Q. Why did you write this book?

A. I wrote The World Bank Unveiled because there is a startling difference between the rhetoric the Bank uses and the reality of how it acts. I believe this gap is serious enough to mitigate good intentions by many people working inside the institution. As a result, the Bank is less effective than it should be or can be. Ultimately, those who need the most from the Bank – the world’s poor – suffer the most because of its ineffectiveness or missteps. And, of course, I believe that talking about these things in an open and honest manner will go a long way in reducing this gap, improving accountability and helping to restore a measure of faith in the institution for both internal and external stakeholders.

Q. What makes The World Bank Unveiled different than any of the books previously written about the Bank?

A. Frankly, a book like this has never been written. Previous publications about the Bank, almost without exception, have been done by economists and academics assessing the institution within the context of its lending and policymaking roles in the global economy. These macroeconomic reviews usually come from external observers who have never worked at the Bank. The central theme of those documents is whether the Bank is an effective international financial institution. The World Bank Unveiled takes a completely different perspective. It is an insider’s account of how the Bank actually thinks and acts on a daily basis. As a result, a reader becomes privy to behaviors and events that are not just revealing about the Bank, but they would never have access to otherwise.

Q. You are not an economist, policymaker or academic. What makes you qualified to write about the Bank?

A. With a dozen years of experience working at the Bank, I am uniquely qualified to write about the institution because I saw how it actually did its business. Again, previous publications about the Bank have been done by outsiders engaging in “big picture” perspectives on the institution.. These efforts do not provide the insight and access a reader gets from an insider’s account. I have been privy to events and have had access to documents unavailable to others. To be sure, I am not an economist and I also do not claim to have any special knowledge about the financial matters of the Bank. The book does assess aspects of the institution’s economic work, but it is not the core focus. The World Bank Unveiled documents a case study of one particular initiative to increase the institution’s transparency with analysis of how the Bank’s culture and bureaucracy impact its larger role in the world.

Q. Why is transparency for the World Bank important?

A. Transparency is vital to the Bank, its role in the world and its relationships with donor and borrower countries. But there’s no need to take my word for it. Two leading World Bank figures in the last decade have also spoken about the importance of transparency. On the eve of his departure from the Bank, former Bank President James Wolfensohn noted that transparency reduces corruption, less corruption leads to better governance, and better governance increases development. Transparency, Wolfensohn believes, is the key. Nobel Prize winning economist and former Bank Chief Economist Joseph Stiglitz has often discussed the importance of transparency in the policymaking of the Bank and International Monetary Fund. He believes the lack of transparency in these institutions has led to bad decisions and insufficient accountability as well as real pain for the world’s poor.

Q. What prevents the World Bank from becoming more transparent?

A. I think it’s important to note there is some level of transparency at the Bank and there are a few accountability mechanisms. Perhaps the Bank has made more progress than other development banks in this area, but then again, the Bank receives a great deal more attention than its counterparts. Nevertheless, such reforms have been modest and, more importantly, they have been driven by pressure from external forces. Governments, non-governmental organizations and community-based organizations have successfully pressured the institution to make reforms, often against its wishes. There are two things that inhibit the Bank from going further. First, it has a monolithic culture of secrecy that instinctively hoards information rather than shares it. This culture is strong and resistant to change, and its historical antecedents go back to the birth of the institution. As a result, this unique structure is embedded in the DNA of how units and people within the organization behave and interact. Second, the Bank has two main decision-making strata. At the top is senior management, which includes the president, Board members, and others who approve large lending packages and assess the role of the World Bank in the world. Below them is a middle-management bureaucracy composed of numerous fiefdoms. While senior officials are positioning and repositioning the Bank to sail the political currents of the moment, middle-management bureaucrats accrue and retain power by wedding themselves to the status quo. These officials have much to gain by resisting change. Increasing transparency and improving accountability is not on the agendas of those controlling fiefs.

