Wolfensohn Confirms Plan to Leave World Bank

The Bush administration said yesterday that it was searching for a successor to World Bank President James D. Wolfensohn, after Wolfensohn officially informed the Bank's board and the US Treasury that he will leave the post when his term expires in June, The Washington Post reports.

Wolfensohn told US Treasury Secretary John W. Snow that he will step down after a decade at the bank's helm, according to a Treasury spokesman. And in a letter that was circulated yesterday to World Bank staff members, Wolfensohn definitively stated his intentions, saying, "I would not wish to be considered for a third term." The daily further notes Snow said in a statement Monday evening "Jim Wolfensohn has been an outstanding leader of the World Bank…I look forward to working with him over the next six months as he continues to lead the Bank. His counsel will be invaluable as we go through the transition process."

Dow Jones notes Treasury spokesman Rob Nichols said the Treasury secretary commended Wolfensohn for "10 years of remarkable accomplishment," citing Iraq reconstruction, aid for recovery from last month's Indian Ocean tsunami and poverty reduction. The Associated Press adds the Secretary said in a statement that "Because of Jim's leadership, the World Bank today is a more dynamic and effective development organization…I view his accomplishments as historic."

The Wall Street Journal further reports a spokesman for the US Treasury told reporters the US would begin consulting with other nations to find a successor. "The expectation is that Jim Wolfensohn will serve out the remainder of his term ...we would like the president-elect to be able to hit the ground running as soon as possible immediately after," said Nichols. Nichols said the selection process for Wolfensohn's successor would be open, candid and transparent.

Reuters adds that a World Bank board official said there have been informal talks between the United States and major European countries that fund the Bank about Wolfensohn's departure, but said there were no preferred candidates to replace him at this stage. Traditionally, the top job at the World Bank has gone to an American but developing countries are expected to push for a broader range of candidates and to contend the practice of giving the presidency to an American is outdated, the news agency writes.

The China Daily meanwhile writes the World Bank broadened its scope under Wolfensohn, who sought a more "humanizing" role for the bank. Since taking over in 1995, he cut by 40 percent financing for dams, bridges and infrastructure projects, and shifted that money to programs promoting climate change, faith-based initiatives and helping the disabled. "The magnitude of the change was really very significant," said former World Bank Chief Economist Joseph Stiglitz, a 2001 Nobel Prize winner. "He saw development in human terms. It wasn't just a bank, it was the impact that the World Bank had on the lives of individuals."

Der Standard (Austria) writes Wolfensohn put more emphasis on fighting poverty, women’s rights, and good governance. He was regularly traveling to developing countries and informed himself about the daily lives and problems of the people in the most remote villages.

La Tribune (France) further writes that if Wolfensohn’s departure is confirmed, it would not only mean the eclipse of a great banker (and great musicians), but it would also mean a threat to the evolution which the Bank took upon itself over the past decade.

The Financial Times meanwhile notes that Wolfensohn has been controversial as head of the World Bank. A reorganization of the bank's administration, launched soon after he took the job in 1995, alienated large swathes of the staff. But he won praise for putting more bank staff in developing countries. Wolfensohn has been more receptive to outside advice from non-governmental organizations than any of his predecessors. But some would say that he has been less receptive to guidance from experts within the bank. He has tried to make the distribution of aid more effective and to beef up the bank's research.

German business daily Handelsblatt (Germany) further writes in an editorial that it would have been a miracle if the Bush administration had kept Wolfensohn on board. For the Americans, the Australian was too open, too vast, and in the end, too independent. Nor did the Bush administration like Wolfensohn’s characterization of the reconstruction of Iraq as a long and expensive enterprise. Time and again, Wolfensohn was pointing to Washington’s massive military budget, which barely left any resources for development aid, writes the daily. At the same time, the flood catastrophe in the Indian Ocean makes clear that institutions like the World Bank and the UN are needed more than ever. The US government would be well advised not to act only out of opportunistic political considerations, argues the daily, adding that the selection of the new World Bank President will show if and how the White House wants to deal with that question.

