it has consistently applied to the mobilization, recycling and globalization of capital. 

This is a view that has been echoed by Rotberg’s successors for several decades. 

“Since the Bank’s inception, we have issued bonds worth close to $900 billion,” says Jingdong Hua, who took up the role of treasurer 50 years to the day after Rotberg began his World Bank career, moving across from the IFC on January 1, 2019. “Of this total, more than $600 billion has been channelled directly to our client countries in the form of loans or direct investment. If that is not a significant transformation of global savings into development finance, I don’t know what is.”

The role the treasury has played in the World Bank story has not just been critical for the financing it has generated directly. It has also played a notable part in acting as a laboratory for new products and spearheading innovation across international capital markets. 

“The World Bank was the first borrower to use a Bloomberg terminal, the first to issue an e-bond, the first to issue a global bond, and the first to issue a green bond,” says Afsaneh Beschloss, treasurer and CIO of the World Bank between 1999 and 2001. 

Former World Bankers say that the pioneering spirit of the treasury department that has been the engine room of this innovation for at least five decades mirrors the broader quality, diversity and (usually) loyalty of the Bank’s staff. Cultivating and maintaining that loyalty was, however, especially important in the treasury. 

Kenneth Lay, treasurer of the Bank from 2006 to 2010

“Our people were being courted almost on a daily basis by the Wall Street investment banks,” says Kenneth Lay, architect of the global bond in 1989 and treasurer of the Bank from 2006 to 2010. “So it was essential that they loved coming to work every day.”

That, he adds, involved providing them with much more than a pay packet. It also meant ensuring that the staff in the treasury, like their colleagues elsewhere in the Bank, were fully committed to the battle against poverty and deprivation. 

“I always said that there were challenges facing all of us that were harder and more important than getting another five basis points out of Goldman Sachs,” says Lay. 

None of this is to suggest that World Bank staffers are poorly paid. Kim’s annual salary was $500,000 plus a little over $350,000 in various benefits, while the current chief executive is paid a basic of $419,000. 

That may not quite be in the Jamie Dimon league. But as one former World Bank director points out, it means the World Bank president commands a higher salary than the president of the US, and considerably more than the French president and the UK’s prime minister put together.

Nevertheless, few professionals at the World Bank are motivated principally by personal financial enrichment. 

“People don’t come to the World Bank... for money,” said Alden ‘Tom’ Clausen in an internal interview in 1992, who described his staff as “the greatest pool of professionals I ever worked with”. 

It’s easy to criticize the World Bank for excessive neo-liberalism, but I don’t think experience in Asia bears that out 
 - David Dollar, John L Thornton China Center

That was high praise, coming from a financier who had been at Bank of America for 20 years (11 of them as chief executive) before becoming president of the World Bank in 1981. 

Another myth is that World Bank staff are pampered travellers who always turn left on aircraft. McNamara himself claimed that he chose to travel in coach class 80% of the time in order to set a precedent to his staff. 

On one trip to Tokyo, McNamara even embarrassed his hosts by insisting that he wouldn’t meet the Japanese finance minister at the first-class steps of his commercial flight. 

“To hell with him,” said McNamara. “He can come to the economy-class entry.”

Today, the only first-class travel allowed for any World Bank staff member is on trains in Europe, India and China. All flights of up to five hours are booked in economy. 

For an institution of its size, which has been perceived as plodding and bureaucratic, the Bank has often had a refreshingly open-minded approach to recruitment and promotion. This was sometimes reflected in a willingness to throw relative novices in at the deep end, which was another of McNamara’s preferences. 

Jaycox, who joined the Bank as a young professional in 1964, recalls how surprised he was to be appointed chief of the railways division very soon into his World Bank career. 

“When McNamara arrived, he was like a spark in a tinder box,” Jaycox recalls. “All of a sudden young and inexperienced professionals like me were being promoted into leadership positions.”

For a large public-sector institution, the Bank has also made a point of giving young staff a surprisingly high degree of autonomy. 

Afsaneh Beschloss, treasurer and CIO of the World Bank between 1999 and 2001

Beschloss was 26 when she left JPMorgan to join the Bank in 1982. Within four years she had been appointed as leader of its natural gas group, charged with finding alternatives to coal in emerging markets. 

“As a young person, it was very empowering to be given the opportunity to start something from scratch,” she says. “I was given the freedom to hire the best people from all over the world to advise on how we could move away from coal to natural gas, and subsequently to solar, wind and other renewable alternatives.”

Recognizing and rewarding initiative, say former World Bankers, has consistently been a cornerstone of the Bank’s philosophy in building and managing its principal asset, which is its people. It is this wealth of human talent that has underpinned the accumulation of a knowledge bank that is probably second to none anywhere on the planet. 

