Examination of Witnesses (Questions 20-39)
MR MICHAEL
HAMMER, MR
JEFF POWELL
AND MS
NURIA MOLINA
20 NOVEMBER 2007
Q20 Hugh Bayley: The point is clear.
Mr Hammer: I think there is a
slightly different direction I would like to take here. There
is the substantive issue: should the World Bank be promoting private
sector/public sector programming in that area. Yet, it is also
about who in the country itself is actually in charge of setting
the policy under which economic development should take place.
I think that is where the role of parliaments comes in. Is it
a matter for the World Bank to, essentially, roll out programmes,
sometimes over and above the head of national parliaments, not
engaging with them while they are developing a project or a programme;
providing not enough information through the government itself
to parliamentarians so that parliamentarians find it hard to hold
their own government to account about what policies come from
the World Bank and what programmes are being rolled out? For me
there is, in addition to the substantive issue (on which we would
not have a position at the One World Trust because we recognise
the role that private investment takes in the economic development
in all countries, usually), therefore the question of who is actually
in charge of the policy agenda in a particular national context.
Q21 Hugh Bayley: Would you like the
World Bank to have a policy that would require the government
of any country in which it has a presence, shall we say once a
year, to make a report to the parliament about the uses made of
the World Bank's funds, and to allow there to be debate and questions
and so on? Would that help?
Mr Hammer: I think such a policy
would be very valuable. It should cover several ways of ensuring
that accountability. We would certainly support the idea that
senior staff of the World Bank, whether in-country representatives
or people who are involved with the programme in, for instance,
Washington, can be called by parliaments in any country. In the
same way that we are sitting and giving evidence to a Select Committee
it should be possible for a national parliament to ask the same
of World Bank staff. The other thing that should happen is that
the governments in those countries, with support from the World
Bank or other international financial institutions, should provide
information—not just a big bagful of data but targeted reporting—that
empowers parliaments to exercise their oversight function over
the policies that the government is negotiating with the World
Bank. As we know the power relationships of aid recipient countries
with the World Bank are very often skewed. Without access to information
we cannot talk about a fair negotiation process.
Q22 John Battle: In a sense that
is where I want to push this question. You will remember we were
in Ethiopia and this was the old argument: World Bank funds make
public sector projects. What do we find in Ethiopia but a field
full of equipment that had been left to rot for 17 years because
the road programme had been cancelled. We were looking at the
wastage of public money through the World Bank. I want to push
the question another way, because it is interesting about the
trickle-down of wealth. I never really believed in the Heineken
theory of economics, because I never think it reaches the parts
it needs to. So I want to monitor who benefits. I would ask this
question: do any of your NGOs monitor, in some financial detail,
I would say, where the World Bank gives leverage for grants to
private companies to invest in privatisation programmes? It may
even be Coca Cola, but I want to know whether employing 200 truck
drivers is less than is actually paid in the 1% profit returned
to the shareholders out of country (because the wealth is exported
out) that has come from the leverage of the grant. Who monitors
the private sector investment in projects in detail to make sure
that the World Bank's grants to private companies actually benefits
people in-country and the wealth is not exported out? Yes, a little
bit of trickle down as far as the truck drivers are concerned,
but the real money is made elsewhere in the world. All I am asking
is (I am not saying whether it is right or wrong—I have
a view on that) are we monitoring? Are we capable of monitoring
it in detail? Do the World Bank monitor it or do any of your organisations
monitor it, so that we have got really strong case studies to
put up an argument as to whether this trickle-down works or not?
Ms Molina: Yes, indeed, we probably
do need to build our own capacity in monitoring what we call the
reverse flows, or the lack of capacity of developing countries
to retain resources and wealth that has been created in their
countries and that flows out. You will know the figures: roughly,
according to different sources, it seems that the wealth flowing
out from developing countries can be from four to 10 times bigger
than actually the development aid flows going from north to south.