World Bank, IMF, UN Coordinating Tsunami-Relief Plans

The World Bank, IMF and the United Nations are coordinating plans to help tsunami-affected countries make the transition from receiving humanitarian relief to long-term recovery, Agence France Presse reports.

"This is a crisis of massive proportion, requiring a massive response from the international community," said World Bank President James Wolfensohn, who is traveling to South Asia and Southeast Asia. In the days immediately after the tsunami devastated Indian Ocean coastlines on December 26, the World Bank announced it would commit an initial $250 million for emergency reconstruction while further financing for longer-term reconstruction needs is identified. The World Bank's assistance is being tailored to individual country needs, taking into account the local capacity for effective implementation and disbursement.

The IMF said separately Monday that it was in contact with authorities in affected countries and preparing "detailed assessments of macroeconomic impacts and financing needs, country by country." The IMF executive board was briefed Monday on ways in which it can help afflicted countries, including through emergency lending and adjustments to IMF-supported policy programs and associated financing, the Fund's spokeswoman Gita Bhatt said.

Reuters reports that World Bank experts are starting to evaluate what needs to be done to rebuild shattered communities over the next several years. World Bank engineers, economists, and development experts should be on the ground from this week to begin work on a recovery strategy. Margaret Arnold, head of the World Bank's Hazard Management Unit, said their assessments should give governments, international donors and lenders an idea of the scale of funding needed to rebuild towns and villages wiped out by the tsunami.

She said because of the scale of the disaster and since many areas were inaccessible, bank officials will have to work off loose estimates. Arnold said the short-term emergency response - temporary shelter for the homeless, sanitation and clean water - should last between six months to a year. She added that the challenge was not only providing urgent shelter and clean water, but to ensure that long-term development was integrated with reconstruction.

The Associated Press meanwhile notes James Wolfensohn will visit Sri Lanka this weekend to view firsthand the destruction caused by the Dec. 26 tsunamis that killed more than 30,000 there, the bank said in a statement Tuesday.

Reuters explains the World Bank said Sri Lanka was proportionally the worst hit, with most of the population living on the coast and about two-thirds of the coastline destroyed. Deborah Bateman, World Bank country director for Sri Lanka, estimated that 800,000 to 1 million people are homeless, the majority of them very poor. She said the bank had already released money from existing loan projects to buy medicines, build emergency toilets and fund government health offices that had run out of cash. World Bank assistance to Sri Lanka has averaged about $200 million over the past two to three years. Bateman said $100 million could be added to that in 2005 because of the tsunami. The bank said an assessment team would arrive in the Maldives on Tuesday. Staff from the International Finance Corp, the bank's private-sector lending arm, which supported tourism on the island, were expected to help to evaluate financing options to revive tourism.

In other news, The Wall Street Journal Europe further reports US president Bush tapped his father George H.W. Bush and former US president Bill Clinton to lead private fund-raising efforts for victims of the disaster. George H.W. Bush and Clinton will spearhead a nationwide effort to persuade American citizens and companies to contribute to private charities already working in the devastated region, the president said. The announcement both meshed with Bush's philosophy of limited government and helped him to deflect criticism that his administration responded too slowly to the humanitarian disaster.

Meanwhile, in a letter published in the Financial Times, Robert Picciotto, Director General of Operations Evaluation at the World Bank Group, writes that the initial response to the crisis has revealed a great deal about the state of the global aid system. First, the electorates of industrial democracies are far more inclined to help poor countries than their governments. Second, learning from past experience is not a characteristic of the humanitarian enterprise. Responses to natural and man-made emergencies are invariably fragmented, improvised and inchoate. Third, the extraordinary logistical problems faced in delivering supplies and helping the victims displays the limits of development strategies that neglected infrastructure, ignored horizontal inequalities and concentrated resources on well-endowed countries and regions. A global forum hosted by the UK's Department for International Development in London on January 13-14 will bring together policymakers from the development assistance committee of the Organization for Economic Co-operation and Development, the European Union, the United Nations Development Program and the World Bank. The event offers a timely opportunity to learn from experience: the aid system urgently needs adjustment to respond more nimbly and effectively to the mounting human security problems of fragile societies.

