Syria is trapped on a crumbling precipice, and however it might fall will entail significant risks for the United States and for the Syrian people.

The brutal regime of Bashar al-Asad is employing its loyal military forces and sectarian thugs to crush the opposition and reassert its tyranny. Even if Bashar fails, Syria may not be out of the woods: an increasingly likely alternative to the current regime is a bloody civil war similar to what we saw in Lebanon, Bosnia, Congo, and most recently in Iraq. The horrors of such a war might even exceed the brutal reassertion of Asad’s control, and would cause spillover into Syria’s neighbors—Turkey, Iraq, Jordan, Lebanon, and Israel—that could be disastrous for them and for American interests in the Middle East.

But the unrest in Syria, which is now entering its second year, also offers some important opportunities, ones that would come from the fall of the regime of Bashar al-Asad, whose family has ruled the country with an iron grip for over forty years. Syria is Iran’s oldest and most important ally in the Arab world, and the Iranian regime has doubled down on Asad, providing him with financial aid and military support to shore up his regime. Asad’s departure would deal a significant blow to Tehran, further isolating it at a time when it has few friends in the region or the world. In addition, Damascus is steadfast in its hostility toward Israel, and Asad’s regime is also a longtime supporter of terrorist groups like Hizballah and Hamas, and has at times aided al-Qa’ida terrorists and former regime elements in Iraq. The regime’s collapse, therefore, could have significant benefits for the United States and its allies in the region.

Actually ousting Asad, however, will not be easy. Although the Obama administration has for months called for Asad to go, every policy option to remove him is flawed, and some could even make the situation worse—seemingly a recipe for inaction. Doing nothing, however, means standing by while Asad murders his own people, and Syria plunges into civil war and risks becoming a failed state. Already the violence is staggering: as of March 2012, at least 8,000 Syrians have died and thousands more have been arrested and tortured in trying to topple the regime. At the same time, Syria is fragmenting. The Syrian opposition remains divided, and the Free Syrian Army is more a brand than a meaningful, unified force. Al- Qa’ida is urging fighters to join the fray in Syria, and sectarian killings and atrocities are growing. Should the violence continue to intensify, Syria’s neighbors may increase their meddling, and instability could spread, further weakening already-fragile neighbors like Iraq and Lebanon.

So to protect U.S. interests, Asad cannot triumph. But a failed Syria, one wracked by civil war, would be just as bad. Thus, U.S. policy must walk this tightrope, trying to remove Asad, but doing so in a way that keeps Syria an intact state capable of policing its borders and ensuring order at home. At the end of the day, however, removing Asad may not be doable at a price the United States is willing to pay. If so, the U.S. government may be forced to choose between living with a brutal but weakened Asad or getting rid of Asad regardless of the consequences.

This memo lays out six options for the United States to consider to achieve Asad’s overthrow, should it choose to do so:

1. Removing the regime via diplomacy;
2. Coercing the regime via sanctions and diplomatic isolation;
3. Arming the Syrian opposition to overthrow the regime;
4. Engaging in a Libya-like air campaign to help an opposition army gain victory;
5. Invading Syria with U.S.-led forces and toppling the regime directly; and
6. Participating in a multilateral, NATO-led effort to oust Asad and rebuild Syria.

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The crisis in Syria continues with no end in sight, and in the Saban Center's latest Middle East Memo, Breaking the Stalemate: The Military Dynamics of the Syrian Civil War and Options for Limited U.S. Intervention, Saban Center Senior Fellow Kenneth Pollack argues that until there is a breakthrough on the battlefield, there will be no breakthroughs at the negotiating table.

In his paper, Pollack lays out the military advantages and disadvantages of both the opposition and the regime's forces, and looks at how different opportunities for U.S. intervention can affect those critical dynamics. This analysis provides a much-needed counterpoint to the debate over the possible cost of U.S. options in Syria with an analysis of their likely impact on the conflict.

Highlights include:

• The strengths and weaknesses of the opposition, including: greater numbers, a history of deprivation of political power, the aid of Islamist militias affiliated with the Muslim Brotherhood and Salafist groups, and support from Arab and Western countries.
   
• The strengths and weaknesses of the regime, including: motivation to defend against a determined majority, a geographic advantage, the remnants of the Syrian armed forces, help of foreign contingents like Hizballah, and the support of foreign countries like Iran and reportedly Russia and China.
   