Obviously, we are aware that plugging the leaks in developing
countries is as important as making north/south flows more effective,
and we are building the capacities and trying to get European
governments more interested in the need to legislate in the appropriate
way so these leaks are plugged, because obviously one of the important
details we should take into account is that all this wealth sometimes
goes offshore in tax havens that are based geographically in Europe,
I have to say.
Q23 Ann McKechin: Following on from
that I wonder if I could ask a couple of questions regarding the
World Bank good practice principles. One of the principles is
reducing the overall number of conditions, and I know, Ms Molina,
your written evidence has made specific criticism about this.
I wonder if I could put to you that this is rather a false debate;
that it really should not be the number of conditions that are
imposed on a grant but whether the conditions are actually effective.
We have had quite scathing evidence, for example, about the World
Bank investment in the Chad-Cameroon oil pipeline, and one of
the criticisms by the International Advisory Group was that the
lack of hard data about almost every one of the Ministry's accomplishments
made the task of actually finding whether the oil revenues led
to economic growth almost impossible. That suggests to me that,
perhaps, in some cases, we are not imposing enough conditions
on the grants, rather than the fact that we have too many. I wonder
if you could comment on that point.
Ms Molina: Basically, the conditions
that we are demanding should be phased out, and which we should
call for an end to, are economic policy conditions. I believe
that in your question you were hinting at conditions that may
be referred to as dealing with the process with diligence, transparency
and accountability. These sorts of conditions, obviously, need
to be in place, but rather than conditions what there should be
are the contractual terms of an agreement between two parties;
an agreement that should be balanced and where both parties should
participate on an equal footing. Obviously, it is the effectiveness
of conditions for some European donors, but also they have been
identified as ineffective, as it were; it is conditions that are
focused on economic policy, economic management and which have
been trying to perform sensitive policy reforms, sometimes not
taking into account the ownership of national—
Q24 Ann McKechin: I wonder if I could
press you just a little bit further, because one of the examples
you have given on page 10 of the written evidence is about conditions
in Uganda.[11]
I have read through the list. On the face of it, there does not
appear to be many that most people would consider unreasonable.
One of them, for example, is that a government department would
complete a survey of land right awareness levels of women. What
particular criticisms have you of that list?
Ms Molina: We do not have criticisms
on the content of the list. There are several different issues
that we are concerned about. One would be the number of conditions,
which was the first thing that you referred to in your questions.
Obviously, sometimes we can perfectly acknowledge, welcome or
agree with the content of some of them, as you say, but the number
of conditions is burdensome. If the number is too high, and in
developing countries which are not ready, it will stretch their
administrative capacity and they are just unable to track every
six months, every year a huge list of conditions which, sometimes,
can go up to more than 100—more than 100 from the World
Bank—and then adding the rest of the donors. So, obviously,
the number matters. We are not criticising in particular; this
was an example that we put forward more on the side of the numbers
and how the numbers should be streamlined. I would agree this
is not so much focused on the area that we call due diligence
which we believe that, if agreed, equally by both parties, it
is very legitimate to be in place. Our main criticism, as you
will read in the report, obviously, or as you have already, is
on the economic policy conditions.
Q25 Ann McKechin: If I could turn
to that now, obviously you called for the principles to be used
as a way of reducing economic conditionality. In a letter in this
morning's Guardian Kyle Peters, the Country Services Director
at the World Bank, responding to an NGO campaign here in the UK
about conditionality, stated that: "country ownership is
a central principal of the Bank's budget support operations. Indeed,
while less than a third of our recent budget operations have been
sensitive economic reforms, and privatisation constituted only
1.5% of such conditions, where applied, these conditions are based
on countries' own reform programmes."[12]
I wonder if you might care to comment on that criticism.
Ms Molina: Definitely. There is
a clear diversion in numbers, obviously, between the forthcoming
progress report of the World Bank and our research. It is not
that dramatic but it is mainly due to a difference in the definition
of what the World Bank calls economic policy conditions and the
definition that we have used, and on what the World Bank calls
privatisation and the definitions we have used. We are using a
slightly broader definition which does not diverge so much from
the Bank's one, and mainly using the definition of sensitive policy
reforms as the Bank used it in its first progress report, which
does not refer only to privatisation conditions but, also, to
what we would call associated reforms, and the Bank also called
with a very similar terminology.
