Tom
Doug Henwood wrote:
> Financial Times - September 22, 1999
>
> 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.