The central message in last week’s CGD forum featuring former Mexican President Ernesto Zedillo on World Bank governance reform was “let’s get real.” From whom and from where will come any impetus to take up the Zedillo Commission’s good ideas? Answer: G-20, with the United States in the lead.
As I said at the forum, one reform should be relatively easy politically. The G-20 should agree to split voting power at the International Bank for Reconstruction and Development (the wing of the bank that lends to middle-income countries) evenly between developed and developing countries. This shouldn’t be a big deal: it’s already the case at the Inter-American Development Bank and in the World Bank’s own Climate Investment Funds—the multibillion dollar Clean Technology Fund included. The G-20 members should put this on the agenda of the spring 2010 World Bank meeting.
Other simple steps I urged include agreeing to scrap the unwritten rule that the World Bank president is necessarily an American; and establishing separate boards for the IBRD and the International Development Association (IDA), the bank wing that lends on highly concessional terms to the world’s poorest countries.
I also agree strongly with the Zedillo Commission recommendation that the World Bank should focus much more on providing global public goods, the most urgent of which is measures to confront climate change (for some of my previous work on the bank’s role as a provider of global public goods , see here, here, and here).
Indeed, I believe that in this regard we can and should move further and faster than the Zedillo Commission suggests.
In my speech ahead of the G-20 Summit in Pittsburgh, I proposed that the G-20 agree to create a new wing of the World Bank to focus specifically on climate change. I suggested three principles for this new entity:
• Periodic member contributions should be related positively to per capita income and to emissions per capita;
• Developing countries as a group should have influence equal to that of developed countries, whether through 50 percent of weighted votes or other voting rules.
• In legal and operational terms, the new entity would be as distinct or even more distinct from the main lending arm of the bank as the Multilateral Investment Guarantee Agency (MIGA) or the International Finance Corporation (IFC).
The creation of this new entity should be contingent on minimum contributions from the 10 biggest emitters, including China, Brazil, India, and Indonesia as well as the United States and the big European nations. China and other high-reserve countries will surely be interested in intermediating some of their $3 trillion in reserves through a global institution for the global good—as long as they get adequate representation in the new ‘wing’ from the start.