World Bank taking a leaf out of Westminster’s book on expenses

Here in Britain, the fallout from recent revelations about MPs’ expenses continues. Meanwhile, it seems that World Bank officials have been up to similar tricks. Admittedly we cynics may scoff at their lack of imagination – after all, they haven’t been buying birdhouses or maintaining their moats with public funds. But Peter Bosshard at International Rivers, reviewing a book by former Bank staffer Steve Berkman, highlights some dubious claims all the same (hat tip: Bretton Woods Project). Berkman’s book:

reports how Nigerian officials charged $2,200 for 18 cups of tea and snacks at a roadside stall under a World Bank loan (and got away with it). A project office with eight staff in the same country charged a switchboard for 60 telephones, 48 air conditioners, 14 shredders and 12 refrigerators to the operating expenses of another Bank project – all at prices well above the going market rates. They also claimed expenses for television and video sets at 249,999 Naira apiece – more than ten times the equipment’s street value, but just one Naira less than the amount which triggers stricter controls.

Few will be surprised to hear about World Bank money disappearing – Berkman quotes an internal report which found that ‘stealing from Bank funds is the rule, not the exception’. But all the same (and perhaps I’m being naïve), one would have thought that World Bank employees would have enough problems with the endemic low-level fraud that their organisation is known for, without contributing to it themselves. Of course, unlike British parliamentarians, World Bank officials aren’t politicians and being insulated by their institution, will never have to face the wrath of the public.

Export-led growth: not so resilient

As David just noted, this morning’s Lex column in the FT is relatively upbeat about the dangers of protectionism, arguing that “the disaggregation of global supply chains, the source of the huge efficiencies that companies pass on to consumers, will not be easily undone.”

Whether or not that’s right (and like Willem Buiter, Martin Wolf is also a good deal more downcast than the Lex team), it’s interesting to compare today’s Lex column with what they had to say about capital flows to emerging markets just a couple of days ago.  Here’s the bit that made me sit up:

Take Brazil and India, the globe’s ninth and 12th biggest economies, according to the International Monetary Fund’s latest estimates. While the developed world is expected to shrink by 2 per cent this year, the IMF reckons Brazil will grow by 2 per cent, and India by 5 per cent. Why? One answer is that they have stable banks, relatively closed economies, and large internal markets. This has insulated them from much of the global turmoil.

The contrast with East Asia is stark. Singapore’s economy shrank at an annualised 17 per cent rate at the end of last year, South Korea by some 20 per cent. Yet this is not for lack of capital. Asian economies, after all, are global creditors. Their economies have shrunk instead because they are heavily oriented towards collapsing international trade. Meanwhile, their local markets are undeveloped and weak. Asia’s challenge is how to best deploy its accumulated surpluses to boost domestic demand.

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The horror! The horror!

Thanks to Flickr user Oliver Ingrouille

Thanks to Flickr user Oliver Ingrouille

Prepare to heave at this New York Times screed on how tough life is for bankers these days.

“Nobody in the investment banking world is expecting pity, or even a sympathetic ear, these days,” the article begins, before quoting banker after banker who not only feels  “unfairly singled out“, but wants destitute home owners to accept the lion’s share of the blame:

Financiers tell their not-for-attribution account of the mortgage crisis like this: Americans undersaved and overspent for decades, relying on rising property values to bankroll their lifestyles.

But nobody on Wall Street forced United States homeowners to take out loans on houses they couldn’t afford, or refinance mortgages to spend money on cars they shouldn’t have bought.

Of course, others are at fault too. Ratings agencies failed to warn innocent financiers of the risks they were taking, while regulators… well, they should be ashamed of their many failings. Bankers did just one thing wrong. They trusted us too much – and we let them down.

Now they are spat on as they cross the sidewalk from their limousines and are too embarrassed to admit what they do at champagne receptions. “I’d almost rather say I’m a pornographer,” says one poor soul. “At least that’s a business that people understand.”

Then there’s the last devasting blow – having their bonuses cut:

“Fact is that this is a terrible way to make a living — except for the money,” Ken Miller, a former vice chairman at Credit Suisse First Boston and now a private investor, said. “The lifestyle is terrible — the hours, the sucking up. These guys must feel like they’re the victims of a capricious god.”

Yes indeed, Ken, it seems they do.

Russky Standard

I see my first ever boss, Geordie Greig, has been nominated as the editor of the London Evening Standard by the new owner of the paper, playboy oligarch and former KGB spook, Alexander Lebedev.

I’ve interviewed Lebedev in Moscow. He is a strange man. Not your typical Russian oligarch at all. He’s something of an outsider in Putin’s government, despite having worked as a spy abroad (he was based here in London during the 1980s, and his job was to monitor capital flows from the USSR).

