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World(Bank)Changing: A Letter to President-Elect Zoellick

Dear Ambassador Zoellick,

Good morning, Mr. President-Elect. Congratulations on the promotion. What a difference a year makes. Not too long ago, you probably felt a bit adrift, to be a diplomat in an administration that is anything but diplomatic.

Your subsequent stint as vice-chairman of Goldman Sachs must have been comfortable, but I would guess you never bothered to hang any pictures in your office. These days, the bank seems a bit like a farm league for the Beltway majors. Everyone is waiting for the call from the Show.

So, welcome (back) to the big time, Ambassador Zoellick. Well, at least sort of. No one would argue that the World Bank is an important force, but why does it seem a bit out of step, perhaps even past-tense, in our dynamic present?

You certainly will have access to enormous financial resources, but big deal: capital flows are more abundant today than at any time in human history. With 185 national governments and four billion people living on less than $4 per day as your shareholders, you certainly have a highly vested customer base. Yet the currency crises of the past decade along with systemic destitution in Africa and Asia have demonstrated the limits of the Bank's preferred methodology of top-down, belt-tightening economic schemes.

Your office commands some prestige, but ti's difficult to be heard when economists like Jeff Sachs and pundits like Tom Friedman brilliantly and consistently use the media to strengthen their hold on the public imagination. Finally, the Bank talks about innovation, however its pioneers outside the Bretton Woods bureaucracy such as Muhammed Yunus and Bill Drayton who are blending capital and creativity to achieve transformative results. Frankly, it’s a brand new world, Mr. Ambassador. You certainly will be playing more than a bit of catch up.

Nonetheless, you should be thrilled with the appointment. You have a momentous opportunity in front of you. There is some low-hanging fruit that you should seize as quickly as possible. Everyone is well aware of the resentment of the board and restlessness of the staff that chafed at the ideology and insularity of your predecessor. One of your first priorities must be to clean house and reset the management culture. I hope that you will do it fast while momentum is on your side.

I also would like to suggest a more ambitious agenda adjustment. The Bank should return to its core purpose as a bank of reconstruction and development, but infuse a sense of boldness and creativity into this mission. I might suggest a ten point plan, mixing principles, strategies and tactics, to jumpstart the process:

1. Rethink the Religion of Friedmanism. Considering your accomplishments in the trade arena and the robust nature of the global economy, it might seem misplaced to start by questioning the dogma of free markets. Still, I would encourage you to weigh the evidence before you take a “business-as-usual” approach. Joe Stiglitz and other former insiders have written about the shortcomings of the long-standing macro- and microeconomic policy prescriptions of the Bank and its sister organization, the International Monetary Fund. A common denominator in such failures has been the inability of policy-makers to accommodate for the diversity and maturity of recipient economies. As you know well from your time as US Trade Representative, we need to promote free markets and to drive down tariff and non-tariff barriers. Such practices can widen the opportunities for wealth creation up and down the pyramid. At the same time, we need a more measured approach. We need to brace local economies for the inevitable growing pains of globalization. It is important to allow indigenous industries to evolve instead of explode in the face of contractions and change. Creative destruction is fine in the theoretical long-term, but its short-term impacts must be mitigated to soften the blow for vulnerable domestic populations.

2. Redefine the Metrics of Prosperity. Most economists find answers to almost every question within the classic supply and demand curve. I certainly believe in the elegance of this model, but its axes do not contemplate the contextual third dimension of finite resources and fragile ecosystems. Amid melting ice caps and thickening ozone layers, we cannot ignore these realities. This is particularly urgent because the looming emergence of billions of people from poverty could devastate our already weakened global equilibrium. Writers such as Amory Lovins and Bill McKibben have postulated that the planet as we know it cannot sustain a worldwide adoption of US consumption patterns. Mr. Ambassador, use your bully pulpit to lead a global conversation about what constitutes prosperity and how emerging nations should negotiate the balance between growth and sustainability. Historically, its been difficult to broach such issues with governments whose citizenry want to join the modern economy. Nonetheless, just as Bush Sr. appointee Bill Draper used the UNDP to change how we think about measuring human development, you should kick off a conversation about how we quantify wealth in our modern age. It seems like an essential exercise if we want to chart a sustainable future for everyone on the planet.