Q26 Ann McKechin: Some of the terminology
may be a little bit difficult to clarify as to what it exactly
means. To give an example, again in your evidence, on page 12,
on Vietnam, you say that it has to "adapt policies to encourage
the participation of non-state establishments in the delivery
of public services"[13].
That could mean, for example, the privatisation of private utilities,
which clearly you would be against, or, alternatively, it could
mean private companies having to tender for construction contracts
in the public sector, which most people would say would not be
an unreasonable condition. So it is part of the problem, actually,
of how we define what is an economic condition and how we define
one related to better governance.
Ms Molina: It is important to
make clear that in our definition of privatisation we have not
included private sector development. So we have taken into account
that there are a number of conditions which are related to strengthening
or enabling the business climate and strengthening private sector
development, and we have not counted those as privatisation. This
is, to a certain extent, necessary to clarify. When we talk about
economic policy conditions we are not so much worried about or
concerned or claiming that all privatisations are bad in themselves.
They could be bad or good, as much as nationalisations. The problem
is when they are conducted in a rushed way when there is not the
necessary regulatory framework or the necessary institutions in
place. We were saying before: "What is needed for development?"
The right legal frameworks, the right institutions, the appropriate
competition law—all these elements are needed for these
reforms to happen successfully. Past evidence shows that this
has not necessarily been the case. On the ownership of these conditions,
if the country wants to put forward these reforms then they are
legitimate to do it; they are a country elected by their own citizens.
But why should the Bank impose the conditions? The country will
do it anyway. So the Bank should just not be seen as meddling
in decision making which is up to the national institutions and
parliaments.
Mr Powell: If I can just add there
that I think there is a fundamental divide, where the Bank sees
itself as having a supporting role in the reform agenda. Many
civil society critics of the Bank say: "Well, that is not
your role". How would we see things here in the UK if the
Chancellor were to stand up and say: "Well, I am taking this
measure and it is backed by this multilateral institution"—whatever
multilateral institution that might be? I would imagine that would
draw some catcalls from around the Chamber. Would I be wrong?
Q27 Sir Robert Smith: Well, the EU
is often called into—
Mr Powell: Does that not draw
catcalls around the Chamber? Indeed. So I think there is this
fundamental divide, where civil society says that if this is the
reform agenda of a government by democratic principles, it should
have to win the argument of the day. It should not be able to
use, rightly or wrongly, the pressure of an international lender
to achieve that reform. If they cannot achieve that reform that
means the domestic political economy is not yet prepared for that
reform.
Chairman: If you can help us with any
specific case studies that would be valuable because we have been
round this course before and it is not always that easy. For example,
whether it is the British Government or the World Bank, that says:
"The Government of X asked us to help them in their agreed
policy of privatising X or Y and we are simply advising them on
the best way to do it." They may even have said they wanted
to realise assets in order to build the infrastructure of their
health service. So if you get that response, your argument crumbles.
I am not asking you to do it now but if you can give us any written
examples that take us from the general to the specific, genuinely
we would be very happy because we are interested in pursuing the
argument but it has to be more than just intellectual; it has
to be real.
Q28 Sir Robert Smith: What does the
Bank do if someone does not meet some of these conditions?
Ms Molina: Technically the response
would be withholding funds, yes—pull-back or freeze the
money. The reality is that they are not so often doing it; they
are extending a number of waivers, which has been eroding their
impact. I would just make a note on your request, not so much
on particular cases that we would be happy to provide, obviously,
but overall, we obviously face the same problem when we discuss
with the Bank and they just push for evidence that a given finance
minister has agreed or has used Bank leverage to push forward
this reform. We work very closely with our sister network in Africa,
AFRODAD,[14]
and they work very closely with national parliamentarians in that
country. We were recently in a meeting with them and it was surprising
to see how parliamentarians in these countries were just complaining
that they were completely marginalised from the decision-making
process, not only in terms of monitoring the money flows from
the Bank and from donors but, also, from the decision-making process—being
able to participate in long contraction and in budget matters.