This has not come cheap. Alba reckons the Bank makes an annual commitment of at least $1 billion to technical assistance and the publication of its analytical products and research. The results, he says, have been worth the investment because they have increasingly generated a global perspective unmatched by any other institution. 

“The idea that knowledge is a public good has strengthened over time,” says Alba, pointing to the conditional cash transfer schemes as a compelling example of knowledge-based programmes that have been replicated worldwide. 

Launched in Brazil and Mexico in the early 2000s as a method for giving families a financial incentive for sending children to school and ensuring they attend regular heath check-ups, the programme has helped lift people out of poverty from Ghana to Mozambique, from Mexico to Indonesia.

Others agree that it is knowledge that has underpinned the Bank’s mission of alleviating extreme poverty. 

David Dollar, senior fellow at the John L Thornton China Center

“The World Bank has done an extraordinary job of improving data on developing countries,” says David Dollar, senior fellow at the John L Thornton China Center, who spent 20 years working for the World Bank in Asia. “It is thanks to the World Bank that we now have such accurate estimates on global poverty.” 

He adds that the proudest achievement in his career at the Bank was the contribution he made to the compilation of the first truly representative survey on households in Vietnam. That may sound routine and dry by US or European standards. But in a country where precious little information was available on rural households, most of them headed by poor farmers, it created an invaluable anchor upon which to develop health and education policy.

Charles Boamah, former chief financial officer and now senior vice-president at the African Development Bank (AfDB) in Dakar, says that the data the World Bank has collected in Africa has been equally important in helping to shape economic policy and support inward investment. 

“I would single out the work the World Bank has done in improving the investment climate as one of its main achievements in Africa,” he says. “Its ‘Doing business’ report has played an important role in drawing attention to the key areas of reform needed if Africa is to attract more private capital. This knowledge work complements the project financing we do at the AfDB, especially in infrastructure.”

Achilles heel

A downside associated with the Bank’s formidable intellectual firepower is that it has sometimes made its staff fiercely independent, unapproachable and hard to manage. 

“I think it’s fair to say that arrogance has probably always been the Bank’s Achilles’ heel,” says one ex-director. 

But despite the reputation it may have gained for aloofness and arrogance, former directors insist that one reason why the Bank has survived and prospered is its preparedness to acknowledge and learn from its mistakes. 

“If learning from failure is the way to make progress, I think the World Bank has done a pretty good job,” says Ahmed at CGD. 

In the highly sensitive area of environmental stewardship, a turning point in this respect came in February 1985, when for the first time in its history the Bank abruptly stopped disbursements on a loan for what would later become known as ESG (environmental, social and governance) reasons. 

The project, which was a landmark in the history both of the World Bank and the global NGO movement, was the Polonoroeste Northwest Region Integrated Development Programme covering over 400,000 square kilometres in the Brazilian provinces of Rondonia and Mato Grosso.

This horribly misjudged $1.6 billion scheme involved paving some 1,500km of the BR-364 Highway through the Brazilian jungle, calling for extensive deforestation and resettlement. That ultimately prompted a mea culpa from Conable, who in May 1987 acknowledged that Polonoroeste had been: “A sobering example of an environmentally sound effort which went wrong.” 

The Bank, Conable added, “misread the human, institutional and physical realities of the jungle and the frontier... Protective measures to shelter fragile land and tribal people were included; they were not, however, carefully timed or adequately monitored.”

Conceding that the Bank had been “part of the problem” of environmental degradation, Conable promised to lead what he described as a “major effort to incorporate environmental concerns into all aspects of its work.” 

Formally recognizing the link between poverty and environmental degradation, in 1987 Conable announced the opening of a new environmental department. Not before time. As Mallaby observes in his book on the Wolfensohn tenure, as late as 1986 the Bank employed the sum total of five environmentalists.

Another area where the World Bank was prepared to listen to criticism and to change its strategy in response was in the sphere of structural adjustment, notably in Africa. 

Jaycox, who was in charge of African operations from 1984 to 1996, acknowledges that the process of structural adjustment was harsh. 

“It was awful,” he says. “We were asking these countries to reduce deficits, fire a lot of people, reorganize their public sectors and devalue their currencies because none of their exports were profitable. Conditionality was brutal and controversial, and we made ourselves very unpopular throughout Africa.”

Brutal and extreme, but in some cases highly successful. 

“On one occasion, we devalued the CFA franc in 17 countries within a single day,” Jaycox recalls. “Suddenly, exports of cocoa and other commodities boomed. By 1995, the 30 structural adjustment economies were registering per capita income growth for the first time for many years.”

