A high-level commission on the World Bank today called for sweeping changes to reflect the world’s new economic order and said European countries are overrepresented in the decision-making executive board.
In a long-awaited report, the 11-member commission, led by former Mexican president Ernesto Zedillo, said the Bank’s effectiveness was undermined by a hierarchy dominated by the United States and Europe “offering many member countries too little voice and too few opportunities for participation.”
“We see the World Bank Group maintaining its central role in the global financial architecture, but, like you, believe it must continuously adjust to changing global realities,” Zedillo said in a letter to World Bank President Robert Zoellick.
“The world needs a World Bank which reflects the economic realities of the 21st century and which is financially sound, capable of supporting its clients through the recovery and into the post-crisis era. Action on voice reform and on capital should not be delayed,” he added.
The commission included among others Zhou Xiaochuan, governor of the People’s Bank of China; John Kufuor, former Ghanaian president; Arminio Fraga, former Brazilian central bank chief; Montek Singh Ahluwalia, deputy chairman of India’s planning commission; Rima Khalaf, ex-deputy prime minister of Jordan; John Rogers, secretary of Goldman Sachs board; Sadako Ogata, president of Japan’s international cooperation agency and Shriti Vadera, under-secretary of state for Britain’s Department for International Development.
The panel said European countries were “considerably over-represented”, occupying 8 or 9 chairs in the World Bank’s 25-member decision-making board a “historical legacy that no longer seems appropriate for a global institution and a transformed global economy.”
The commission recommended the board be reduced to 20 chairs.
It recommended that the Bank be made more effective by involving ministers more directly in setting strategy and introducing a council of representatives to sharpen oversight of development projects.
While it acknowledged current proposals to increase the voting power of developing countries, the commission emphasized that the political muscle of heads of state was needed to drive this process.
The Group of 20 major developed and developing nations proposed last month at a summit in Pittsburgh a 3 % point shift in voting power from rich nations to poorer ones.
The commission also said the selection of the head of the World Bank should be based on qualifications and not on the current system in which the president of the World Bank is always an American and a European heads its sister institution, the International Monetary Fund.
The commission said growing challenges in the developing world would require the Bank to act with more speed and flexibility, while the financial demands “will likely be unprecedented.”
It urged member countries to ensure the World Bank has adequate resources to carry out its work, noting that if given a greater say in the institution, developing countries would be willing to contribute more resources to the Bank.
In his response to the commission’s report, Zoellick said the Bank had embarked on a process of reform to improve its effectiveness and accountability, and discussions were underway on voting power changes.
He said while member countries recognized the need for voting power changes in the Bank, the current composition of the board at 25 members “is well suited for supporting the development mandate of the World Bank Group”.
Pic: Logo of The World Bank