Chairman: This Committee, in general,
and Mr Bayley, in particular, have been very active in trying
to promote the role of parliamentarians in other countries, and
we are very much on side for that.
Q29 Richard Burden: Could we go back
to the issue of DFID leverage in conditionality reform? I think,
Jeff, you mentioned, in your opening remarks, about the decision
in 2006 to withhold £50 million from the World Bank. You
said that whilst that kind of approach is not the be-all and end-all
of trying to secure reform, it was a kind of useful start. This
year the £50 million was released on the grounds that progress
had been made, and that has attracted some criticism from a number
of bodies. My first question is: do you think that the £50
million was released but actually there had not been any progress
made? Or do you think that there was progress made but it was
not enough? If it was not enough, what do you think they should
have insisted on to release the £50 million? Not to completely
reform conditionality (that is a much longer project) but, to
release the £50 million, what should DFID have asked for
on that specific thing that they did not get?
Ms Molina: Yes, definitely, there
were some problems made in 2006, and in 2007 we acknowledge that
in our report, some difficulties in the number of conditions and,
to a certain extent, some problems in some of the five good practice
principles—not enough by far. You would expect that two
years after an institution has committed to a policy of reform
the change and the progress should noticeable. This is our main
concern—we see glacial change. So, basically, I definitely
think that the strategy of withholding funds by DFID and the pressure
put by other governments, and apparent consideration in different
progressive donor governments to maybe follow the same strategy,
has been influential. It has been influential in other progressive
governments in Europe and it has definitely put the pressure on
the World Bank. I do not know if the question is along the lines
of whether it should be used again. It is a successful strategy
and it should be potentially considered to be used again. In particular,
there is a number of recommendations that should be made in a
number of areas, but in a nutshell, obviously, independent monitoring
of the World Bank progress on conditionality is something that
should be asked, and this would provide objective and independent
evidence for governments, such as the British and others, to use
as a yardstick to realise where there has been progress, because,
obviously, a report or a study that is issued by the same institution
is not independent and there may be a conflict of interest. So
independent monitoring suggesting, maybe, to set some targets,
because the good practice principles have some flaws and these
flaws are that they are relatively ambiguous and difficult to
measure. So, maybe, setting some targets in terms of the degrees
of overall conditionality and the degrees of economic policy conditionality,
and, obviously, further engagement of other stakeholders, such
as parliament and civil society organisations, both in donor countries
and in recipient countries.
Mr Powell: If I can add briefly
to that, we understand that where the rubber hits the road, as
it were, in terms of the Bank's reform agenda with IDA, is in
terms of the matrix of the reforms that are included in the final
IDA document. Our understanding in the draft is that there is
absolutely no reference to this issue. So, at this stage, barring
the use of the financial leverage there does not seem to be any
willingness to consider another method of holding the Bank to
continued progress to reform on this agenda. So we very much support
the work that EURODAD has done in terms of a call for an independent
assessment of the good practice principles in an attempt to make
them more rigorous, so that we can make an objective assessment
of how much progress has been made. I do not think that is possible
right now because you are always going to get the kind of arguments
that all of you have heard quite a bit of between different understandings
of different definitions of the implementation.
Q30 Richard Burden: So what you are
saying is that the tactic of withholding or threatening to withhold
contributions was not only useful last year but it is one that
should be seriously considered as being operated again, and specifically
for the issue of independent monitoring to secure that as well?
Mr Powell: Yes.
Q31 Richard Burden: What else do
you think DFID could be doing to secure the kind of conditionality
reforms to make World Bank policies more development orientated,
other than withholding contributions?
Mr Powell: Obviously, there are
a number of ways that reform agendas are pushed ahead at the World
Bank. One is to make a direct contribution to pay for the independent
assessment that will be done. That can be done through some kind
of trust fund action. Another is to push this agenda at the World
Bank Board. Another is for UK staff to work with World Bank staff
in terms of trying to convince them of the value of such an assessment.