• Options for U.S. interventions to break the stalemate, including:

  • Training and equipping the opposition.
  • Stopping the resupply of the regime in order to diminish its ability to generate firepower.
  • Attacking regime infrastructure targets, such as military bases, power-generation plants and transportation choke points like bridges.
  • Establishing and maintaining a no-fly zone.
  • Engaging in a tactical air campaign against regime ground forces.

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As the holiday season rolls around each year, it often carries a hefty price tag that can strain family budgets. In a survey of low-income taxpayers using volunteer tax preparation services, three-quarters of respondents listed December as a time of year when it’s hardest to make ends meet. But it’s not the only one. Low-income families go through a constant year-round balancing act of juggling bills, going without, asking family and friends for help, and taking on debt when they fall behind.

Many of these families benefit from the Earned Income Tax Credit, which supplements earnings for low-income workers. The EITC has proven to be one of the nation’s most effective anti-poverty programs, and for some families can represent up to 40 percent of their annual income. For the one in five American households that receive the EITC in their refunds, tax time gives them a chance to catch up financially as they start the New Year. But by summer, many recipients once again find themselves struggling paycheck to paycheck to shore up budget gaps, or scrambling to deal with unforeseen financial shocks, like a car breaking down or an unplanned medical expense.

Providing alternative payment options that deliver the credit outside of tax time would go a long way toward boosting economic stability year round for these families. In his new paper “Periodic payment of the Earned Income Tax Credit revisited,” Steve Holt explores the range of proposals that have emerged in recent years to provide more options for delivering the EITC during the year, and shares some lessons learned from early experiments to test those options.

Most notably, the Center for Economic Progress in Chicago recently completed a year-long pilot which offered 343 households the option of receiving half of their expected EITC in four payments in advance of tax time. The results of the pilot were overwhelmingly positive. Compared to EITC recipients in the control group, participants who received periodic payments missed fewer bills and racked up fewer late fees. They were less likely to resort to payday lenders or have to borrow money from family and friends. And they reported less food insecurity and decreased financial stress throughout the year. What’s more, after completing the pilot, 90 percent of the participants reported a preference for periodic payment over the standard lump sum.

More experimentation needs to be done to determine effective ways to replicate and expand on the advanced-payment pilot in Chicago. And future experimentation should also include pilots that test proposals for deferred savings mechanisms. These options, like CFED’s Rainy Day EITC proposal, would allow EITC filers to put a portion of their credit in a savings account and receive a bonus match as an incentive to save. Though structured differently than advanced payment options, the end goal of deferred savings proposals is the same: providing greater financial stability to low-income families outside of tax time.

A growing share of our economy’s jobs are in the low-wage industries and occupations in which many EITC-eligible taxpayers work (as illustrated by new national, state, and metro data from Brookings MetroTax model on characteristics of the EITC-eligible population). The EITC is an incredibly effective policy tool that helps bridge the gap between what the labor market provides and what it takes to support a family. But we can make the EITC work better for working families by offering alternative payment options that can help promote economic security year round.

INTRODUCTION

In August, 2010 the government of Kenya adopted a new constitution. This followed a referendum in which an overwhelming majority of Kenyans voted for change. The decisive impetus for reform came from the widespread violence and political crisis that followed the 2007 election. While claims of electoral fraud provided the immediate catalyst for violence, the deeper causes were to be found in the interaction of a highly centralized ‘winner-take-all’ political system with deep social disparities based in part on group identity (Hanson 2008).

Provisions for equity figure prominently in the new constitution. Backed by a bill of rights that opens the door to legal enforcement, citizenship rights have been strengthened in many areas,including access to basic services. ‘Equitable sharing’ has been introduced as a guiding principle for public spending. National and devolved governments are now constitutionally required to redress social disparities, target disadvantaged areas and provide affirmative action for marginalized groups.

Translating these provisions into tangible outcomes will not be straightforward. Equity is a principle that would be readily endorsed by most policymakers in Kenya and Kenya’s citizens have provided their own endorsement through the referendum. However, there is an ongoing debate over what the commitment to equity means in practice, as well as over the pace and direction of reform. Much of that debate has centered on the constitutional injunction requiring ‘equitable sharing’ in public spending.

On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared.

