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Last Updated: Thursday, 14 September, 2000, 19:04 GMT 20:04 UK
Plutocrat for the poor
James Wolfensohn, World Bank President

James Wolfensohn is an the investment banker turned spokesman for the world's poor.

He has managed to retain the confidence of the governments that fund the World Bank, the lender to the world's poor, while reaching out to the pressure groups who have been critical of its bureaucracy.

He has also managed to negotiate the treacherous waters of the world financial crisis, while helping launch the debt initiative to help the world's poorest countries.

And now he is playing a central role in the reconstruction of Iraq, after navigating a difficult path between the conflicting desires of the Bank's major shareholders, the United States, the UK, France, and Germany.

Difficult time

In November 1999 Mr Wolfensohn became only the second head since Robert MacNamara in the 1960s to be re-appointed for a second term.

In contrast, his counterpart at the World Bank's sister organisation, the IMF, Horst Koehler, was only appointed after long delay caused by disagreements between Europe and the United States.

However, Mr Wolfensohn found himself the target of anti-globalisation protesters in Washington, while on the other side of the political spectrum his critics in the US Congress want to scale back the World Bank's ambitions.

Nevertheless, he has proceeded with a radical new strategy for tackling world poverty, putting empowering the poor at the centre of the World Bank's concerns for the first time.

Life spans three continents

Mr Wolfensohn was born in Australia, but moved to London to work in merchant banking and then spent much of his working life on Wall Street, where he rose to become chairman of leading trading firm Salomon Brothers (now part of Citigroup).

In 1981 he left to set up his own 'boutique' investment banking firm in partnership with the former head of the US Federal Reserve, Paul Volker.

But Mr Wolfensohn was drawn to the developing world and its problems.

He did not give up his affluent life style, however - nor his interest in music, as honorary chairman of New York's Carnegie Hall.

He still has four houses, including one in the ski resort of Jackson Hole, Wyoming, where he spent last Christmas developing his strategy to alleviate world poverty.

He is determined to return the World Bank to its original purpose - the relief of world poverty - after several crisis years when it was forced to spend much of its time and resources dealing with the global financial crisis.

His firm vision means that the World Bank looks less vulnerable to pressure for reform from the US Congress, its biggest contributor, than the IMF - despite growing criticism from right-wing Republicans

Debt relief for the poor

Mr Wolfensohn's first big project for the World Bank after joining in 1995 was perhaps his most important.

He was responsible for drawing up the initial plans for giving debt relief to poor countries, drawing up a list of "Highly Indebted Poor Countries" (HIPCs) and working out the criteria for giving aid in conjunction with the International Monetary Fund (IMF).

The plan was initially criticised by many NGOs for being too little, too late.

But Mr Wolfensohn persisted, and won support from governments, notably in the United Kingdom, to extend the debt initiative to more countries and reduce the length of time needed before countries began eligible.

He worked with, not against, the coalition of pressure groups and churches known as Jubilee 2000, which won high-profile endorsements from figures in the media and from the Pope.

The campaign was characteristic of Mr Wolfensohn's new approach - working more closely with voluntary organisations, often by-passing governments, in order to achieve pragmatic objectives.

The Asian crisis

Mr Wolfensohn took a high profile role when disruption in the currency markets threatened to derail the Asian miracle.

He travelled ceaselessly around the world to the crisis-torn countries, promising assistance and assembling the coalitions of private sector lenders and governments to revive countries like South Korea and Thailand.

Mr Wolfensohn's banking contacts were never more important - but he was also not afraid to pull the plug on unpopular governments, as when the IMF and World Bank withheld aid to Indonesia over East Timor.

Russia was a more difficult case. Like Mr Camdessus, the World Bank has continued to lend to Russia to help rebuild its infrastructure, despite the political turmoil and the war in Chechnya.

And it played a key role in organising help to Kosovo Albanian refugees, and in the rebuilding of Kosovo.

Lending policies

Mr Wolfensohn has sought to apply the lessons of the crisis to a fundamental redesign of the bank's Third World lending policies.

He wants to make the World Bank a "knowledge bank", opening its resources to all and encouraging Third World internet use - a pet project for which he has set aside $500m.

But more than that, he sees the internet as one way to bypass the often corrupt and inefficient government sector in many developing countries, to allow the poor to design their own development programmes.

And the Bank is increasingly ready to deny assistance to governments where it believes there is a lack of good governance - moving cautiously to resume lending to Nigeria, for example.

Uphill task

The World Bank believes it is facing an uphill task, as the number of the world's poor has stayed the same despite world economic growth.

In its report, "Voices of the Poor," based on conversations with thousands of poor people across five continents, Mr Wolfensohn wrote:

"What poor people are sharing with us is sobering... we are prepared to hold ourselves accountable to make an effort to respond to those legacies."

The World Bank has traditionally operated at a great distance from the poor people it has tried to help.

The World Bank is under unprecedented attack, with governments questioning the role of official lending as never before, while pressure groups question the World Bank's analysis and prescriptions.

If Mr Wolfensohn can satisfy all these audiences, while reducing the distance between the Bank and the poor it serves, he will be making a very great contribution indeed.

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