Reuters finally notes that the United Nations put the latest death toll in Asia's tsunami at around 150,000 and warned it could still soar as relief workers were confronted by huge devastated areas without roads, bridges and airstrips. "There are many, many more who have disappeared or who are missing or who are for us nameless as of this stage," said Egeland, adding that the toll there could rise by tens of thousands.

Britain Proposes Richest Nations Freeze Debt For Tsunami Countries

Britain Tuesday unveiled a proposal for the world's wealthiest nations to freeze immediately about $3billion in annual debt repayments from countries hit by the tsunami disaster in the Indian Ocean, Agence France Presse reports.

The freeze would be offered as part of a broader international package of emergency aid and reconstruction funds that has already amounted to $2 billion for the December 26 disaster, British finance minister Gordon Brown said. The proposals were expected to be presented on January 12 in the French capital to the Paris Club of creditor nations. Brown said that the moratorium "would then lead to an analysis of the debt needs of these countries with the possibility of some write-off of debt, and at the same time ensure that the money goes to the areas and people in greatest need in these countries.” In the case of Sri Lanka, Brown said, Britain was "adding them to the list of countries which should get 100 percent multilateral debt relief because of the scale of the problems of 30,000 dead".

The debt repayment freeze would be followed by other steps, Brown added. "The IMF will offer emergency assistance, particularly to the Maldives, Sri Lanka and Indonesia, that could be worth up to a billion dollars," he said, adding that "The World Bank, which has made an initial contribution for emergency relief, will add to that very substantially over the next few days with money for reconstruction that the president of the World Bank will announce."

The Associated Press further reports that Brown said members of the G-8 had lined up behind the plan, first proposed by German Chancellor Gerhard Schroeder, to make debt relief part of the disaster response. He said he believed a proposal for 100 percent multilateral debt relief for Sri Lanka will also win support. Brown also said US Treasury Secretary John Snow backed the proposal. He noted a new international development fund to be announced this week would take a longer-term view of aid. "We never want to be in a position again where we have to choose between emergency aid and tackling the underlying causes of poverty," he said.

Reuters notes that the Paris Club group of creditors will examine a debt moratorium for Indonesia and Sri Lanka, the two countries hardest hit by the tsunami in southern Asia, when it meets on Jan. 12, French Finance Minister Herve Gaymard said. The Paris Club will collect data from lenders to establish the total amount owed by the countries concerned. Indonesia owes the Paris Club about $40 billion and is the largest debtor in the disaster zone, according to the World Bank.

The Independent meanwhile adds that that Damian Milverton, spokesman for the World Bank, said “there is definitely going to be consideration of debt relief in reconstruction plans that are going ahead. James Wolfensohn expects the donors to consider the best ways to help and he considers debt relief one of the tools."

The Associated Press meanwhile reports that an ambitious plan to set up an Indian Ocean tsunami warning system is expected to dominate the upcoming ASEAN gathering of leaders from stricken nations and world donors seeking to prevent a repeat of last week's carnage in Jakarta. The focus of Thursday's summit will be on rebuilding communities and ensuring that coastal communities will be warned the next time an earthquake unleashes tsunamis. Thai Foreign Minister Surakiart Sathirathai suggested that a part of the money pledged to the relief effort from around the world should go to setting up a warning system.

Agence France Presse adds James Wolfensohn will also attend the meeting of leaders of the Association of Southeast Asian Nations on Thursday.

Annan Starts Reshuffling UN Staff For Reform Push

UN Secretary-General Kofi Annan on Monday chose the high-profile British head of a key agency as his new chief of staff, the start of a reshuffle aimed at instituting UN reforms and combating scandals, reports Reuters.