There are compelling grounds for a strengthened focus on equity in Kenya. In recent years, the country has maintained a respectable, if less than spectacular, record on economic growth. Social indicators are also on an upward trend. On most measures of human development, Kenya registers average outcomes considerably above those for sub-Saharan Africa as a region. Yet the national average masks extreme disparities—and the benefits of increased prosperity have been unequally shared. Some regions and social groups face levels of deprivation that rank alongside the worst in Africa. Moreover, the deep fault lines running through society are widely perceived as a source of injustice and potential political instability.

High levels of inequality in Kenya raise wider concerns. There has been a tendency in domestic debates to see ‘equitable sharing’ as a guiding principle for social justice, rather than as a condition for accelerated growth and enhanced economic efficiency. Yet international evidence strongly suggests that extreme inequality—especially in opportunities for education— is profoundly damaging for economic growth. It follows that redistributive public spending has the potential to support growth.

The current paper focuses on a group of 12 counties located in Kenya’s Arid and Semi-Arid Lands (ASALs). They are among the most disadvantaged in the country. Most are characterized by high levels of income poverty, chronic food insecurity and acute deprivation across a wide range of social indicators.

Nowhere is the deprivation starker than in education. The ASAL counties account for a disproportionately large share of Kenya’s out-of-school children, pointing to problems in access and school retention. Gender disparities in education are among the widest in the country. Learning outcomes for the small number of children who get through primary school are for the most part abysmal, even by the generally low national average standards.

Unequal public spending patterns have played no small part in creating the disparities that separate the ASAL counties from the rest of Kenya—and ‘equitable sharing’ could play a role in closing the gap. But what would a more equitable approach to public spending look like in practice?

This paper addresses that question. It looks in some detail at education for two reasons. First, good quality education is itself a powerful motor of enhanced equity. It has the potential to equip children and youth with the skills and competencies that they need to break out of cycles of poverty and to participate more fully in national prosperity. If Kenya is to embark on a more equitable pattern of development, there are strong grounds for prioritizing the creation of more equal opportunities in education. Second, the education sector illustrates many of the wider challenges and debates that Kenya’s policymakers will have to address as they seek to translate constitutional provisions into public spending strategies. In particular, it highlights the importance of weighting for indicators that reflect need in designing formulae for budget allocations.

Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity.

The paper is organized as follows. Part 1 provides an overview of the approach to equity enshrined in the constitution. While the spirit of the constitution is unequivocal, the letter is open to a vast array of interpretations. We briefly explore the implications of a range of approaches. Our broad conclusion is that, while Kenya clearly needs to avoid public spending reforms that jeopardize service delivery in wealthier counties, redistributive measures are justified on the grounds of efficiency and equity. Although this paper focuses principally on basic services, we caution against approaches that treat equity as a matter of social sector financing to the exclusion of growth-oriented productive investment.

Part 2 provides an analysis of some key indicators on poverty, health and nutrition. Drawing on household expenditure data, the report locates the 12 ASAL counties in the national league table for the incidence and depth of poverty. Data on health outcomes and access to basic services provide another indicator of the state of human development. While there are some marked variations across counties and indicators, most of the 12 counties register levels of deprivation in poverty and basic health far in excess of those found in other areas.

Part 3 shifts the focus to education. Over the past decade, Kenya has made considerable progress in improving access to basic education. Enrollment rates in primary education have increased sharply since the elimination of school fees in 2003. Transition rates to secondary school are also rising. The record on learning achievement is less impressive. While Kenya lacks a comprehensive national learning assessment, survey evidence points to systemic problems in education quality. In both access and learning, children in the ASAL counties—especially female children—are at a considerable disadvantage. After setting out the national picture, the paper explores the distinctive problems facing these counties.

In Part 4 we look beyond Kenya to wider international experience. Many countries have grappled with the challenge of reducing disparities between less-favored and more-favored regions. There are no blueprints on offer. However, there are some useful lessons and guidelines that may be of some relevance to the policy debate in Kenya. The experience of South Africa may be particularly instructive given the weight attached to equity in the post-apartheid constitution.

Part 5 of the paper explores a range of approaches to financial allocations. Converting constitutional principle into operational practice will require the development of formulae-based approaches. From an equitable financing perspective there is no perfect model. Any formula that is adopted will involve trade-offs between different goals. Policymakers have to determine what weight to attach to different dimensions of equity (for example, gender, income, education and health), the time frame for achieving stated policy goals, and whether to frame targets in terms of outcomes or inputs. These questions go beyond devolved financing. The Kenyan constitution is unequivocal in stipulating that the ‘equitable sharing’ provision applies to all public spending. We therefore undertake a series of formula-based exercises illustrating the allocation patterns that would emerge under different formulae, with specific reference to the 12 ASAL focus counties and to education.

