The Multilateralist

Jim Kim Wants a Brave New World Bank

Jim Kim Wants a Brave New World Bank

World Bank president Jim Kim has signaled several times that he wants the institution he leads to become less risk-averse. In leaked internal documents, he has lamented an internal "culture of fear" that prevents initiative and stifles imaginative responses to poverty. It appears that his campaign to change the Bank’s culture continues; Bloomberg reports today on a new instructive to staff encouraging risk-taking:

In an e-mail to staff obtained by Bloomberg News, Kim said the lender will undergo a series of organization changes including instituting a set of “global practices,” installing a new framework for country partnerships that shifts the focus “from instruments of our engagements to the impacts,” and making a “series of improvements in areas of leadership, people and talent.”

He also said the bank needs to make “significant progress on culture.” Under the new system, employees would be encouraged to “not let excessive risk-aversion get in the way of supporting high-risk/high-reward operations with potentially transformational results.”

It doesn’t appear that Kim has precisely identified the wellsprings of the fear he has diagnosed. There are multiple potential sources. The Bank ultimately responds to its largest shareholders, who often have divergent views about Bank strategy. Several large powers, including Russia, Brazil and China, have kicked up a fuss about one of the Bank’s best-known publications, the annual Doing Business report. At the same time, Bank staff have to work with "client" governments to implement projects. Some of these governments have other options in financing, and the Bank must tread carefully to avoid grievously offending its clients.

But it seems likely that there’s another source of fear: criticism by influential non-governmental organizations and activist groups. In his 2004 book on the Bank, excerpted as an FP article here, Sebastian Mallaby documented the way that these groups can tie up worthwhile Bank projects:

[P]rojects in dozens of countries are similarly held up for fear of activist resistance. Time after time, feisty Internet-enabled groups make scary claims about the iniquities of development projects. Time after time, Western publics raised on stories of World Bank white elephants believe them. Lawmakers in European parliaments and the U.S. Congress accept NGO arguments at face value, and the government officials who sit on the World Bank’s board respond by blocking funding for deserving projects.

The consequences can be preposterously ironic. NGOs claim to campaign on behalf of poor people, yet many of their campaigns harm the poor. They claim to protect the environment, but by forcing the World Bank to pull out of sensitive projects, they cause these schemes to go ahead without the environmental safeguards that the bank would have imposed on them. Likewise, NGOs purport to hold the World Bank accountable, yet the bank is answerable to the governments who are its shareholders; it is the NGOs’ accountability that is murky.  

It’s telling that the report of Kim’s renewed call for boldness comes in the same week that Human Rights Watch released a major report chiding the Bank and as environmental groups have been scrutinizing the Bank’s new energy policy. Jim Kim has been outspoken in urging a less cautious Bank. But is he manifesting that same caution by not explicitly identifying the Bank’s demons?