Mark Malloch Brown, 51, is administrator of the UN Development Program, the largest UN agency, with programs in 166 countries. An outspoken official and former World Bank vice president, he replaces Iqbal Riza, 70, of Pakistan, who announced his retirement two weeks ago. Malloch Brown will remain head of UNDP as well as chief of staff while the tsunami emergency continues in Asia and until a replacement is found. He left with Annan on Monday for Jakarta, Indonesia, and a Thursday meeting with Asian leaders and an aid appeal. Malloch Brown made clear that he would be outspoken on problems facing the United Nations, unusual in that post.

The Washington Post adds Annan said that Malloch Brown would help him put economic development at the center of the United Nations' work during Annan's final two years in office. He said Malloch Brown would also help him make the organization more efficient and address new security threats, including terrorism and the spread of weapons of mass destruction. Monday's appointment comes as the organization faces allegations that senior UN officials, and Annan's son, may have improperly profited from the Iraq oil-for-food program administered by the United Nations. Annan's son, Kojo, has denied any wrongdoing.

Agence France Presse further notes Malloch Brown made clear that he had been asked by Annan to take on a media role at a time when the United Nations has been buffeted by staff unrest and scandal that led some US politicians to call for Annan's resignation. "A modern, global public organization of this kind has to understand that there are many news cycles a day, that to get your message out requires ... a vigorous, rapid response," Malloch Brown said. He said he would be "someone pushing for a quick response to issues, a response of a substantive and open and forthcoming kind" and would have a "much more prominent role" as a spokesman for Annan and the United Nations. The UN's communications operation has been criticized for its sluggish response to damaging allegations about the Iraq oil-for-food scandal, charges of sexual exploitation by peacekeepers in the Congo and other issues.

The Independent (UK) writes the appointment of Malloch Brown, who is credited with introducing important reforms in the UNDP since arriving there in 1999, is believed to be the first step by Annan to strengthen his chances of completing the second half of his second term in charge of the world body.

A report in The New York Times Monday detailed a secret meeting attended by several former senior UN officials on 5 December, which was held in the apartment of the former US ambassador to the UN, Richard Holbrooke. The agenda of this secret meeting was to "save Kofi and rescue the UN", one of the participants told the newspaper. The gathering was conceived as an effort to convince the secretary general that he had to take urgent steps to protect his position and respond to the attacks on the organization. Officials however insisted Monday that the appointment of Malloch Brown as the new chief of staff was not connected with the meeting in December.

The Los Angeles Times adds Malloch Brown said he will take up his new post January 19. Annan said the appointment was "the first of a series of changes" in his Cabinet. Undersecretary-General for Management Catherine Bertini and Controller Jean-Pierre Halbwachs both resigned in December and must be replaced. Annan's longtime chief of political affairs, Kieran Prendergast, may also move on to new responsibilities, perhaps as the special envoy to the Middle East, UN officials said.

Private Investors Say World Bank Is Dominating Carbon Trading

The World Bank is using its size and reputation to crowd the private sector out of investments that are important to Europe's fledgling market in carbon trading, The Wall Street Journal reports some private-sector participants in the market say.

The European Union's carbon-trading program formally began yesterday. The market, which has been trading unofficially since 2003, is meant to establish a value for carbon-dioxide emissions rights. Carbon dioxide is among the so-called greenhouse gases, which contribute to global warming by trapping the sun's rays in the earth's atmosphere. Emissions-trading markets are expected to be valued at billions of dollars annually; former UK Energy Minister Stephen Timms has forecast the market at about $19 billion, by 2010.

The Globe and Mail reports that because of its resources and name, some private-sector participants say, the World Bank is getting the best terms on projects to reduce emissions in the developing world. Such projects generate carbon credits that can be traded. Compounding the problem, some governments then use taxpayer money to buy the same credits from the World Bank, and use those credits to give domestic companies looser emissions requirements. As a result, a mechanism designed to encourage the private sector into making efforts to reduce pollution isn't having the desired effect, these people say. “The World Bank has played a key role in pioneering collective investment for emissions reductions,” said Larry Philp, managing director of emissions brokerage house CO2E Spain. “But due to its present market dominance, the bank is stifling the very innovation and efficiency that only markets could bring to bear to combat climate change.”