The downside of structural adjustment was the toxicity associated with conditionality and the perceived surrendering of economic sovereignty that went with it. 

James Wolfensohn, president of the Bank from 1995 to 2005

That changed under Wolfensohn, with the average number of conditions per loan, which reached 35 in the late 1980s, falling to 12 at the end of his tenure in 2005. In particular, conditionality in sensitive policy areas such as privatization and trade liberalization declined notably during Wolfensohn’s leadership. 

Wolfensohn’s fastidiousness about encouraging increased local influence on the Bank’s lending broke new ground for an institution previously regarded as haughty and intellectually imperialistic. 

“Prior to Wolfensohn, World Bank staff members tended to have the perception that they knew better than the client,” says Alba. “He put in place a decentralized structure by appointing local country directors who were more focused on the client’s requirements and sensitivities. Today, one of the Wolfensohn legacies is the Bank’s demand-driven lending policy.” 

This mirrored a more general move towards banking with an altogether kinder and more human face during the Wolfensohn decade. 

“The biggest shift under Wolfensohn was the emphasis he put on health, education and people-centred investment,” says Malloch-Brown. 

Almost 15 years after leaving the World Bank, Wolfensohn remains justifiably proud of the change he instilled in the character and culture of the Bank. In respect of its relationship with borrower countries, this often involved simple initiatives. 

“When we undertook a review, I insisted that instead of forcing officials from the country to come to Washington or Paris, we would go to them,” Wolfensohn says. “In other words, instead of making them feel like a poor relation who had to come to HQ to plead for money, we went and talked to them as equals, which made a huge difference.”

Another of his legacies that also helped to paint the Bank in a more compassionate light was the HIPC debt relief initiative launched in 1996. 

The idea, based on Wolfensohn’s experience of the corporate world, was to give sovereigns hamstrung by debt the same opportunities to make a fresh start that bankrupt companies were given. 

Although it was initially regarded as heretical by the IMF and a number of World Bank shareholders – most notably Japan – within a decade the HIPC scheme had reduced the debt of 18 countries by close to $20 billion. 

“Two of the key shifts under Wolfensohn were the move from infrastructure to human development and the HIPC debt relief programme, which was well ahead of its time,” says Malloch-Brown. “Between them, these two shifts cut the ground from under the feet of many NGOs because we had adopted their agenda.”


The gentler hand of the Wolfensohn era twinned with the end of the Cold War helped the World Bank to address an issue that had troubled it since its launch. This was the belief – as strong today in some quarters as it was in the late 1940s – that although its charter is apolitical, the Bank is an instrument of US political and economic imperialism. 

McNamara, for one, insisted that this was an influence he was determined to resist. 

“The US treated the Bank as though it were a US institution,” he said in 1992, “and I just didn’t accept that.”

Accept it or not, the reality was that for years many of the Bank’s lending decisions remained policy driven. The World Bank’s support for the kleptocratic Zairean dictator, Mobutu Sese Seko, was perhaps the most notorious example of its role in propping up Cold War allies.

Leaving aside exceptional situations such as the Bank’s relationship with Zaire, it has generally managed the tension between politics and its mission with sensitivity and pragmatism. Among the most delicate of political relations the Bank had to handle in the 1980s were those with China. 

McNamara regarded the relationship the World Bank built with Beijing in the 1980s as one of the institution’s most notable achievements. At the time, it may also have been one of the most surprising and controversial. 

When China originally approached McNamara about joining the Bank in February 1980, it did so almost entirely out of the blue, having had minimal contact with Washington since 1973. In April 1980, and in spite of opposition from the Secretary of the Treasury, McNamara made a hastily arranged visit to Beijing, where he held a fruitful meeting with Deng Xiaoping.

China’s accession to the Bank the following month was fraught with political sensitivities. China insisted on the expulsion of Taiwan as a precondition of its membership and when the Bank published its first economic research report on China, Beijing was upset by many of the details included in the eight-volume publication. 

These ranged from the Bank’s interpretation of the history of Sino-Mongolian relations to its cartographic representation of China’s borders with the Soviet Union and India. 

Issues of this kind did not prevent the World Bank from playing a decisive role in shaping Chinese economic policy over the next decade. But they were an early indication of how delicately and discreetly relations between H Street and its new friends in Beijing would need to be managed. 

China made it clear that it would tolerate no conditionality in any World Bank lending. Nor would it stand for the Bank imposing “its views” on Chinese political or economic policy.

The result was that while China clearly welcomed the expertise (and the money) that the Bank provided, both parties were uneasy about attracting the scrutiny of the media. So Caio Koch-Weser, the Bank’s first division chief for China, was appalled when he was telephoned in 1985 by Time magazine, which was planning to nominate Deng Xiaoping as ‘person of the year’. 

