WORLD BANK: Economist rebuked over Russia By Alan Beattie in Washington
James Wolfensohn, the president of the World Bank, yesterday rebuked Joseph Stiglitz, his chief economist, saying Mr Stiglitz's views on the failure of market reform in Russia had been made with the benefit of perfect hindsight.
Speaking at a press conference just before the annual meetings of the World Bank and the International Monetary Fund in Washington, Mr Wolfensohn said he did not doubt that mistakes had been made in implementing the liberalisation programme in Russia. "But to say later that you would have done it differently earlier is to be a little generous to yourself," he said.
Mr Wolfensohn also said there was no evidence that World Bank lending to Russia had been misappropriated. Allegations have grown recently that money lent to Russia by the IMF in June last year was diverted to private bank accounts in New York. But Mr Wolfensohn said that a continuing audit process of all the Bank's lending had yet to turn up any evidence that money had gone missing.
He added that the current investigation into the allegations of theft and money laundering was a positive development and should be seen as a chance to get the matter "into the open".
Mr Wolfensohn's comments about Mr Stiglitz referred to a paper delivered at the World Bank's annual conference on development economics in Washington in April. In it, Mr Stiglitz said the "failures" of Russia's transition towards a market economy were not just due to sound policies being poorly implemented but to "a misunderstanding of the foundations of a market economy".
Referring to his chief economist as a "free spirit", Mr Wolfensohn implied Mr Stiglitz's views did not reflect those of the Bank as a whole. "I am always interested to see what Joe is saying on behalf of the Bank," he said.
Mr Stiglitz's views were widely believed to have caused a rift between the World Bank and the IMF, which was instrumental in implementing market reforms. Mr Stiglitz had said the "Washington consensus" which advocated rapid privatisation of state-owned enterprises and liberalisation of markets failed to take into account social and institutional factors, which ensured that those policies failed.