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At the recent celebration of the 50^th anniversary of Dr. Martin Luther King’s March on Washington, Dr. King's daughter, Rev. Bernice King, cited Syria and called for international approaches rooted in love and embodying her father's commitment to nonviolence.  It is truly ironic that, after President Obama lauded King's legacy on the steps of the Lincoln Memorial, the administration announced its plans for unilateral military action to address the Syrian government’s horrific use of chemical weapons.

The situation in Syria causes us to ask:  Have all nonviolent alternatives been exhausted in accomplishing the president’s goal of responding to the brutal crimes of the Assad regime while averting a new regional (potentially global) war?

While, to date, public discourse has focused on the pros and cons of a punitive military strike, has adequate attention been given to the probability that a cruise missile strike will prompt retaliatory action—threatened by Syria, Hezbollah and Iran—against the state of Israel?  Have we considered adequately that the spiral could continue to an unthinkable escalation, keeping in mind Dr. King’s admonition that violence begets violence?  As United Nations Secretary General Ban Ki-moon stated:  "Diplomacy should be given a chance and peace given a chance.”

In sum, before authorizing or taking military action, could Congress and the administration assure us that certain steps (such as the following) have been incorporated as part of a broader regional solution?

Engage nonmilitary options in a multilateral coalition—Rather than going it alone, has the U.S. exhausted all efforts to lead a multilateral coalition to stop and punish Syrian chemical weapons use by other means under international law?  Could the pending United Nations inspections report pave the way for further multilateral interventions, ranging from global sanctions on Syria to criminal prosecution of the Assad regime at The Hague?  Could a tough U.N. sanctions resolution in response to the regime’s criminal use of chemical weapons be issued in preparation for the U.N. General Assembly this month?

Make renewed attempts to engage Russia and China, together with Track II diplomacy partners—The Russians are as concerned as the U.S. about the delivery of materials of mass destruction into terrorist hands.  The International Institute for Sustained Dialogue (IISD), its Dartmouth Conference and other Track II partners could be engaged, along with multilateral and U.S.-Russia congressional exchanges (including China and our allies) to further diplomatic action and sanctions.   

Engage Middle East and global interfaith partners—The sectarian fault lines across the Middle East require serious interfaith dialogue guided by principles and values that are common to all the Abrahamic faiths, addressing the conflict through what has been called the “relationship paradigm" of sustained dialogue. Initiatives such as the U.S.-Islamic World Forum, interfaith endeavors by Pope Francis and the Saudi king’s new interfaith center should be tapped.  A Brookings research report with Terror Free Tomorrow on the soft power effects of interfaith engagement and service in hot spots like Nigeria and South Asia illustrates this largely untapped potential.

Executive Order on Track II diplomacy, interfaith and service initiatives—President Obama could issue an executive order directing the State Department, the Defense Department, the White House Offices on Faith-Based and Neighborhood Partnerships and Social Innovation and Civic Participation, the Peace Corps and other agencies to report in 30 days on strategies and Track II partners that could further support regional solutions in the Middle East and other global hot spots.  Stepped-up multilateral emergency humanitarian aid for the mounting number of refugees from the Syrian conflict could also be marshaled with the United Nations, the Arab League, NATO and the U.S. 

In taking this “road less traveled” by charting a nonviolent direct action campaign and multilateral coalition to punish Syria and strengthen partnerships for peace, President Obama and Congress would establish a higher ground and marshal moral force with potential to break the cycle of violence, thus continuing the trailblazing legacy of Nelson Mandela, Dr. King and Gandhi.

When President Obama unveiled his budget allocation for high-speed rail, he said, “In France, high-speed rail has pulled regions from isolation, ignited growth [and], remade quiet towns into thriving tourist destinations.” His remarks emphasize how high-speed rail is increasing the accessibility of isolated places as an argument for similarly investments. So, what’s the source of this argument in the European context?

In November 2009, the European Union’s ESPON (the European Observation Network for Territorial Development and Cohesion) released a report called “Trends in Accessibility.” ESPON examined the extent to which accessibility has changed between 2001 and 2006. ESPON defines accessibility as how “easily people in one region can reach people in another region.” This measurement of accessibility helps determine the “potential for activities and enterprises in the region to reach markets and activities in other regions.”

