Is Lord Jim That Bad?(World Bank president James Wolfensohn )(Brief Article)

Boom! boom! that's the sound of World Bank president James Wolfensohn under bombardment from all sides. With reconstruction just getting underway in Afghanistan, nearly every development expert in the world is questioning whether Wolfensohn's bank can lead. Worse, the heaviest salvos come from within the bank itself. They attacked Wolfensohn-- mostly anonymously--in a major fall article in Foreign Policy*. An important former World Bank official expanded the assault in Foreign Affairs# this month. The gist is that Wolfensohn has gone soft, abandoning the bank's most concrete success--loans for specific projects like dams and roads--in favor of feel-good anti-corruption campaigns, free-speech initiatives, legal and accounting reforms, environmental cleanup, education and AIDS projects.

On top of this comes a book from World Bank insider William Easterly, challenging the notion that World Bank loans ever did much good**. Easterly says that bank efforts in Africa have demonstrably failed: income per person in the sub-Sahara is at about the same subsistence levels as in 1980.

Wolfensohn has plenty of external critics, too. Free-market conservatives led by U.S. Treasury Secretary Paul O'Neill claim bank lending has been counterproductive in Asia, Latin America and Africa. Only countries that shunned aid and embraced competitive world markets enjoyed strong growth over the past four decades, O'Neill and Co. argue. They want the bank to end all lending and limit itself to giving advice and occasional grants.

The anti-globalists of the Western left would also like Wolfensohn to back off. Environmentalists, anarchists and Marxists say the bank destroys the environment, degrades cultures and raises poverty levels by forcing predatory capitalism on the Third World. Anything else? Oh, yes. Many of Wolfensohn's critics, annoyed by his arrogance, call him Lord Jim. Against all this, I'd like to suggest the world's least favorite banker may be doing something right.

The complaints against him are obviously contradictory. After taking over in 1995, Wolfensohn decided to try something new. He had nothing to lose. Tired of the bank's questionable results, rich countries were limiting its funds anyway. Wolfensohn began hiring lawyers, sociologists and environmentalists, and firing some economists. He continued some traditional projects--like new financing for a huge dam in Uganda. But he also funded reform of legal, banking and accounting systems, and tried to placate the conservatives and radicals alike. He organized debt relief for the poor, provided they ...