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Zoellick Faces New Challenge: Restoring Confidence at World Bank

AP
Thursday, 31 May 2007 | 3:40 AM ET

Robert Zoellick has dealt with the Cold War, the killing in Darfur, China's rise as an economic colossus. His next challenge: to restore confidence at the badly shaken World Bank.

"We need to put yesterday's discord behind us and to focus on the future together," Zoellick declared after President George W. Bush chose him Wednesday to run the poverty-fighting institution and heal wounds left behind by outgoing president Paul Wolfowitz.

"I believe that the World Bank's best days are still to come," said Zoellick, now a vice chairman at Wall Street giant Goldman Sachs.

If approved by the World Bank's 24-member board, Zoellick, 53, will also bring to the institution years of experience in the foreign and economic policy arenas under three Republican presidents, starting with Ronald Reagan.

World Trade Organization Director-General Pascal Lamy praised his "ability as a strategist, as one who can broker compromise and as one who has profound interests in the concerns of developing countries." As the EU's trade chief, Lamy went head-to-head with Zoellick when he was U.S. trade representative over steel, aid to plane makers Boeing and Airbus and hormone-treated beef.

"We often disagreed, but that was part of our business," said Luiz Felipe de Seixas Correa, the Brazilian ambassador who led his country's successful WTO challenge of the U.S. cotton subsidy program. "I can say he's superbly qualified for the World Bank job."

In a brief statement, the bank's board acknowledged Zoellick's nomination and said it would meet with him. At the same time, it left the impression that it would not blindly ratify Bush's choice. Other nominations from the bank's executive directors will be accepted until June 15, the board said.

In some ways, the selection of Zoellick appeared far less controversial than when Bush chose Wolfowitz, then the Pentagon's No. 2 official. His role in the Iraq war upset Europeans and others.

Wolfowitz's Reign

Wolfowitz had a stormy two-year tenure at the bank, culminating in his resignation -- effective June 30. He was essentially forced to leave after a special bank panel found he broke bank rules when he arranged a hefty compensation package in 2005 for his girlfriend, Shaha Riza, a bank employee. The controversy caused a staff revolt and strained U.S. relations with Europeans.

Zoellick will need to regain trust, rebuild credibility and mend frayed relations inside the institution as well as with its member countries worldwide. He'll also need to persuade countries to contribute nearly $30 billion (22 billion euros) over the next few years to fund a centerpiece bank program that provides interest-free loans to the world's poorest countries.

He told a small group of reporters later Wednesday, "This institution has been through a traumatic period. There is a lot of anxiety, some frustration and anger that's been built up."

Zoellick said he planned to meet soon with the bank's contributors, borrowers and others, to listen to their perspectives on how the institution can best fulfill its purpose. Zoellick also anticipates working closely with the bank's board and staff to develop a consensus for the future direction of the bank, which has been coping with many financial and economic changes since its creation in 1945.

"On the one hand, one has to calm the waters but one also has to start to navigate a course for the future," Zoellick said. He sported cufflinks of tiny dark blue globes on his crisp white shirt.

In tapping Zoellick, Bush picked a veteran of politics both inside Washington and on the international stage. He is known for pulling facts and figures off the top of his head. He also has a reputation for being a demanding boss.

Zoellick's Achievements

Zoellick announced last June that he was leaving his post as deputy secretary of state to go to Goldman Sachs and work to develop investment markets around the world. He leads the investment bank's board of international advisers, a 24-member group of former government officials who help develop overseas strategies. As the State Department's No. 2 diplomat, Zoellick brokered peace talks in Darfur and dealt with many thorny issues involving the complex relationship between the U.S. and China.

When he was Bush's top trade envoy, Zoellick played a key role in negotiations to bring China into the World Trade Organization. He forged free trade deals between the U.S. and other countries, including Singapore, Chile, Australia and Morocco. In addition, he helped launch global trade talks in Doha, Qatar.

Under Bush's father's administration, Zoellick worked closely with then-Secretary of State James Baker on policies pertaining to the end of the Cold War. He also had worked on negotiations on German unification.

Those skills will come in handy as Zoellick manages an institution with 10,000 employees worldwide and 185 member countries.

Jeffrey Hooke, a former World Bank employee who has written a book about the institution, said Zoellick "will do a good job smoothing the waters post-Wolfowitz. He is a safe choice."

Internationally, the reaction to Bush's choice was generally positive, although some public health and environmental groups expressed concern about his ability to carry out the institution's mission.

German Development Minister Heidemarie Wieczorek-Zeul -- who was highly critical of Wolfowitz -- said, "Robert Zoellick is a good candidate who brings a strong amount of international experience with him."

French Foreign Minister Bernard Kouchner said Zoellick is "certainly" the right man for the job."

But Charad D. Wadhva, professor emeritus at the Center for Policy Research, a New Delhi think tank, had some doubts.

"Professionally, he's competent but I'm not so sure about his background in developing economies or in helping developing countries," Wadhva said. "He may have to learn a lot to understand the needs of the developing countries."

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