Presidents of the World Bank, or investment managers generally, are rarely renaissance men or women. James Wolfensohn, who has died at the age of 86, was a glittering exception.
Not only did he transform the hidebound Washington-based global assistance organisation, he also revived the finances and artistic breadth of two major US concert venues, Carnegie Hall in New York and the Kennedy Center for the Performing Arts in Washington, while finding the time to learn the cello at the knee of Jacqueline du Pré and performing with the likes of Yo-Yo Ma and Bono.
That he shook up the World Bank is beyond dispute. As only the third person to serve as president for two full terms — from 1995 to 2005 — and the first after Robert McNamara, president from 1968 to 1981, he was given the time to do so. His legacy stands on an entirely different level to the bankers and politicians who served as presidents in between the two men.
Wolfensohn enthusiastically sought the job. Armed with impressive endorsements from the financial and political worlds, he lobbied then-US president Bill Clinton for it. The fact that, having travelled extensively in developing countries, he was passionate about global inequities, as was Mr Clinton, greatly helped his cause. So, too, did the fact that the Bank had been in something of a rut since McNamara retired.
Wolfensohn came to the World Bank at a difficult time. Protesters had disrupted its annual meeting in 1994, arguing that the Bank should be abolished. The Bank was beset by controversy over its lending for large dams. An internal review had also recently concluded that the outcomes of more than a third of its projects were “unsatisfactory”.
At the same time, the Bank was struggling with the transformation of the former communist countries of central and eastern Europe and the former Soviet Union. Yet, perhaps most important was the crisis of the poorest countries, which were paying more back in debt service than they were receiving in new loans or aid.
Wolfensohn tackled these challenges and more with characteristic energy, transforming the Bank and, as importantly, the world’s view of it.
Wolfensohn golfing with Bill Clinton at Jackson Hole, Wyoming, in 1996 © Mike Theiler/Reuters
James David Wolfensohn was in a sense, born into finance on December 1 1933 in Sydney. He was named after the banker James de Rothschild, for whom his father had worked in London before emigrating to Australia. But the family struggled financially, which left a lasting imprint upon him. Nevertheless he did fence for Australia in the 1956 Olympics.
Three years later he earned an MBA from Harvard Business School, which set him on his way, in spite, he admitted, of being an indifferent student. He had already obtained a law degree from the University of Sydney.
Back in Australia he worked as a lawyer for various financial institutions before moving to London and New York for J Henry Schroder and then joining Salomon Brothers. It was from that perch that his reputation grew, not least for his role in orchestrating the terms of the US bailout of Chrysler, the near-bankrupt car company. His co-architect was none other than Paul Volcker, who in 1979 became chairman of the US Federal Reserve.
He became a naturalised US citizen in 1980, partly, it was said, because he had already set his eyes on the World Bank, which, by tradition had always been headed by an American. But he would have to wait 15 years. He filled in his time by running his own successful boutique investment firm in New York, with blue-chip clients including Mercedes-Benz and Ralph Lauren.
Among Wolfensohn’s most significant initiatives at the bank, launched in 1996 with Michel Camdessus, managing director of the IMF, was the Debt Initiative for Heavily Indebted Poor Countries. This created a framework for debt relief to the world’s poorest and most heavily indebted countries from all creditors, including multilateral creditors.
A more controversial decision by Wolfensohn was to attack corruption in countries receiving Bank assistance. In a speech in 1999, he recalled that “when I arrived at the Bank I was told, you don’t talk about the C-word because it is a political issue and the Bank is owned by governments and your charter does not allow you to enter the political field”. In spite of fierce internal resistance, he prevailed, using his sharp tongue when necessary. Today, the Bank builds in corruption clauses into all its agreements.
Receiving Russia’s Order of Friendship from Vladimir Putin in 2004 © Alexander Natrsukin/AFP/Getty
In 1997, Wolfensohn proposed a “strategic compact” between the Bank and its shareholders: if they would “invest $250m in additional resources over a three-year period”, the Bank would “deliver a fundamentally transformed institution — quicker, less bureaucratic, more able to respond continuously to changing client demands and global development opportunities, and more effective and efficient in achieving its main mission — reducing poverty”.
One element in this transformation was decentralisation of the Bank’s operations — getting staff out into the field rather than prescribing advice from the ivory tower in Washington. He wanted more consultation with local authorities and civic groups, particularly when Bank-financed projects had the potential for serious environmental consequences. That, again, rankled with many staffers.
Given his private sector experience, Wolfensohn also believed countries needing assistance should not be discouraged from using the international financial markets. Official foreign aid was finite, he argued, and not always dispensed with the recipient country’s best interests in mind. Better deals could be had in the private sector.
In 1999, he proposed the Comprehensive Development Framework, which called for a long-term and holistic vision of development, “ownership” by each country of its development strategy, and measurement by results. It was to be the foundation for the Bank’s efforts to help achieve the Millennium Development Goals agreed by the members of the UN in September 2000.
His wife, the former Elaine Botwinick, whom he met while at Harvard, died in August. Their three children and seven grandchildren survive him.
Source: Economy - ft.com