It was not Time’s recognition of Deng’s “sweeping reforms [challenging] Marxist orthodoxies” that worried Koch-Weser. The problem was that Time wanted to include a box celebrating the role played by the World Bank as the architect of the Five-Year Plan that was the anchor of China’s reform programme.

“The last thing I need is publicity in Time magazine all over the world that we have done their system reform,” the Brazilian-born Koch-Weser said in an internal interview some years later. 

Up until then, he added, the Bank had successfully avoided publicizing how “influential and central” it had been in the China reform agenda, even avoiding sharing the lowdown with shareholders and the Bank’s own staff. 

“And of course we wanted to keep it that way,” said Koch-Weser. 

This was not to diminish the importance of the Bank’s achievement in China. In the same interview Koch-Weser reflected on the importance of the Bank’s first loan in China, a $250 million facility for 20 universities. This, said Koch-Weser, was “highly symbolic”, in that it helped to begin the reversal of the “know-how loss” incurred by China during the Cultural Revolution. 

More broadly, there was no disguising his gratification at the “historic role” the Bank had played in influencing the course of economic reform initiated by prime minister Zhao Ziyang, “without people talking about it, of course”. 

Others agree that the World Bank’s achievement in China in the 1980s ranks as one of the most important in its history. 

“I think the World Bank needs to be given a lot of credit for lifting millions of people out of poverty in China,” says Ngozi Okonjo-Iweala, who spent over 20 years as a development economist at the Bank before becoming Nigeria’s first female finance minister in 2006. “The Chinese authorities deserve credit for introducing a range of free-market ideas into the agricultural sector in the 1980s, but it was the World Bank that led the process.”

The relationship between H Street and Beijing that flourished in the 1980s was put to the severest of tests in the immediate aftermath of the Tiananmen Square demonstration in 1989. Following the Bank’s apolitical charter to the letter and leaving its lending programme unchanged would have meant turning a blind eye to the crackdown that McNamara later denounced as “an absolute disgrace”. 

Calling a complete halt to lending would have made a loud political statement. It would also have had a direct and harmful impact on the rural communities that the Bank had spent the previous decade trying to lift out of poverty.

In the event, the Bank resisted the temptation to fly to either extreme, slowing but maintaining its lending to China. The year after Tiananmen Square, Conable later recalled, had been “very difficult”. The Bank had planned a $2.3 billion programme for China in the fiscal year, which began immediately after Tiananmen Square. 

“We wound up putting $700 million in that year,” said Conable. 

This appeared to be in line with the distinction that McNamara drew between civil and human rights. 

“The most fundamental human right is to live, and China advanced ‘living’ more from ’79 to ’89 than any developing country I know over a 10-year period,” he explained in 1992. “Look at what happened: literacy, nutrition, infant mortality, life expectancy. Those are fundamental qualities. They did it under a repressive dictatorship.”

Some may regard McNamara’s distinction between civil and human rights as repugnant. Others would see it as a pragmatic and necessary approach that benefited precisely the people that the World Bank had always set out to help. In this case they included victims of the Datong-Yanggao earthquake in October 1989 and impoverished pupils at the rural schools that had been earmarked for World Bank assistance. 

“It’s easy to criticize the World Bank for excessive neo-liberalism, but I don’t think experience in Asia bears that out,” says Dollar at the John L Thornton China Center, who has been observing the Chinese economy for well over 30 years. He spent 20 years at the World Bank, latterly serving as its Beijing-based country director for China and Mongolia, before acting as the US Treasury’s financial emissary to China from 2009 to 2013.

“While the Bank was pushing Beijing to accelerate economic reform, it also accepted political reality in China and never called for measures such as sweeping privatization,” says Dollar. 

This pragmatism may have been more noticeable in China than elsewhere, but it was not confined to the World Bank’s relationship with Beijing. 

Alba says that the Bank adopted a similar approach to its dialogue with Moscow. 

He should know, given that he was country director for the Russian Federation from April 2010 to December 2012. 

“Although our reports were often critical of Russian economic policy, the finance ministry never perceived them as being politically motivated,” he says. 

By then, however, the more shameful politically driven lending of the 1970s and 1980s had in any case become a distant memory, rendered largely obsolete by the end of the Cold War. 

“Suddenly, World Bank lending was no longer regarded as a geopolitical addition to military aid,” says Malloch-Brown. “It was no longer a question of asking whether borrowers were in the Soviet or American camp. It was a question of how projects would perform.”

In other words, Malloch-Brown adds, the 1990s was the decade in which World Bank lending was simultaneously re-professionalized and de-politicized. 

“The process became professional, accountable and transparent again, and we were able to re-focus on development impact,” he says.