Q. What reforms would you like to see the Bank take?

A. There are a number of steps I think the Bank should take. Some have garnered a great deal of attention in recent years.

These include increasing the representation and voting power of less developed nations on the Bank’s Board of Directors as well as improving the transparency of the selection process for Bank presidents.

Cities have also focused attention on the Bank’s project evaluation process. The Bank suggests its
lending projects are largely successful, but critics believe its evaluation process is not independent and therefore flawed. The Bank needs to improve in this area as well as pay much more attention to post-lending supervision and project sustainability. I also think the Bank should engage in internal architectural-type reforms. One would be to change its managerial selection process. The Bank prizes academic excellence and therefore has traditionally hired managers who are highly educated and efficient technocrats. Unfortunately, the institution’s managerial corps underperforms because there is a dearth of managers with leadership skills and real-world experiences outside academia. Additionally, the Bank’s Conflict Resolution System should be reformed. The system was established to protect staff from managerial abuses. In reality, the system is weak, filled with loopholes and viewed by staff as unduly weighted in management’s favor.

Q. Will a book like this make such reforms happen?

A. I think it depends. The World Bank Unveiled doesn’t just show the institution’s weaknesses, but also reveals important strengths that the Bank possesses. If taken in the spirit intended, as an opportunity to improve the Bank and make it stronger, then change is possible and the book may play a role. There will certainly be a sizable number of people inside the Bank who will support what the book says. The danger, however, is that key officials wedded to the status quo may view the book as a threat and therefore seek ways to mitigate its influence. The Bank is very good at diluting the impact of its critics. It uses panels and reports and other tactics to package proposals that suggest change, but in reality often addresses the symptoms of problems rather than the causes. My sense is that if enough organizations and people outside the Bank are exposed to the book, then external observers have the power to pressure the Bank to enact meaningful and lasting change.

Q. In November 2008, the G-20 met in Washington to discuss reforming the global financial markets. They discussed reforming the Bank and IMF. What impact do you think the G-20 meetings will have on the Bank?

A. I think the potential for change is there but it is too early to say how much. Rhetoric, as I have learned, is not reality. The joint declaration from the November meeting discussed a “medium-term” goal of increasing the representation of poor countries on the Bank's Board. This reform has been resisted by the Bank for years, so such an outcome from the crisis would be positive. The more immediate concern that the declaration addressed in general terms was insuring the Bank's financial stability so it could continue helping developing countries during the current situation. One gets a sense that the core intent is to make sure that the Bank has sufficient capital so that it can continue the business of ‘business as usual’. This doesn't address important long-term issues the Bank and poor countries must face. The fact is that following the Monterrey Consensus in 2002, the world’s largest donors, including the U.S. , committed to increase development aid to 0.7% of their gross national income.

U.S. development assistance doubled under the Bush Administration. Nevertheless, these donors, and particularly the U.S. , have not come close to living up to their agreements. In late 2008, The New York Times reported that the Monterrey participants only provided 0.28% and the U.S. just 0.16%. In fact, the Center for Global Development’s Commitment to Development Index 2008 ranked the U.S. 17th out of 22 wealthy nations. The vast majority of foreign aid is spent on fighting terrorism rather than reducing poverty. Ironically, most experts believe poverty is the root cause of terrorism. Frankly, since 9/11 the Bank has not been an effective advocate for increasing aid to levels adequate enough to achieve the Millennium Development Goals. The meetings of the G-20 have focused on the IMF and to a lesser degree the Bank as tools to stave off financial collapses. What is most unfortunate is not that the G-20 is focused on a crisis, but for the last eight years there has been insufficient dialogue about global poverty.

