Zoellick aims to restore morale, curb expanding mission at World Bank

Matthew Benjamin and William McQuillen

Robert Zoellick's biggest task at the World Bank, next to restoring staff morale, may be to restrain the expansion of the largest development organization's mission.
The former U.S. trade representative will take over a 61- year-old agency that has expanded its mandate beyond building roads and clinics to include goals such as promoting ecological tourism and funding theater groups. Zoellick is more likely to concentrate on objectives that bring tangible results.
``The bank has to focus its mission on poverty reduction,'' said John Taylor, undersecretary of Treasury for international affairs from 2001 to 2005 and now a professor of economics at Stanford University in Stanford, California. ``Bob's management experience will enable him to implement those measurable-results reforms very well.''
Zoellick, 53, who negotiated seven international trade agreements in President George W. Bush's first term, is also apt to emphasize the economic benefits of giving developing countries unfettered access to overseas markets.
``He deeply believes in free trade,'' said Kenneth Rogoff, a professor at Harvard University in Cambridge, Massachusetts and former chief economist at the International Monetary Fund.
Before he can alter the bank's mission, Zoellick will have to win the trust of 13,000 staffers demoralized by two years of conflicts with departing President Paul Wolfowitz, who resigned this month over his role in giving his companion a pay increase.
Bank employees said the controversy had damaged the credibility of an institution that preaches good government. Managers and board members clashed with the former U.S. deputy defense secretary over his appointments of recruits from the Bush administration, the bank's role in Iraq and his anti- corruption agenda.
``Having to clean up the Wolfowitz mess is going to detract from any effort at reform for at least a year or two,'' said Desmond Lachman, resident fellow at the American Enterprise Institute in Washington and a former official at the International Monetary Fund.
Zoellick, nominated by Bush yesterday, told reporters in Washington he will consult member countries about ``the role of the bank.'' He said he had spoken to former presidents James Wolfensohn and Robert McNamara.
Zoellick's nomination is subject to approval by the bank's board, which has said it would make a decision by June 30, when Wolfowitz leaves. The U.S. nominee has always won approval under an arrangement that reserves leadership of the IMF for a European.
Zoellick became deputy secretary of state at the start of Bush's second term and left government in June of last year to become a vice chairman at New York-based Goldman Sachs Group Inc.
He's on a long list of Goldman executives to join or rejoin the top ranks of government. Treasury Secretary Henry Paulson is a former Goldman chairman, and his former co-CEO Jon Corzine was elected senator from New Jersey and then governor. Joshua Bolton, Bush's chief of staff, was an executive director at Goldman in the 1990s.
As trade representative in Bush's first term, Zoellick managed commercial relations with China and started the so- called Doha round of global talks. At the State Department, he traveled to Sudan to broker a peace agreement between the government and a rebel group.
Zoellick will also face criticism that the bank shouldn't lend to middle-income nations such as India and China, which can raise money in capital markets. Lending to such countries accounted for more than half of the $23 billion in World Bank aid last year.
Zoellick ticked off a range of ills afflicting poor nations, including discrimination against women, corruption and environmental degradation. He didn't specify which ones the bank should tackle.
``Zoellick's really got a huge challenge ahead of him,'' said William Easterly, a former World Bank economist and a co- director of New York University's Development Research Institute. ``What the bank needs to do is find a few things it's good at doing and specialise in them.''
Bloomberg