Friday, March 2, 2012

Olive branch to Yunus “may not do the trick”

Bangladesh Prime Minister Sheikh Hasina had earlier thrown a challenge to the World Bank to come out with concrete proof that her ministers or officials were involved in any form of corruption in the selection of contractors/consultants for the Padma Bridge project. The World Bank is presumably still looking into the veracity of allegations to that effect. Now the Finance Minister, Honourable AMA Muhith has gone one step further by accusing the World Bank itself of being privy to corruption, suggesting that the latter had recommended a firm reputed to be corrupt for enlistment for work in the Padma Bridge project. One wonders when and how such war of words between this government and the World Bank will be resolved, ending the impasse with the external Development Partners of Bangladesh (i.e. the donor community).
Honourable AMA Muhith has been characterised by sections of the media and the intelligentsia as an “empty vessel” whose much-sounding faux pas from time to time has been causing recurrent share market debacle, dollar crisis and other financial woes for the nation-state. The habit is contagious, and now the Prime Minister herself, being under great stress from failures in governance, law and order problems, economic troubles, factional feuds within and opposition challenges without in the polity, is found by many to be increasingly given to faux pas. One such faux pas or an overture perceived by many to be flippant, was the Prime Minister’s off-the-cuff remark to a visiting parliamentary delegation of the European Union suggesting that Europe should propose the name of Dr. Muhammad Yunus to be appointed as the head of the World Bank. Many in Bangladesh wondered whether the Prime Minister was at all sincere in making that overture, since she has been publicly asserting in her party meetings that Dr. Yunus was in reality a “blood-sucker” from all positions in the Grameen Bank despite overwhelming support of the bank’s shareholders for a lifelong role of the founder of the Grameen Bank in that institution. The Holiday in its last issue dubbed the proposal coming from Sheikh Hasina as the “decade’s biggest joke.” And Mahfuz Anam, editor of The Daily Star, questioned: “Is it a change of heart or mockery?” A news-commentary in the Sunday Guardian of U.K. questioned “Olive branch or poison pill?” The commentary read (abridged): “What a fascinating turn of events. With the announcement that Bob Zoellick is retiring as head of the World Bank, there has been a lot of talk that the new head need not necessarily be an American, as has been the custom since the bank’s inception.

