Thursday, April 19, 2007

The World Bank, though in a hole, needs to dig deeper.

As a former Executive Director of the World Bank it is with much sadness that I have followed the Wolfowitz affair. It is clear that he should not have played a role in deciding the terms on which his girlfriend was seconded to the US state department and that he should now leave the Bank.

Having said that, I also find it important to question the appropriateness of the primary idea, put forward it seems by the Ethics Committee, since it does not seem to be correct either that the World Bank should be seconding anyone anywhere, even on reasonable and non interfered terms, as a tool to solve this type of conflict of interests, so as to allow someone to have his cake and eat it too.

In contrast while an Executive Director, we had to spend millions of dollars of the Board’s time just in order to debate a “measly” forty thousand dollar a year increase for the then World Bank president James Wolfensohn, just so that he would be able to earn as much as his counterpart in the IMF.

Now, after so much procrastination, by all parties, the only real solution for the World Bank, with or without Wolfowitz, lies in appointing a committee of true outsiders to dig deep and review all the World Bank’s current work related policies. The World Bank, when compared to other similar institutions, is very clean but of course, after 64 years of accumulating problem solving compromises, it should be time for a good scrubbing.

The world needs the World Bank to come out of all this smelling like roses, and the staff also deserve it.

Sunday, April 15, 2007

Should Imus be banned from talking, or his listeners from listening?

The words we use are important to the extent they impact. When I see and listen to one of these commentator programs I do not care much for what words they use but much more whether they are trying to reinforce the good within us or if they are just out looking to exploit the bad that we all also carry inside. In this respect, having the impression that Imus geared himself to belonging to the latter group, I can’t really say that I object too much he is now suffering some of his own medicine.

Now, saying that reminds us that it is not only the speaking of the words that counts but also how we listen to them. The real difficult and perhaps unsolvable problem for a society might then be that instead of barring some radio or TV hosts, which in their disrespectful, vulgar and highly censurable ramblings might nevertheless be providing a needed input to some or something, it might perhaps be better served by barring from listening those in the audience that might not be able to adequately digest what is being said, and that end up supporting it providing bodies to the rating numbers.

Now, before someone bars me for suggesting some supremacy inspired censorship let me make absolutely clear that the only real censorship I really defend is self-censorship, and we should all be more aware of the much good that can come from it, not the least lower ratings for unworthy programs.

But, this is indeed a very difficult issue and all those that believe the contrary… well they are the only ones that we can with certainty say should be barred.

A wondrous world!

“The persistence of global imbalances brings with it an important financial stability issue—the problem of sustaining the financial flows needed to support the imbalances.”

From the Global Financial Stability Report by the International Monetary Fund, April 2007, page 15

Friday, April 13, 2007

What an opportunity we seem to have missed!

Daniel Smith in “Politicians cannot control Nigeria’s corruption crusade”, FT April 12, writes about Nigeria saying “its politics remains a stark scramble for power in which elites compete for domination of the state apparatus to reap the benefits of control over enormous oil revenues”, and so in fact little does the crusade againts corruption matter anyhow, especially while oil prices remain high. As is, the Nigerians now elect a government to whom hand over the oil revenues that in reality belongs to themselves, only to have to spend the next couple of years licking boots in order to get some of that same oil money back, while the elected government officials, arrogantly, not in need of other tax income, couldn’t care less about them.

It is only when you get to understand this that you really get a feeling for what a wonderful opportunity the world seems to have lost in Iraq. Can you imagine what having helped to channel the oil revenues directly to the Iraqi citizens in a transparent way could have done? That could really have been called democracy building, and the setting of a great example for the citizens of Nigeria, Venezuela and all the other oil cursed nations to follow.

The current analysis of the remittances takes the eyes away from much bigger issues

The press announces that “Migrants send home $62bn to Latin America and Caribbean” and the commentaries that generally follow evidence how much, by focusing the attention on the remittances as such and which could in fact be compared to the cash dividends of the corporate world, the development banks might be missing so much of the real story.

If these remittances represent 15% of what the migrants earn then the real underlying economic activity is worth more than $420bn, and a country such as El Salvador has just as much GNP produced by its emigrants abroad than the GDP produced in el Salvador; and who is to argue that someone from El Salvador is less El Salvadoran just because he works abroad.

This calculation does also evidence that way too much detailed and expensive attention has been given to the analysis of what channels are used for the remittances, and the costs of these transfers. Frankly, in my book, this amounts almost to a lack of respect for the migrants since indeed these transfers do certainly represent the least of their thousands of problems and hardships.

Let us hope the development agencies will soon start looking at the real issues, such as how to increase the earning potential of these millions of sacrificed migrants; such as helping in the development of temporary migrant worker programs that satisfy the interests and meet the concerns of all parties; and to study whether they migrants could be better off reinvesting their savings in their own and their children’s educations instead of perhaps only ending up providing temporary support to their ineffective national governments who most probably were the main cause of why they had to emigrate in the first place; and to the rate of that heart-drain by which they might start to forget their homeland and how to slow it down.

Now, while analyzing all these issues, let us please never forget that all these remittances are of a very private nature; no different from any money a son could send his mother in a developed country; and so we need all to be extremely respectful of that.

Thursday, April 05, 2007

Let us not waste this opportunity to make a very significant reform at the World Bank

On the web of World Bank (WB) we can read an interview with Suzanne Rich Folsom, the Director of the World Bank's Department of Institutional Integrity (INT), on the theme of fraud and corruption. When questioned “What sanctions are imposed on those misusing WB’s funds?, she answers “when we find that a supplier has engaged in corruption in a project, we take actions to debar them – which means to make sure they can’t get any more contracts for a while. We also publicly debar – we list their names on our website. ‘Naming and shaming’ is a huge deterrent.” This sounds of course reasonable, especially considering that INT is not a court that could send anyone to jail.

Unfortunately, immediately thereafter, Folsom also has to say the following: “We’re often asked why we don’t publicly name WB staffs that are terminated for fraud and corruption as well. The WB’s rules don’t allow such disclosures…”, and this, no matter how you look at it, is of course something completely unacceptable and represents a truly ugly wart on the public face of what in so many respects is the best managed of all our international organizations.

Perhaps these days, when the World Bank’s President’s and a former staff names are publicly mentioned everywhere as having done something not correct, this could be the best opportunity ever for getting rid of whatever crazy disclosure rule stops the World Bank from living as it preaches,