Q. Will things be any different under the Obama Administration?

A. In fact, I believe they will. President Obama has said he would increase U.S. development assistance to $50 billion by 2012. While this would not bring U.S. aid to 0.7%, it would double it from levels provided by Bush. As importantly, President Obama has laid out a strategic agenda that moves well beyond his predecessor. Obama said he would seek new initiatives to increase primary education rates, expand health initiatives on HIV/AIDS, malaria and tuberculosis, expand debt relief for the poorest countries, and move forcefully to address climate change and global trade impasses. No doubt the current domestic and global financial downturn will consume the Obama Administration’s time, attention and resources in the near-term, but in the medium-term I am quite hopeful that it will move to implement this agenda.

Q – In their April meeting in London, the G-20 announced it would provide $1.1 trillion in new funding to the Bretton Woods institutions to help poor countries during the current global economic crisis. Of that amount, about $100 billion would be directed to the World Bank and other regional multilateral lending banks. The G-20 also said it would provide capital for a vulnerability fund that Bank president Robert Zoellick wanted for targeted assistance to the poorest countries during the downturn. Doesn’t this suggest that the Bank is still a trusted mechanism for aiding the poor?

A – The global economic crisis is replacing the post-9/11 period as the centerpiece of the development paradigm. As a result, the Bank and the IMF have returned to a position of importance. I believe the Bank plays a vital role in reducing poverty and have said so a number of times in The World Bank Unveiled. The G-20 actions suggests from their perspective the Bank remains a relevant player on the development scene as well. Its willingness to increase the Bank’s funds, however, is not the same as suggesting they are convinced the institution is as effective in reducing poverty as it should be. The G-20 pledge to infuse the Bank with new capital did not exorcise the underlying issues plaguing the institution with its various constituencies. Despite British Prime Minister Gordon Brown’s insistence the meeting marked the beginning of a “new world order,” there is no consensus that the Washington Consensus is dead. Borrowers remain hesitant to do business with the Bank because of its appetite to impose conditions with its loans. Donors remain unclear whether the Bank’s lending assistance is effective. Both groups plus civil society observers continue to be concerned about the Bank’s transparency and accountability. With all these problems working in tandem, it remains to be seen whether the Bank will be any more effective using the vulnerability funds and future aid to help the developing world than it had been before the global economic downturn.

Q – In the last few years, there have been a number of development NGOs and think tanks that have been advocating for Bank reforms. Now, the Bank has announced it has formed a committee to study the issue. In addition, the Bank said it will also be updating its information disclosure policies. Doesn’t this mean the Bank has heard their views and is actively addressing these issues and shouldn’t this reduce the level of concern for the institution’s critics?

A – I’m not sure anyone would doubt these are positive developments. In addition to the NGOs and think tanks, the G-20 has formally called upon the Bank (and the IMF) to implement reforms. However, it is a leap to suggest that the Bank is truly interested in reforming. For years, the Bank has resisted calls to increase the public’s access to key documents, particularly those related to deliberations by its board of directors. To the extent that access will increase is good, but full transparency seems unlikely. With regards to reforming its governance, the Bank sensed the wave that was about to overwhelm it when the G-20 first convened in November 2008. So it took a preemptive measure. The Bank acknowledged it could no longer avoid calls to “modernize” its governance and subsequently launched a commission to study the issue. But its’ reluctant to proactively implement reforms or increase access to board and project documents is undeniable.

It’s also critical to understand the reforms being studied. In the last few years, external observers have focused attention on three possible reforms for the Bank: Changing the board’s representation, giving emerging and developing country members a greater voice and vote power in Bank operational decisions and changing the process for selecting its president. All have merit. These reforms will make the Bank’s decision making more representative of its membership. Nevertheless, my personal sense is there are other reforms that have greater potential for improving the institution’s effectiveness and accountability because they will directly impact its internal functionality. Creating an evaluation process that is independent of the Bank and more focused on project sustainability will dilute the approval culture and increase managerial accountability. Reforming the Conflict Resolution System will improve staff morale and also increase managerial accountability. Revising the institution’s process for selecting managers will improve its effectiveness and reduce its culture of fiefdoms. Implementation of these reforms in my view will have the greatest impact on the Bank’s ability to reduce poverty.