3. Embed a Culture of Bottom-Up-Led Innovation into Organization. Historically, the Bank has offered capital to developing nations based on ideas and schemes designed in cubicles and offices in Washington, DC. This model ignores the reality that some of the highest impact innovations actually have bubbled up organically from the grassroots of the Global South. Numerous successful, scalable concepts such as microfinance were discovered outside the halls of power. They frequently are cultivated in a manner consistent with local cultures and shaped by social mores. They are not engraved in stone, but characterized by continuous improvement and iteration. They achieve scale slowly but accelerate over time. The leadership of the World Bank should acknowledge the value and vision of its four billion customers by integrating their input and insights into the Bank agenda.

4. Create a Global Advisory Board of Social Entrepreneurs. Most multilateral agencies suffer from top-heavy management systems staffed with academics and bureaucrats but lacking in seasoned practitioners. The Bank is no exception. Yet, dynamic organizations such as the Acumen Fund, Ashoka, Endeavor, the Schwab Foundation, the Skoll Foundation, and others have identified the emerging class of global social entrepreneurs who are pioneering new techniques to uplift communities in need. It does not seem novel, but almost necessary, to bring individuals such as Maria Otero, Mo Ibrahim, and Fazle Hasan Abed into your circle of influence. Just as you were advised at USTR by the President’s Export Council, you should create a Social Entrepreneurs Council to institutionalize the advice and counsel of such trailblazing individuals at the World Bank. Build diversity into the plan to ensure a range of cultural and functional perspectives are represented in its composition. Use their expertise to create programs and uncover opportunities for innovation. Former Bank President Jim Wolfensohn, who currently serves on the Endeavor board, might attest to the merits of this model.

5. Launch Tiger Teams Focused on Big Cross-Border Problems. Like its counterpart organizations, the Bank employs a traditional bureaucratic design based on geographic regions. However, the great challenges of our time – from climate change to communicable diseases to migration flows to water and sanitation – are trans-border issues. Such calamities threaten to impart a disproportionate impact on the poorest nations least capable of withstanding the repercussions. You need to publicly acknowledge the relationship between these problems and global development. You would be well-served to organize cross-cutting tiger teams of your best and brightest from across the Bank to tackle these crises. Get beyond partisanship and enlist global elders such as Al Gore, Nelson Mandela and Mikhail Gorbachev to serve as roving ambassadors on these topics. It is long over to rethink your organizational design and apply significant resources to addressing these crises.

6. Embark on a Listening Tour of the Global South. Despite your loyalty to the elected leadership in the White House, you now serve a much higher authority – the planet writ large. In light of this reporting relationship, I hope you will admit that the trend of US unilateralism has failed the broader interests of humanity. It has encouraged regional parochialism and damaged the fragile alliances that steady world affairs. You must demonstrate a very different approach in your first days on the job. Among your initial tasks, please undertake a global listening tour, not to consort with world leaders, but to engage local communities and hear their views and concerns. After embarking on this trip, share your findings in an annual “State of the World” address. I would suggest that you deliver the inaugural address to your constituents, the community of nations, at the 2007 UN General Assembly meeting in September. Such humility and transparency would be a welcome change that would be embraced by all sides.

7. Maintain a Focus on Corruption but Pursue Other Priorities. The pioneering team at Transparency International has been talking about the detriment of corruption since 1993. Although the moral hazard is obvious, the TI approach has focused on its negative impact on economic development. There are numerous analyses that confirm a correlation between economic health and moral behavior. I hope that you will retain this focus, but yet not at the expense of a much broader agenda. When you consider the wide range of urgent issues at hand, an overriding focus on corruption seems myopic at best, misguided at worst. It would be exciting to see you apply some capital to take calculated risks in the hopes of finding the Grameen or Kickstart and laddering millions out of poverty through the path of entrepreneurship.

8. Elevate Development Marketplace into a Permanent and Persistent Program. I visited the Bank last week and walked through the 2007 Development Marketplace (“DM”). It was breathtaking to behold the ingenuity and invention of small-scale entrepreneurs from around the world. They pitched their products and services in a trade show setting, simply to win small sums of grant money. Despite the excitement and potential, it’s startling to think that the competition has been trimmed since its launch and only runs for two days! It seems obvious that DM should be far more than a once-a-year event held in a lobby in Washington DC. Instead, transform DM into a permanent platform for education and investment. I could envision an ongoing program of micro-grants to support small scale social entrepreneurs. Complement this effort with a traveling version of DM that can be experienced by the general public. This could build widespread awareness about real-world solutions to poverty and inspire tremendous hope. Frankly, the possibilities seem endless, but start by elevating DM and thoroughly rethinking its execution.