ESPON’s research concluded that in this five-year period, rail accessibility grew an average of 13.1 percent. The report further concludes that high-speed rail lines have “influenced positively the potential accessibility of many European regions and cities.”

In particular, the research found that the core of Europe--Germany, France, Belgium, the Netherlands, and Switzerland--has the highest potential accessibility. Europe’s core produces the highest levels of economic output and has the highest population densities. ESPON argues that with such densities, the core has found reason to link their economic hubs (cities) with high-speed rail. These are the places in Europe where they have the greatest returns on investment.

But ESPON also found that high speed rail is starting to increase the accessibility of isolated places such as France’s Tours, Lyon, and Marseille. This is a very important finding for Europe. They have a long-standing policy of social cohesion and balance, striving to create economic sustainability and population stability across Europe. The objective is for areas well beyond core to thrive economically and to dissuade people from migrating in search of jobs. Fiscally, social cohesion translates into investing disproportionately more money into areas not producing sufficient levels of economic output. High-speed rail is but one of the many strategies intending to produce “economic and social cohesion,” states a European Commission report on high-speed rail.

But we are not Europe. While their thesis underpinning high-speed rail is social cohesion, what is our underlying thesis for high-speed rail? And what does this look like spatially? What was the logic behind the selection of Florida over other possible corridors? Is this line going to strengthen our national economy and GDP? Clarity on this score will help ensure the project is a success and offers a high return on investment. Lessons from this accessibility study say that places with high population levels and GDP output offer the greatest accessibility and therefore success.

It would be a pity if the U.S. finally jumped on the high-speed bandwagon but still missed the train.

Since its 50th anniversary in 1994, the World Bank has been led by four presidents: Lewis Preston until his untimely death in 1995; then James Wolfensohn, who gave the institution new energy, purpose and legitimacy; followed by Paul Wolfowitz, whose fractious management tossed the World Bank into deep crisis; and most recently, Robert Zoellick, who will be remembered for having stabilized the bank and provided effective leadership during its remarkably swift and strong response to the global financial crisis.

Throughout these years of ups and downs in the bank’s leadership, standing and lending, the overall trend of its global role was downhill. While it remains one of the world’s largest multilateral development finance institutions, its position relative to other multilateral financing mechanisms is now much less prominent. Other multilateral institutions have taken over key roles. For example, the European Union agencies and the regional development banks have rapidly expanded their portfolios, and new “vertical funds” such as the Global Fund for AIDS, Tuberculosis and Malaria have become major funding vehicles. At the same time, according to a 2011 OECD Development Assistance Committee report multilateral aid has declined as a share of total aid. Meanwhile, non-governmental aid flows have dramatically increased, including those from major foundations like the Bill and Melinda Gates Foundation, but also from new internet-based channels bundling small individual donations, such as Global Giving. The World Bank— which 20 years ago was still the biggest and most powerful global development agency and hence a ready target for criticism— today is just one of the many institutions that offer for development to the poor and emerging market economies.

Against this backdrop, the World Bank, its members and Dr. Kim face three options in its long-term trajectory over the next 10 to 20 years: 1) the bank can continue on its current path of gradual decline; 2) it might be radically scaled back and eventually eliminated, as other aid channels take over; or 3) it can dramatically reinvent itself as a global finance institution that bundles resources for growing global needs.

There is no doubt in this author’s mind that the World Bank should remain a key part of the global governance architecture, but that requires that the new president forge an ambitious long-term vision for the bank – something that has been lacking for the last 30 years – and then reform the institution and build the authorizing environment that will make it possible to achieve the vision.

Option 1: “Business as Usual” = Continued Gradual Decline

The first option, reflecting the business-as-usual approach that characterized most of the Zoellick years of leadership will mean that the bank will gradually continue to lose in scope, funding and relevance. Its scope will be reduced since the emerging market economies find the institution insufficiently responsive to their needs. They have seen the regional development banks take on increasing importance, as reflected in the substantially greater capital increases in recent years for some of these institutions than for the World Bank in relative terms (and in the case of the Asian Development Bank, even in absolute terms). And emerging market economies have set up their own thriving regional development banks without participation of the industrial countries, such as the Caja Andina de Fomento (CAF) in Latin America and the Eurasian Development Bank in the former Soviet Union. This trend will be reinforced with the creation of a “South Bank” or “BRIC Bank”, an initiative that is currently well underway.

