World Bank presidents or investment managers in general are seldom men or women of the Renaissance. James Wolfensohn, who died at the age of 86, was a glittering exception.
Not only did he transform the Washington-based global aid organization, but he found time for learning the cello, but also reinvigorated the finances and artistic breadth of two major US concert halls, Carnegie Hall in New York and the Kennedy Center for the Performing Arts in Washington on Jacqueline du Pré’s knee and perform with the likes of Yo-Yo Ma and Bono.
There is no question that he shook the World Bank. As the only third president of two years – from 1995 to 2005 – and the first after Robert McNamara, president from 1968 to 1981, he was given the time to do so. His legacy is on a very different level than that of the bankers and politicians who served as presidents between the two men.
Wolfensohn was enthusiastic about the job. Armed with impressive recommendations from the financial and political world, he campaigned for the then US President Bill Clinton. The fact that, after traveling extensively in developing countries, like Mr Clinton, he was passionate about global inequalities, helped a lot. So was the fact that the bank had retired since McNamara.
Wolfensohn came to the World Bank at a difficult time. The protesters had interrupted their annual meeting in 1994 and argued that the bank should be abolished. The bank was hit by controversy over lending for large dams. An internal review recently showed that the results of more than a third of the projects were “unsatisfactory”.
At the same time, the bank struggled with the transformation of the former communist countries of Central and Eastern Europe and the former Soviet Union. Perhaps most important, however, was the crisis in the poorest countries, which repay more in debt service than in new loans or relief supplies.
Wolfensohn met these challenges and more with characteristic energy and changed the bank and above all the worldview.
Wolfensohn Golf with Bill Clinton in Jackson Hole, Wyoming, 1996 © Mike Theiler / Reuters
James David Wolfensohn was kind of born into finance on December 1, 1933 in Sydney. It is named after the banker James de Rothschild, for whom his father had worked in London before he emigrated to Australia. But the family struggled financially, which had a lasting impact on him. Even so, he fenced in for Australia at the 1956 Olympics.
He earned an MBA from Harvard Business School three years later, which put him on his way despite admitting to being an indifferent student. He had already graduated from the University of Sydney with a law degree.
Back in Australia, he worked as a lawyer for various financial institutions before moving to London and New York for J Henry Schroder and then joining Salomon Brothers. From this place his reputation grew, not least because of his role in orchestrating the terms of the US bailout for Chrysler, the near-bankrupt auto company. His co-architect was none other than Paul Volcker, who became chairman of the US Federal Reserve in 1979.
He became a naturalized US citizen in 1980, in part, it was said, because he was already looking at the World Bank, which has traditionally always been headed by an American. But he would have to wait 15 years. He filled his time running his own successful boutique investment firm in New York with blue chip clients like Mercedes-Benz and Ralph Lauren.
One of Wolfensohn’s most important initiatives at the bank, launched in 1996 with Michel Camdessus, managing director of the IMF, was the debt initiative for highly indebted poor countries. This created a framework for debt relief for the world’s poorest and most indebted countries by all creditors, including multilateral creditors.
A more controversial decision by Wolfensohn was to fight corruption in countries receiving bank support. In a speech in 1999, he recalled that “when I got to the bank, I was told you weren’t talking about the C word because it’s a political issue and the bank is owned by governments and yours Charter does not allow you to enter the political field ”. Despite intense internal resistance, he prevailed and used his sharp tongue when necessary. Today the bank incorporates corruption clauses into all of its agreements.
Receipt of the Russian Order of Friendship from Vladimir Putin in 2004 © Alexander Natrsukin / AFP / Getty
In 1997 Wolfensohn proposed a “strategic pact” between the bank and its shareholders: if they “invested USD 250 million in additional resources over a period of three years”, the bank would “deliver a fundamentally transformed institution – faster, less bureaucratic , You are able to react continuously to changing customer requirements and global development opportunities and to fulfill your main task – the fight against poverty – more effectively and efficiently. ”
One element of that transformation was decentralizing banking operations – bringing employees on-site rather than prescribing advice from the ivory tower in Washington. He wanted more consultation with local authorities and citizen groups, especially when bank-funded projects had the potential to have serious environmental impacts. That was also the case with many employees.
Based on his experience in the private sector, Wolfensohn also believed that countries in need of assistance should not be discouraged from taking advantage of international financial markets. Official foreign aid is limited and not always in the best interests of the recipient country. Better offers could be obtained in the private sector.
In 1999 he proposed the comprehensive development framework, which required a long-term and holistic vision of development, the “ownership” of each country for its development strategy and measurement based on the results. It should form the basis of the Bank’s efforts to contribute to the achievement of the Millennium Development Goals agreed by members of the United Nations in September 2000.
His wife, former Elaine Botwinick, whom he met at Harvard, died in August. Their three children and seven grandchildren survive him.