9. Experiment to Scale Demonstration Models of Innovation. I am sure you have noticed the blizzard of breakthroughs over the last several years in the microfinance space enabled by the work of non-profit actors such as Grameen Bank and for-profit institutions such as BancoSol. We also have witnessed the birth of hybrid for/non profit organizations such as Kickstart in Africa and Water Health in India that are franchising ideas into income streams for the poor. Mr. Ambassador, I hope you will stand behind such new ideas and support similar income-generating experimentation. It would be exciting to see you apply some grants to take calculated risks in the hopes of finding the Grameen or Kickstart and laddering millions out of poverty through entrepreneurship.

10. Collaborate with Corporations and Foundation to Explore New Development Models. During your tenure at Goldman Sachs, you saw firsthand that institutional investors and private capital flows have reconfigured the global economy well beyond the Bretton Woods architecture. Going forward, we only will see further change, particularly as new actors such as the Bill and Melinda Gates Foundation and Google.org ascend to center stage. Even multinational corporations that aggressively implement BOP-style strategies could have a major impact. While these organizations might direct far less capital than the Bank, they command considerable attention and wield extraordinary influence. Build active links to this "fourth sector." Focus on crafting relationships with such thought leaders. Design programs to foster deep collaboration and ties to this category of change agents.

Mr. Ambassador, I trust you will consider these ideas in the spirit with which they are intended. You have a tremendous opportunity to change the World Bank and change the world as a result. I hope you will embrace this challenge.

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Comments


Let's look a bit more closely at Zoellick's record:

In 1998 he was a signatory to the Project for a New American Century (PNAC) letter to Bill Clinton, advocating war against Iraq. James Wolfowitz, current
World Bank head, was also a signatory to this letter. As a pro-war neo-con he is no different from Wolfowitz.

http://www.newamericancentury.org/iraqclintonletter.htm

He was a share-holder and consultant to Enron, the energy company which went bankrupt in 2002.

http://news.bbc.co.uk/hi/english/static/in_depth/business/2002/enron/21c.stm

He was a key figure in the American WTO case against the EU which sought to impose GM crops and GM food on Europe.

http://news.bbc.co.uk/2/hi/business/3025217.stm

As these three brief examples demonstrate he is certainly not the person to restore trust in the World Bank.

The solution to the current leadership crisis is an open, transparent and democratic selection process which emphasises the candidate's merits, rather
than political connections, as the criteria for the job.


Posted by: Marcus on 31 May 07

Marcus writes: "He was a share-holder and consultant to Enron..."

I wouldn't hold the "shareholder" part against him. I bough Portland General Electric stock so I could stand up and talk at shareholder meetings, and Enron bought them out. Many PGE employees had their entire retirement fund in PGE stock which subsequently became Enron stock.

In fact, it's to Zoellig's credit if he was an Enron consultant who held his shares through the end, instead of using inside info to cash out. Anyone know if this is the case?


Posted by: Jan Steinman on 1 Jun 07

Zoellick is a Bush appointee and has in the past been a major instrument in developing and implementing the current administration's world view. His presence at the World Bank is simply to carry out more of the same influence. How could this possibly be seen as a good thing?


Posted by: Pete Dixon on 4 Jun 07

Excellent letter Jonathan, it was very enlightening to read your compilation of ideas and, like most of the content here, breathe in the optimism. Despite the anti-Bush dogma that tends to pervade I think Zoellick will definitely be a turn for the better. While his commitment to poverty alleviation, rather than wealth creation, remains undemonstrated, I've considered Zoellick the most nuanced thinker of the Bush team for the last several years (maybe from the beginning), the one who has a better, more intelligent and realistic grasp on globalization than any others past and present.

Accordingly, I feel like hopefulness for President Zoellick to pursue your final three points to be not unrealstic: a) they are based on markets and enterprise rather than aid which I imagine Zoellick will be keen on, and b) the WB's business model is in dire need of an upgrade to maintain relevance and these are key ideas that can help push it into unexplored new markets.

My biggest hope, one I think is less realistic but simply brilliant, is your number 6. Here's to well-connected WorldChanging readers forwarding your letter to folks that can make sure it's read, so the idea has a chance.

thanks again for the post.


Posted by: shiva on 4 Jun 07



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