At the same time, the World Bank’s soft loan window, the International Development Association (IDA), will face less support from industrial countries going through deep fiscal crises, heightened competition from other concessional funds, and a perception of reduced need, as many of the large and formerly poor developing countries graduate to middle-income status. It is significant that for the last IDA replenishment much of the increase in resources was due to its growing reliance on advance repayments made by some of its members and commitments against future repayments, thus in effect mortgaging its future financial capacity. The World Bank’s status as a knowledge leader in development will also continue to be challenged with the rise of research from developing countries and growing think tank capacity, as well as a proliferation of private and official agencies doling out advice and technical assistance.

As a result, under this option, over the next 10 to 20 years the World Bank will likely become no more than a shadow of the preeminent global institution it once was. It will linger on but will not be able to contribute substantially to address any of the major global financial, economic or social challenges in the future.
 
Option 2: “The Perfect Storm” = Breaking Up the World Bank

In 1998, the U.S. Congress established a commission to review and advise on the role of the international financial institutions. In 2000, the commission, led by Professor Allan Meltzer, released its recommendations, which included far-reaching changes for the International Monetary Fund and the World Bank, most of them designed to reduce the scope and financial capacities of these institutions in line with the conservative leanings of the majority of the commission’s members. For the World Bank, the “Meltzer Report” called for much of its loan business and financial assets to be devolved to the regional development banks, in effect ending the life of the institution as we know it. The report garnered some attention when it was first issued, but did not have much impact in the way the institution was run in the following 10 years.

In 2010, the U.S. Senate Foreign Relations Committee released a report on the international financial institutions, which called on them to aim toward “succeeding in their development and economic missions and thereby putting them out of business”. However, it did not recommend a drastic restructuring of the multilateral development banks, and instead argued strongly against any dilution of the U.S. veto right, its lock on leadership selection, and its voting share at the IMF and World Bank. While not dramatic in its short-term impact, these recommendations were likely a strong factor in the subsequent decisions made by the Obama administration to oppose a substantial increase in contributions by emerging markets during the latest round of capital increase at the World Bank to push for an American to replace Robert Zoellick as World Bank president. These actions reinforced for emerging market countries that the World Bank would not change sufficiently and quickly enough to serve their interests, and thus helped create the momentum for setting up a new “South Bank.”

While there seems to be no imminent risk of a break-up of the World Bank along the lines recommended by the Meltzer Report, the combination of fiscal austerity and conservative governments in key industrial countries, compounded by a declining interest of the emerging market countries in sustaining the institution’s future, could create the perfect storm for the bank. Specifically, as governments face constrained fiscal resources, confront the increasing fragmentation of the multilateral aid architecture, and take steps to consolidate their own aid agencies, they might conclude that it would be more efficient and fiscally prudent to rationalize the international development system. There is a obvious overlap on the ground in the day-to-day business of the World Bank and that of the regional development banks. This is a reality which is being fostered by the growing decentralization of the World Bank into regional hubs; in fact, a recent evaluation by the World Bank’s Independent Evaluation Group concluded that “[r]ather than functioning as a global institution, the bank is at risk of evolving into six regional banks”. With the growing financial strength, institutional capacity and dynamism, and the apparently greater legitimacy of regional development banks among their regional members, shareholders might eventually decide that consolidation of the World Bank’s operations with those of the regional development banks, in favor of the latter, is the preferred approach.

There are lots of reasons to think that this drastic step would be difficult to take politically, financially and administratively, and therefore the inertia common to the international governance architecture will also prevail in this case. However, the new World Bank president would be well advised to be prepared for the possibility of a “perfect storm” under which the idea of eviscerating the World Bank could gain some traction,. The more the bank is seen to fade away, as postulated under Option 1 above, the greater is the likelihood that Option 2 would be given serious consideration.

Option 3: “A Different World Bank” = Creating a Stronger Global Institution for the Coming Decades

Despite all the criticism and the decline in its relative role as a development finance institution in recent decades, the World Bank is still one of the strongest and most effective development institutions in a world. According to a recent independent ranking of the principal multilateral and bilateral aid institutions by the Brookings Institution and the Center for Global Development “IDA consistently ranks among the best aid agencies in each dimension of quality”.

