Sneak Peek: Not Your Average Banker

TNI’s Justine A. Rosenthal sits down with World Bank Chief Robert Zoellick. Among topics of conversation: dealing with failed states, making China a “responsible stakeholder” and rethinking international development. This excerpt is taken from “No

CURRENT PRESIDENT of the World Bank, Robert B. Zoellick, sat down for a long talk with TNI's executive editor, Justine A. Rosenthal, almost a year into his tenure at the Bank. Zoellick discussed his new agenda-from putting the pieces back together in failed states to how to make a rising power like China a benign stakeholder in the international system. Seeing this as a time as pivotal for the World Bank as the years post-World War II, Zoellick looks at how to reformulate an international-development heavyweight sixty years on.

 

Justine A. Rosenthal (TNI): You're rapidly approaching your one-year mark at the World Bank Group. How do you see the Bank fitting into the global framework right now?

Robert B. Zoellick (RBZ): If you think about this in the sense of foreign-policy or security architecture, the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade (later the World Trade Organization) were created with a certain set of assumptions about failures in the international economic system in the 1920s and 1930s, which people believed led to fascism and conflict. Those institutions were designed to deal with those perceived problems. But the world has changed. The challenge now is determining how to create a new multilateralism that works in the new environment. The Bank Group remains one of the world's great multinational institutions. But sixty years have passed, and it is time for an overhaul. How do we create the opportunity for poor states to prosper and grow? How do we encourage China and India to be responsible stakeholders in the development system? For states coming out of conflict, how do we engender hope and prevent the spread of ethnic conflict and disease?

I believe that globalization offers incredible opportunities. Some people are fighting against it because of anxieties-protectionism, isolationism, nativism. Our new agenda is to create an inclusive international system, which encompasses the notion that globalization will win more adherents if there's a sense that more people can be included in its benefits. It also involves building a sustainable system, which means not only environmentally sustainable but also that the different parts of the international economy are supportive of one another and supportive of the political regimes that underpin them.

TNI: What is your agenda for dealing with this new environment?

RBZ: We set out six strategic themes last autumn to focus the energies of the Bank Group moving forward. First is support for the poorest countries, particularly sub-Saharan Africa. Some of the special problems of postconflict states or states facing breakdown are second. Third is coming up with different development solutions and business models for middle-income countries (MICs). The fourth is our global and regional public-goods agenda, with a particular focus on the environment, aid-for-trade, financial-services integration and transnational health issues. Open development in the Arab world is our fifth focus, and the sixth is our knowledge agenda that cuts across all categories.

We've taken these six strategic themes and we are trying to further develop them. Currently, we're spelling them out in terms of the description of the problem, ironing out objectives and action. This strategy is an ongoing process. So it's directional but has to have the flexibility to adapt to changed circumstances and at times be opportunistic.

TNI: One of the characteristics of the new environment that is most pressing to current U.S. foreign policy is postconflict states. How can the World Bank help those states verging on conflict and breaking apart?

RBZ: As I've described, I see this issue as the modern version of the challenge that the World Bank faced after World War II. In 1945, reconstruction meant Europe and Japan-indeed, our first loan was to France. In 2008, reconstruction means places in Africa and the Middle East-states that are in fragile situations or are affected by conflict. This category covers a wide range, from Liberia to Afghanistan and Cote d'Ivoire to Mozambique-countries that are facing very different sets of problems. Some are breaking down; some are stuck in tenuous situations of internal breakdown or struggling between war and peace-Zimbabwe; some are in the aftermath of conflict-Liberia; and some are developmentally further along-Mozambique.

The development community used to look at states facing breakdown or postconflict states as a more-difficult version of the development issue. But by breaking postconflict states out on their own, we're recognizing that they have some unique problems. To give you a sense of the importance of this, in his book The Bottom Billion, Paul Collier pointed out that over 70 percent of the bottom billion lived in countries that endured civil wars. And that has a dangerous spillover effect on neighboring countries. Our research shows that, on average, states that border conflict countries lose about 1.2 percent a year of growth.

Part of our work is to better understand what works and what doesn't, in concert with a broader set of partners. This is going to be an ongoing challenge in the international arena. The World Bank Group must determine how we, as a development institution, can work with security and political institutions to support and increase the likelihood that people will either avoid sliding into conflict or come out of it more quickly.

One of the lessons that people have learned is that even though it may be assumed that the first thing to do for countries in fragile situations is pour in a lot of resources, what they really need is some basic capacity for financial management and procurement. Otherwise, pouring money into these countries is like pouring water onto sand.

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