Thursday, May 10, 2007

George F. Will - The Real World Bank Problem -

George F. Will - The Real World Bank Problem - "90 percent of the World Bank's loans went to 27 middle-income countries, which Lerrick says 'closely parallels' private-sector lending decisions. The bank's loans represented less than 1 percent of the money provided by private capital markets to those 27. Ten of the 27 accounted for 75 percent of the bank's loans. Wolfowitz has said:

'We are facing . . . competition [from the capital markets]. I think it's important that we effectively compete. Increasingly . . . if the fight against poverty is successful, more and more countries will be in this middle-income category, and if this institution is going to remain relevant to the world, it obviously needs to be relevant to the middle-income countries.'

Wolfowitz's words are those of a man who has been in government much too long. He says private capital markets have become competitive with the bank's functions. But when those markets are not 'competitive,' that means only that they question the value added by loans the World Bank has wanted to make. That is the meaning of the capital markets' supposed bias against developing countries. If those markets are now eager to compete with the World Bank for clients, it is time for the bank to get out of the way."