A third, radically different option from the first two, would build on this strength and ensure that the world has an institution 10 to 20 years from now which helps the global community and individual countries to respond effectively to the many global challenges which the world will undoubtedly face: continued poverty, hunger, conflict and fragility, major infrastructure and energy needs, education and health challenges, and global warming and environmental challenges. On top of this, global financial crises will likely recur and require institutions like the World Bank to help countries provide safety nets and the structural foundations of long-term growth, as the bank has amply demonstrated since 2008. With this as a broad mandate, how could the World Bank respond under new dynamic?

First, it would change its organizational and operating modalities to take a leaf out of the book of the vertical funds, which have been so successful in tackling major development challenges in a focused and scaled-up manner. This means substantially rebalancing the internal matrix between the regional and country departments on the one hand and the technical departments on the other hand. According to the same evaluation cited above, the World Bank has tipped too far toward short-term country priorities and has failed to adequately reflect the need for long-term, dedicated sectoral engagement. The World Bank needs to fortify its reputation as an institution that can muster the strongest technical expertise, fielding team with broad global experience and with first rate regional and country perspective. This does not imply that the World Bank would abandon its engagement at the country level, but it means that it would systematically support the pursuit of long-term sectoral and sub-sectoral strategies at the country level, linked to regional and global initiatives, and involving private-public partnership to assure that development challenges are addressed at scale and in a sustained manner.

Second, recognizing that all countries have unmet needs for which they need long-term finance and best practice in areas such as infrastructure, energy, climate change and environment, the World Bank could become a truly global development institution by opening up its funding windows to all countries, not just an arbitrarily defined subset of developing countries. This would require substantially revising the current graduation rules and possibly the financial instruments. This would mean that the World Bank becomes the global equivalent of the European Investment Bank (EIB) and of the German Kreditanstalt fuer Wiederaufbau (KfW)—development banks that have successfully supported the infrastructure development of the more advanced countries.

Third, the World Bank would focus its own knowledge management activities and support for research and development in developing countries much more on a search for effective and scalable solutions, linked closely to its operational engagement which would be specifically designed to support the scaling up of tested innovations, along the lines pioneered by the Bill and Melinda Gates Foundation.

Fourth, for those countries with strong project management capacities, the World Bank would dramatically simplify its lending processes, following the example of the EIB. This would make it a much more efficient operational institution, making it a more attractive partner to its borrowing member countries, especially the emerging market economies.

Fifth, the membership of the World Bank would fix some fundamental problems with its financial structure and governance. It would invite the emerging market economies to make significantly larger contributions to its capital base in line with their much-enhanced economic and financial capacities. It would revamp the bank’s voting and voice rules to reflect the changed global economic weights and financial contributions of emerging markets. The bank would also explore, based on the experience of the vertical funds, tapping the resources of non-official partners, such as foundations and the private sector as part of its capital and contribution base. Of course, this would bring with it further significant changes in the governance of the World Bank. And the bank would move swiftly to a transparent selection of its leadership on the basis of merit without reference to nationality.

Conclusion: The New World Bank President Needs to Work with the G-20 Leaders to Chart a Course Forward
 
The new president will have to make a choice between these three options. Undoubtedly, the easiest choice is “business-as-usual”, perhaps embellished with some marginal changes that reflect the perspective and new insights that an outsider will bring. There is no doubt that the forces of institutional and political inertia tend to prevent dramatic change. However, it is also possible that Dr. Kim, with his background in a relatively narrow sectoral area may recognize the need for a more vertical approach in the bank’s organizational and operational model. Therefore, he may be more inclined than others to explore Option 3.

If he pursues Option 3, Dr. Kim will need a lot of help. The best place to look for help might be the G-20 leadership. One could hope that at least some of the leaders of the G-20 understand that Options 1 and 2 are not in the interest of their countries and the international community. Hopefully, they would be willing to push their peers to contemplate some radical changes in the multilateral development architecture. This might involve the setting up of a high-level commission as recently recommended by this author, which would review the future of the World Bank as part of a broader approach to rationalize the multilateral system in the interest of greater efficiency and effectiveness. But in setting up such a commission, the G-20 should state a clear objective, namely that the World Bank, perhaps the strongest existing global development institution, should not be gutted or gradually starved out of existence. Instead, it needs to be remade into a focused, effective and truly global institution. If Dr. Kim embraces this vision and develops actionable ideas for the commission and the G-20 leaders to consider and support, then he may bring the right medicine for an ailing giant.