Now the Bangladeshi PM Sheikh Hasina has mooted the possibility of her mortal enemy Dr Muhammad Yunus being the new head of the World Bank, and has suggested to the EU that if they don’t want an American in the top spot, they can nominate Bangladesh’s Nobel laureate instead.
The PM’s full frontal assault on Dr Yunus has diminished both the PM and the country, and has achieved nothing except to contribute to the unpopularity of her government. Hasina may now be looking for a way to signal that the madness is over and that she is ready to make peace.
However, even though the PM appears to have forgotten herself sufficiently to toss in a few back-handed compliments to Dr Yunus, she has by no means disavowed her earlier statement that he is guilty of “sucking the blood of the poor,” nor is there any sign of contrition for her harassment of him.
And since one person whose name has been raised as a serious candidate for the post is US Secretary of State Hillary Clinton, who is known to be a close personal friend of Dr Yunus and who has been active in supporting him against the PM, the PM’s tossing of Yunus’ hat into the ring seems more like mischief making than an olive branch.
(Indeed) if the PM wants a truce, then it’s a day late and a dollar short. She needs to do much more than suggest his name for the headship of the Bank, which is a symbolic gesture at best.”
The head of the visiting parliamentary delegation of the European Union explained to the media that the European parliamentarians were “surprised” by the Prime Minister’s proposal. They had replied that the European Union has no vote in the World Bank, but the member countries of the EU have votes. The delegation would place the Bangladesh PM’s proposal to the governments of the member-states of EU for consideration. Likewise the US ambassador in Bangladesh, when questioned about the proposal by journalists, said that if Dr. Muhammad Yunus is interested to take charge of the Presidency of the World Bank, the USA will certainly consider his candidature. All that is presumably diplomatic pep-talk. 
There are, however, serious takers of the proposal also around. One of them, a former US consultant to the Government of Bangladesh and now a prolific commentator on the political economy of Bangladesh, Forrest Cookson, found the proposal to be an “inspired decision” of the Bangladesh Prime Minister, notwithstanding “a remarkable amount of negative comments. He observed in “The Independent” of Dhaka (abridged): 
“The World Bank has had eleven presidents since its founding; by tradition the president has always been an American citizen.  Of these eleven, six were bankers; three had served in high positions in the United States Department of Defence; one was a publisher and one was a Senator and Congressman. 
In 65 years the Bank has followed a number of strategies:  First, emphasis was on infrastructure projects that would produce the earnings to insure repayment of the loans.   Dams, power plants, ports and roads fed the portfolio of the Bank.  The Bank had a lot of success with this approach. 
Next came the McNamara regime which I characterize as having two themes—(1) transfer of resources from the rich countries to the poor countries, (and) (2) Direct resources to villages and try minimize government bureaucracies from getting in the way.  These ideas came from the better experience of the Vietnam War.
Following McNamara the Bank’s strategy shifted to supporting good macro-economic policies under so-called structural adjustment loans.
Gradually the Bank focused more and more on social issues (health and education) and governance, particularly corruption.
The Bank missed the importance of the export-led growth strategy that resulted in several Asian countries lifting themselves out of poverty.   (Korea, Taiwan, China, Thailand and Malaysia.) However, the Bank responded to the great changes in the financial world—the end of the iron curtain and emergence of Eastern European states with significant success. 
The World Bank (now) needs a leader who will take up the drive to reduce poverty. Yunus is without doubt the best candidate for the job through accomplishment, education and experience.  The campaign for his election must begin now.”
Another former World Bank appointee, now with the Policy Research Institute of Bangladesh, Mr. Sadiq Ahmed wrote in The Daily Star of Dhaka essentially as follows:
“The proposal by the honourable Prime Minister (PM) of Bangladesh to nominate Professor Muhammad Yunus to the presidency of the World Bank has met with some scepticism at home owing to the past unhappy developments. Instead of questioning the PM’s motivation, as citizens we ought to welcome the idea. 
The experience of uneven performance by previous World Bank presidents illustrates the need for a change in the selection process. This was indeed recognised during the replacement of Wolfowitz. The board announced a selection process on merit but the outcome still was the selection of the US nominee.
This result is almost guaranteed by the selection process where votes by the executive directors are weighted by country share holdings. The US has the largest percent of votes, presently 15.8 percent, followed by Japan (9.4 percent), Germany (4.9 percent), France (4.4 percent) and UK (4.4 percent). Together this Group of 5 (G5) holds a whopping 39 percent of the voting rights. Along with the convention that a European will lead the IMF, the sister organisation of the Bretton Woods institutions, internal agreements between the US and European member countries along with support from Japan, Australia and Canada almost always guarantee that the US nominee irrespective of merit will get selected.
Without a change in the voting system the idea of a competitive selection is futile, especially if the US is really keen to get its candidate selected. 
(Assuming US agrees to select someone on merit), the person leading the World Bank must be visionary. Professor Yunus has an impeccable track record of innovative ideas and forward thinking.
(Among other things), the World Bank leader must be able to mobilise external support for the cause of the institution. The work of Professor Yunus has been hailed globally. He has inspired both world leaders as well business leaders to mobilise around his ideas and leadership in providing substantial amount of financial as well as personal support. It is no wonder that even though coming from a poor country like Bangladesh he has been welcomed by the top leaders of the world and he can count people like Bill and Hillary Clinton as amongst his best friends. This ability to reach out to external constituencies will serve the needs of the World Bank much better than that of any other potential candidate I can think of.”
However, it is The Economist of London which perhaps has conciliated both angles of vision over the issue in its report under the Banyan column dated February 27. The report says:
“Few in Bangladesh doubt that Mr Yunus must be a serious contender for the job, which would bring him to Washington, DC. But many wonder why the prime minister, after working so hard to discredit Mr Yunus and having him fired, is now pitching for him to get a new one.
Sheikh Hasina is a lady not known for U-turning. ....
The treatment of Mr Yunus has long annoyed Western governments, particularly America, where the microfinance pioneer has lots of fans, including the secretary of state, Hillary Clinton. American officials had repeatedly warned that not being nice to Mr Yunus might affect bilateral ties. They are sure to have pondered what to do with a government which, as one official put it, ‘insists on spitting in the face of those who are trying to help it’.
Much to the annoyance of donors—the World Bank, ADB and the Japanese—it took the Bangladeshi government three months to get rid of a crooked-looking former communications minister, Syed Abul Hossain. The World Bank had identified him as being unable to keep his hands off the $3 billion nest egg that had was set aside on behalf of the Padma Bridge. Bangladesh’s pliable anti-corruption commission has since absolved Mr Hossain of all graft allegations. But a $1 billion loan by the IMF has not been disbursed, ostensibly because progress on reform has been slow.
The economy is wobbling, the taka has been among Asia’s worst-performing currencies and reserves are just sufficient to finance three months of imports. Money is needed to patch the fiscal hole burned by an unsustainable energy policy: power plants that run on imported fuel oil. The Bangladeshi government claims that China and investors from South-East Asia are keen to stump up the money for the bridge. ....
Most likely, Sheikh Hasina had to sort out relations with other donor countries. Being nice to Mr Yunus—in many ways the symbol of an increasingly hostile relationship with more liberal states—may not do the trick alone. But it is a start.”
BY :  Sadeq Khan.