He’s much closer to Gorbachev, and the two own one of Russia’s few independent newspapers, Novaya Gazeta. People were worried Novaya Gazeta would lose its teeth when a KGB man bought it, but no, it still seems full of brave journalists –  one of which was gunned down in Moscow in mid-January, while walking with a human rights lawyer.

The thing that struck me about Lebedev was how wowed he was by British society. He enthused about a dinner he was at in London, where he sat between Tom Stoppard and Tom Wolfe. His son Evgeny is even more of a butterfly, and he could be the one in the driving seat at the Standard.

What will be interesting is how the paper will report UK-Russian relations, next time Russia is in the news for some aggressive action (shouldn’t be long now), particularly if it took place in London, like the Litvinenko killing. I don’t think Lebedev would sit by and let the Standard slag off the Kremlin, as one previous editor, Max Hastings, is fond of doing – he referred in passing to Putin as ‘Russia’s chief Mafia capo’ in a Mail article last week. Not sure that would wash with the new proprietor of the Standard.

G20 prospects – lessons from the 1930s

The G20 London Summit in April will be Barack Obama’s first trip to Europe. The Canadians get him first (apparently this is traditional), while the Japanese (who see the G20 as an evil plot to dilute their influence) are hoping for a sneaky bilateral before the big G20 powwow.

But London will be the big one. Gordon Brown – tired of saving the world on his lonesome – will slip into the role of Robin. Obama will play Batman and kick the world back into shape. The role of Joker is yet to be cast.

But will the summit be a success? The British PM has a lot riding on it, and not just because he believes he can use the event to transform his electoral prospects. We’re in the midst of “the first financial crisis of the global age,” he says, and the best solution is try to bind all the key global issues (economy, trade, climate change, energy, development etc) into a new vision for a  “global society”.

“This is not like the thirties,” Brown told a Davos audience (slightly plaintively, perhaps). “The world can come together.” But will it? And more to the point, will Obama reserve sufficient bandwidth to global coordination? Or will he be sucked into further America First policies, as the mess at home hoovers up a growing proportion of his time, energy and political capital?

The past does not dictate the present of course, but the historical precedents are not so good. The nearest equivalent to the London Summit in the thirties was World Monetary and Economic Conference, which was held in the summer of 1933.

This meeting, which bought 66 countries together in last ditch attempt to trigger global economic recovery, was derailed by a new US President – Franklin D Roosevelt – who had recently been elected in a landslide. Roosevelt rejected a compromise deal that had been hammered out by his own delegation.

The result was humiliation for a weakened British Prime Minister, and a furious reaction from the other European nations, led predictably enough by the French. The Germans, meanwhile, were left out on a limb. Hitler – just settling in as Chancellor – was forced to disown his Economic Minister mid-summit. It was an early setback for him on the international stage.

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A Tale of Two Cities


Image Author: mike_is_scrumptious

Image Author: mike_is_scrumptious

Assume a robust global deal on climate and the world’s cities will have to transform their infrastructure, economies and societies in little more than a generation.

Assume uncontrolled emissions growth and they face growing impact from a less hospitable and more volatile climate.

Either way – big changes are on the way. Few cities’ leaders grasp the scale of the challenge, especially in developing countries, where towns and cities will have an additional 1.5bn residents to cope with by 2030.

This new think piece has been prepared as part of the British Council’s Climate and Cities programme. Download the pdf (which has full references) or read the full text below the jump.

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The Feeding of the Nine Billion

Today sees the launch of The Feeding of the Nine Billion, my Chatham House pamphlet on food prices and scarcity issues, which brings a year-long research programme to its conclusion.  This morning’s Financial Times has a piece on the report here, and there’s a BBC World Service interview with me here (scroll to 9.42; you need RealPlayer installed).

The report’s key diagnosis is that while food prices have fallen significantly from their peak last year, they remain acutely problematic for poor people and por countries at their current levels – and poised to resume their upwards climb when the world emerges from the downturn.  Accordingly, the last thing policymakers can do at this stage is to heave a sigh of relief – on the contrary, they need to treat the current easing in prices as a window of opportunity in which to agree the comprehensive, long-term collective action needed to ensure food security for all in the 21st century.

Long term demand drivers, above all a population set to reach over 9 billion by mid-century and the rising affluence and expectations of a growing ‘gloal middle class’ are half the story, with the World Bank forecasting 50% higher demand for food by 2030. 

On the other hand, scarcity issues will present increasing challenges on the supply side.  Oil prices are also set to resume their climb after the downturn, given that investment in new production has collapsed as oil prices have fallen, setting the stage for a future supply crunch; food prices can be expected to follow them, as biofuels, fertiliser prices and transport costs all play their part.  Climate change, water scarcity and competition for land will all also push prices upwards.

So what needs to be done?  The report sets out a ten point agenda for action at the international level and in developing countries, but overall I think of the challenge in four key areas. Continue reading