However, all of these are, in the end, quite weak relative to
the fact that if the IDA replenishment has been done and money
has been handed over then that is the stick, and if you lose the
stick the others are just kind of, as far as I am aware, in terms
of methods of change, soft.
Q32 Richard Burden: Even if they
are soft, are you saying you do not think DFID is doing them?
Or are you saying it is doing them but they are not working? Is
there something more in those areas of, if you like, soft pressure
that you think DFID should actually be doing, or is it doing all
that could be expected and it just is not working?
Mr Powell: I am saying DFID is
definitely doing all of those things. One recommendation that
has been made by, again, our attempt to work together across countries
in Europe—the civil society—is for what is broadly
called in the Utstein Group "the like-minded donors"
to come together to work more often. This was very effective last
year with the Norwegian study that was done, which was seen as
independent; somewhere between what the civil society groups were
saying as critics of the World Bank and what the Bank was saying
in terms of its research, which was defending its own position.
More effort to work together with donors who prioritise this issue,
I think, could be made. We do not see enough effort on that front.
Q33 John Battle: If anything, what
disappointed me about the EURODAD report, in a sense, were the
references to privatisation of electricity—we almost have
an obsession with it as the only point of critique—and the
references to liberalisation of energy markets in Afghanistan,
Nicaragua, Vietnam and Rwanda. I think there is a world row going
on about liberalisation of energy markets. It has gone on for
eight years in Europe; it is going on in the United States. They
are not there yet, to say the least, and this argument is going
on and on. Privatisation of electricity has become the focal issue
and I am disappointed in that because I do not think it is the
main issue. I think the World Bank conditions do not liberate
the poor, and I would like to ask you whether we can look at the
world from the other end of the telescope rather than this top-down
privatisation model. What about the alternative models nationally
on conditions? Are they only about parliamentarians? I want parliamentarians
to be involved but, goodness, there has been talk for 10 years
about participatory budgeting. That has been going on since the
World Social Forum. Even, dare I say, Liberal and Conservatives
and a few Labour councils in Britain are trying to experiment
with a little bit of participatory budgeting. Where is the vision
of alternative economic models that has been pushed up from the
base in the direction of the World Bank? Who is working on them?
Where are those examples which we could perhaps use to amplify
the bad examples and set a counterweight to them?
Ms Molina: The answer to this
question would go well beyond the scope of conditionality, because,
basically, we are talking about the sort of national policies
that should be in place to ensure a meaningful poverty reduction
and a meaningful developmental model which leads people out of
poverty. I certainly doubt that this should come on board during
the forum of conditions for disbursement in development lending
but it should definitely be developed as alternative national
policies which explore into different economic models, as you
were saying. There is definitely work being done by a number of
multilateral institutions, and a number of CSOs[15]
as well, on alternative fiscal policies and alternative monetary
policies particularly, because, as you know, this is basically
the role of the IMF[16]
but this has an impact on the World Bank and World Bank finance
and the cross-conditionality between the Bank and the IMF. Action
Aid International, for instance, has been exploring into different
alternatives in monetary and fiscal policies in order to provide
national decision-makers with a wide array of options—not
to be ideological but to have a wide array of options—and
there are also institutions, such as the UN DESA,[17]
which published two months ago a number of what they have called
policy notes, ranging from industrial policy to macro-economic
policy, social policy, which tried to provide these alternative
views on development as well.
Q34 John Battle: I do not understand
why conditionality cannot include that governments should be obliged
to work with, consult and engage with people, including the poor.
Even in Britain, at a very modest level, before council budgets
are spent, to some percentage and in some quarters it is now devolved
to the local level, and the Health Authority primary care trusts
involve users—in a very minimal, very measly kind of way,
in my view. Why can that not be part of the World Bank's vision
for conditionality and participation, so that the poor are counted
in rather than told what to do from the top all the time? Even
on alternative economic models, it is still top down.