The Asian Wall Street Journal adds the World Bank said the charge was unjustified. Ken Newcombe, head of the World Bank's Carbon Finance Business, said the bank has agreed to allocate at least some of the carbon credits from any project to the private sector. The market is key to making the effort work, he added. "We're constantly reminding governments that this must be a private market -- that our role and theirs must be transitional," he said. "We must mitigate climate change through the market." In addition to compelling lower emissions domestically, countries can meet the targets by investing in projects to cut emissions in the developing world. In general, the same investment in the developing world achieves more emissions reductions than in the developed world. The World Bank's Carbon Finance Business jump-started this project by pooling funds from governments and corporations. By modernizing a power plant in, say, India or capturing and destroying methane from pig manure on a Brazilian farm, wealthy countries or companies earn carbon credits.

The World Bank manages six carbon funds, including special funds on behalf of the governments of the Netherlands, Spain and Italy. The bank's flagship fund, the Prototype Carbon Fund, has a mix of public and private investors such as the governments of Canada, Finland, the Netherlands, Norway and Sweden, as well as power companies and banks. Some in the private sector complain that the World Bank has dominated about a quarter of the $800 million invested in such projects since 2000. The bank aims to have $1 billion under investment in the next couple of years, and some observers expect its market share will climb to 50 percent. Private-sector brokers and financiers want to get more of these deals, but say they can't offer the favorable market terms the World Bank can. Newcombe said the charge was overstated. "We're aware that many in the private sector are concerned the growth in funds under management at the bank are taking money from them," he said. "We don't think that's true because the serious growth is in government funds."

The Wall Street Journal Europe finally adds that Spain recently invested EUR 200 million to buy 40 million tons of carbon-dioxide rights from the World Bank. Commercial participants in the carbon market say Spain should have directed that money to the private sector. For governments to funnel such development money through the private sector could raise questions, however. "That governments would provide all that money to the private sector isn't consistent with how governments operate," Newcombe said. 

Also in this edition: Briefly Noted...

Briefly Noted…The Bulgarian News Agency reports the international launch event of the Decade of Roma Inclusion 2005-2015 will take place in Sofia on February 2, 2005, Bulgaria’s Council of Ministers Press Office said on Monday. The event will be hosted by Bulgarian Prime Minister Simeon Saxe-Coburg-Gotha and Hungarian Prime Minister Ferenc Gyurcsany. The participating countries are Bulgaria, Croatia, the Czech Republic, Hungary, Macedonia, Romania, Serbia and Montenegro, and Slovakia. Open Society Institute Chairman George Soros and World Bank President James Wolfensohn are expected to attend. The two institutions are the principal sponsors of the international initiative.

The New York Times and Reuters note that India and Pakistan began talks on Tuesday to resolve a long-running dispute over a dam in Kashmir which threatens to cause another setback to an already fragile peace process. The talks come a week after bureaucrats heading the foreign ministries in the two countries said they had narrowed some of the many differences that plague relations between the nuclear-armed neighbors, but reported no breakthrough. “This is the last-ditch effort to find a solution through bilateral channels,” Pakistani Foreign Ministry spokesman Masood Khan said in Islamabad ahead of the talks. “We have reservations and objections and these have been specified...If we do not see any indication of movement toward a resolution of this issue ... we go to the World Bank,” he said.

Anadolu Agency (Turkey) notes Andrew Vorkink, the Country Director of the World Bank for Turkey, said on Monday that Turkey stood at the point of a historic transformation like the east and central European countries after collapse of the Eastern Bloc. In an interview with the news agency, Vorkink said that the EU would have a positive impact on economic and social structure of Turkey, and that Turkey would transform from a developing country to an industrialized country at the end of the EU negotiation process.