Will There Ever Be Any Serious Reform of World Bank Governance?

December 04, 2009

At our recent event with former President of Mexico Ernesto Zedillo, who chaired the High Level Commission on Modernization of World Bank Group Governance on World Bank governance reform (report is here), panelists Moises Naim and Arvind Subramanian worried that there is no reason to expect the powers-that-be to take up any of the recommendations for reform. Johannes Linn seems to share that concern. He complains here that the remit was too narrow to develop any momentum for change.I am more optimistic and propose that the development community focus on four priorities. These should be taken up by the G-20 members of the Bank, starting at the spring meetings of the World Bank in April, following up in Canada in June (where the G-7 meeting is morphing into an informal G-20), and announcing in the G-20 communique in Seoul in November.The four priorities the development community should push are, in summary (and for a somewhat fuller elaboration go here):

  1. End the fusion of IBRD and IDA governance. Make IBRD 50/50 developing/developed countries and reduce to one or two the number of European chairs over the next five years.
  2. Link IDA governance to recent contributions and have the Europeans keep their current chairs on a new IDA Board. Make IDA 50/50 donors/recipients only. Invite China, Brazil and other middle-income countries to make direct contributions if they want to be represented on the IDA Board.
  3. Move on from endorsement of an open and meritocratic process for selecting the next president to a consensus on the mechanics of the process. Assess the potential of double majority voting (i.e. a majority of weighted votes giving the U.S. and other non-borrowers an effective veto, and a majority of countries, giving several potential coalitions of low-income and advanced developing countries an effective veto). Reassure the U.S. Congress that the U.S. will not lose anything: why it will never have to accept a president it doesn’t want and will in fact be better off.
  4. Create an entirely new wing of the Bank (as I mentioned in a recent speech) for managing and financing global public goods, for energy/climate, agriculture, and health. It should open in Beijing or New Delhi once the 10 largest emitters of greenhouse gases have joined. Governance should be 50/50 and a function of contributions discounted by either per capita income or per capita emissions.


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