Ms Molina: Definitely. We would
perfectly agreethat with that. That is what we would call due
diligence or due process: conditions or terms of the contractual
relations between donors and recipients, and that should definitely
include participation of civil society and what you would call
a bottom-up approach instead of a top-down approach. This is quite
different, though, from substantive policymaking. With substantive
policymaking, the more decentralised it is done, the better it
is, because it takes into account the circumstances and the context
of local regional and national levels.
Mr Hammer: There is a mixture
of issues here. One is about who is defining and setting policy;
the other one is also about the space that is offered for consultation.
Earlier in the discussion we talked, for instance, about developing
policies and firm policy commitments from the side of the World
Bank on who to engage on certain processes. If there was greater
transparency, for instance, when eventually decisions were taken
at the executive board level, what the result of the consultations
were that were taken into account when making decisions about
certain programmes, it would be easier for civil society, including
community-based organisations, and other more marginalised groups,
to be involved in the development of policies. It is a very, very
steep and very, very high pyramid to build and, of course, there
has to be a balance struck on the length of a consultation process
and the breadth of a consultation process and the decision-making,
because otherwise—
Q35 John Battle: I am not just looking
for consultation. I am looking, if you are describing it as a
pyramid, for the lock-in, the safeguards to be built in from the
base and not from the top. Are there any models of nationally
owned conditionality that build those kinds of safeguards in?
In other words, you have to work with peasant farmers in their
collectives in order to sort out the agricultural policy; you
have to consult people locally in villages before you put pipelines
through; you have to consult people before you decide that their
town is going to be a goldmine and you need to clear them out
of the way and dig it because you have the money to invest, backed
by the World Bank, as is happening now. Why are they not built
into the conditionality?
Mr Powell: This enters us into
a very broad and, I think, fascinating debate, which really is
at the cutting edge of where discussion in civil society is right
now. How do we move from conditionality to what is often described
as responsible financing standards. How do we move to a situation,
modelled after, for example, the UN conventions and norms to which
countries are signatories, where, when development financing is
involved, there could be norms around participation? That would
move us away from the situation we are in right now, which is
safeguard policies which are specific to a particular institution
and its own rules—which are very confusing, which are Byzantine
for groups on the ground—to a situation where there is the
global expectation of how this would occur.
Q36 John Battle: Good answer.
Mr Powell: It is a detailed debate,
but thank you for questioning it.
Q37 Chairman: Leading from that is
the way that the Bank is run as a corporate entity. Essentially,
it is run on traditional corporate lines. It is a shareholder-driven
organisation—apart from having one minority shareholder
who has a golden share in having the right to nominate the President.
There has been a lot of discussion about how you could change
that in ways that would effectively give the recipient countries
more say. Given that is the concept, that it is a shareholder
organisation, how would you change it in ways that were compatible
with that—because, let us be realistic, the donors are hardly
like to tear that up—but which gave real influence to developing
countries, given that also there are a lot of them?
Mr Hammer: In order to be able
to make progress on the reform of governance of international
financial institutions, it is important to set oneself realistic
goals. Whilst some may argue that, overall, there is something
fundamentally wrong with the way in which decisions are being
taken and the power relationships, for instance, at the executive
board level are very difficult—which is something which
we agree with—from our view it would be unrealistic to ask
people who currently hold a lot of power simply to give it away—one
should nudge and urge them but I think to ask for a complete change
is unrealistic—and so one of the ways we have tried to explore,
together with the Bretton Woods Project, is to find a way how,
all stakeholders and all shareholders in the Bank, essentially,
have the possibility to contribute to the decision-making process.
