Speculation heats up over who will head World Bank

With US Trade Representative Robert Zoellick out of the running to succeed James Wolfensohn as World Bank head, speculation heated up over who will lead one of the globe's top lenders.

Officials said today Zoellick was set to be named deputy to incoming Secretary of State Condoleezza Rice later this month, ending months of rumours in Washington that he was set for the World Bank post.

The US has traditionally filled the World Bank's top job as its biggest and most influential shareholder, while Europeans choose the head of the International Monetary Fund.

Wolfensohn, a Clinton appointee, failed to win support in the current administration for a third term and announced this week he will leave at the end of his tenure on May 31.

The Bush Treasury has started discussions with other World Bank shareholder governments on a replacement for Wolfensohn. European sources said no single name has yet emerged.

John Taylor, the US Treasury's undersecretary for international affairs appeared to move ahead as a top contender for the job, partly because his current duties equip him with credentials for the job.

The World Bank head is in a position to help decide where to allocate billions of dollars in aid annually and, importantly from the Bush administration's view, to bring more discipline and efficiency to the process.

Taylor has served as the Bush Treasury's point man on international economic issues since June 1, 2001, and overseen the activities of the multilateral development banks including the World Bank, IMF and African Development Bank.

He has made nearly 110 trips abroad, many of them to the world's poorest regions, and is the senior Treasury official for planning and implementation of economic and social reforms.

Globally, he is respected as an expert on international monetary and financial issues and has produced research on monetary, fiscal and world economic policy.

Other possibilities for the World Bank post are Randall Tobias, the administration's global Aids coordinator and Carla Hills, the former US trade representative.

Allan Meltzer, a Carnegie Mellon economics professor who headed a government panel that recommended an overhaul of the IMF and World Bank four years ago, said he was not surprised that Zoellick was going to the State Department.

"There is a great desire in the administration to see improvements in the World Bank in outcomes as opposed to lending, and I don't think Zoellick was seen as the person to do that," said Meltzer.

Meltzer said a change at the helm of the World Bank should be accompanied by reforms to revive the credibility of the bank and give focus to its role in the world's poorest countries.

"The bank should be asking what is it that it does well and what it does badly, and what should be curtailed and expanded," said Meltzer, who has criticized the bank for lending to countries like China, which can raise large sums of money on global capital markets.

"Why are we lending to them when there is so much to do in the very poor countries in the world where the bank should be concentrating?" he asked.

Meltzer said the next World Bank president would have to be "tough but humane" and "should not confuse the idea of giving money with actually accomplishing something."

- REUTERS