In additioin to the existing quota based vote we propose, under
a Double Majority voting system to introduce a second set of voting,
on a "one member, one vote" basis, so that, on decisions
that affect them, a majority has to be obtained also in that second
set of majority. This should be valid for all decisions rather
than just a few critical ones. When we looked at comparable examples
where double majority systems are being used, these appear as
perfectly feasible. They exercise a much stronger pressure towards
consensus building and that is what we feel is needed for the
World Bank, so that the decisions that it takes at the very high
level are supported not just by the majority of people who hold
the greatest number of voting shares because of the quota that
they have but also by the greatest number of individual countries
that are affected by those decisions. Particularly, those are,
of course, developing nations which very often do not have any
great part in the voting otherwise. That is one way we have been
looking at these issues. The other way is about how one can hold
those who eventually take the decisions at the executive level
to account and what can be done about transparency there. One
of the things we are looking at of good practice principle is
to disclose the transcripts of the board meetings very, very soon
after the decisions are made—and we are looking at transcripts
rather than just minutes—so that it is possible for an individual
stakeholder in any country to see: "What has my representative
voted on and in which direction?" which is currently very
difficult to ascertain. The United Kingdom is doing that, but
we all know that the last report on the activities of the World
Bank is now one and a half years old, and so, once you get the
information, it is at least recent history. In order to make accountability
proactive and an ongoing process, it is useful to think about
coupling new ways of making decisions at the board level; for
instance, through introducing a double majority voting system
with greater transparency about how the voting is going.
Q38 Chairman: You have mentioned
comparable examples. Could you give us an indication of what they
are?
Mr Hammer: The double majority
voting system is used quite a lot, for instance, in managing corporate
and employment relationships in a number of countries in Europe.
We all know that some countries like to go on strike more than
others but, overall, it seems to be driving consensus in a much
more positive way.
Mr Powell: To add to what Michael
has already raised, we think the staffing issue is still a very
important issue. The African executive directors have raised the
point that there is not an African managing director. The high
level, senior management staff from Africa is lacking, so there
needs to be a greater push. DFID have been supportive of that
push. More movement is needed. Advisors and research and analytical
staff in the executive directors' offices are also important.
Finally—another piece of the puzzle that I have been involved
with for the last year on the IMF side—we have an absence
of evaluation of performance at the presidential and at the board
level of both the World Bank and the IMF. That is quite significant
when you are thinking of the norms for international cooperation,
the norms for international government, intergovernmental organisations
that are evolving, so that that kind of evaluation is an important
piece of the puzzle. Lest we get completely caught up at the Washington
level, I do think the governance model is also a question of how
Washington relates to the country level. Here we not only get
into questions of constituency reform—African executive
directors having to try to represent 24 countries, which is a
virtually impossible task—but also then how those representatives
are able or not able to do what Michael referred to earlier, which
is to be able to respond to the parliaments in those countries
about what kind of position they are taking. These are all related
to each other and the reform agenda has to move forward both in
Washington and in terms of how Washington relates to country representatives
at the Bank.
Q39 Chairman: Are there any negatives
to this? If you mishandle it, you finish up with too many people
involved in the decision-making process and paralysis or confrontation.
You have to balance that out.
Mr Powell: This is more on the
IMF side than the Bank but the spirit of consensus, if you will,
has been leaching away from these institutions in any case. We
cannot divide this discussion of governance reform from the reality
of the very hot debate over the legitimacy of these institutions
that they face today. We have middle-income countries which, in
many cases, are trying to set up their own regional lending institutions,
and low-income countries which are quite unhappy with the conditions
of the financing that they are receiving. Countries are looking
at other options, so we cannot say that the status quo is quite
happy and working well. Some of these reform suggestions, such
as double majority, are exactly to try to address those issues
and see if we can return to more of a consensus kind of model,
where different groups with different interests are better able
to work with each other and strike a compromise. In the past,
the industrialised developing countries dictated the agenda and
the others fell into step, and that is simply no longer acceptable
in the environment that we are in at present.
11 EURODAD, Untying the knots: How the World Bank
is failing to deliver real change on conditionality, November
2007 Back
12
"The World Bank and conditionality", The Guardian,
20 November 2007, p35 Back
13
EURODAD, Untying the knots: How the World Bank is failing
to deliver real change on conditionality, November 2007 Back
14
African Forum and Network on Debt and Development Back
15
Civil Society Organisations Back
16
International Monetary Fund Back
17
Department of Social and Economic Affairs Back
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