An interesting event took place recently in the Chamber of the United Nations Economic and Social Council (ECOSOC). It was the first meeting ever between the members of ECOSOC and the Executive Directors of the World Bank. The Deputy Secretary-General, Louise Fréchette, of the UN spoke of the "obvious convergence of views between the World Bank and the UN which is emerging". The President of the World Bank, James Wolfensohn, talked of "shared common values" and of the similar objectives of the two institutions, particularly the eradication of poverty. He mentioned that "in the past there had been some rivalry and suspicion, but that we aim now to build a better partnership based on trust".

     The meeting drew attention to some major differences between the Bretton Woods Institutions and the UN: the Bank’s mandate only covers countries that need to borrow from it, and the International Monetary Fund’s responsibilities relate effectively to current account deficit countries, while the UN has a global mandate. Another characteristic of the Bank’s mandate, that it should and does concentrate on national policy but not on the international economic system.

     Many ambassadors asked how the World Bank integrates the results of the global conferences, such as the World Summit for Social Development, into its policies. Wolfensohn spoke of the importance of partnership, noting that the World Bank was a participant in these conferences and contributed to their resolutions. He added that it is not for conferences to wonder what the Bank is doing and to decide what it should be doing. "A partnership is required".
This suggests a misunderstanding about the nature of the UN and of the global conferences. The UN is the political centre of the international system. The World Summit for Social Development was attended by 117 Heads of State and Government and by senior representatives of all the other UN member states. This was a meeting at the highest possible level and the largest Summit meeting that had ever been held to that date, March 1995. Every word of the Copenhagen Declaration was carefully negotiated, for it expressed agreed international commitments, which the Bank has a responsibility to implement. The Bank was not and could not be a full participant of the global conferences, for that was a privilege of member states alone.

     Wolfensohn’s January draft of a Comprehensive Development Framework for the Bank is of great interest, for it follows the preparation of the UN Development Assistance Framework. Wolfensohn’s Framework indicates fine leadership of the Bank and it is notably strong on the importance of integrating economic and social policy. But it misstates the Bank’s and IMF’s role: the IMF, he says, "has responsibility for macroeconomic stabilization for our client countries...We have responsibility for the structural and social aspects of development". That is perhaps no more than a Freudian slip, but surely it is an important one. National governments have responsibility for their country’s macroeconomic stabilization and for their development. The roles of the IMF and Bank are to advise and to facilitate availability of funds for stabilization and development.

     The same Freudian slip was made recently by Hubert Neiss, the Deputy Managing Director of the IMF for Asia and the Pacific, who began a speech in Bangkok with the astonishing statement that the IMF "has principal responsibility for macro policy in crisis countries". Not a mention of governments.

     So a fundamental requirement for making the international system work more coherently is recognition about the nature of the system, and of the checks and balances which are quite properly built into it – on all sides – and of needs for reform.

     In a recent speech at the UN, Eveline Herfkens, the Netherlands Minister for Development Cooperation and former Dutch Executive Director at the World Bank, spoke of the relationship between the UN and the Bretton Woods Institutions as "a marriage made in heaven". She said that "there is particular need for improvement between the Bretton Woods [institutions] and the UN system as a whole...The UN is a world forum, with a strong normative function, and the World Bank, with its powerful resource base, are two partners that are made for each other".

     That position could be amplified by describing the functions of the UN as political and those of the Bank and IMF as technical. To simplify with a comparison and to clarify the roles of the UN are the classical political functions of national parliaments translated to the global stage, peaceful conflict resolution and attempting agreement on economic, social and other strategies and priorities. Those of the Bank and IMF are to apply agreed strategies and priorities with all their professional wisdom and skill.

     As in a marriage, there are certainly problems which the Bank and IMF might have with the UN. Amongst them, lack of focus – confusion, speaking with too many voices – could certainly be one. Insufficient technical understanding might sometimes be another. Misplaced competitiveness – turf wars – could also be a problem. Another could simply be lack of clarity in the UN about respective purposes and responsibilities. There is a tendency for delegates at the UN to make carping criticisms of the Bank and IMF because they perceive those organisations as unresponsive, when a quiet, more confident sense of respective authorities would lead to more constructive outcomes.

     Dialogue should be reinforced through the Executive Boards of the Bank and IMF. But Executive Directors generally act as representatives of the Finance Ministers from which they mostly come. Commonly they do not even communicate actively with the Cabinets of the countries they represent about what they are doing. Delegates to the UN normally come from Foreign Ministries and so are not normally adequately briefed on economic and social issues. We must all be aware of the conflict within national public services between ministries – most notably between Finance Ministries and the rest – and the extension of those difference to international forums. Herfkens drew attention to this problem: "We all need better co-ordination in our own countries...At home, after all, we still use separate bedrooms..."

     Empirical observation shows that markets and corporations as well as governments fail to act efficiently. It is therefore becoming clearer that both countries and the global community must seek a better balance between markets, and public intervention. In fact, this more pragmatic approach – of seeking what works – is now more common at the Bank. This evolution means that most of the Bank’s new policies are consistent with those articulated at Copenhagen and other global conferences. Perhaps they were even influenced by them!

     Improved communication is certainly required. Lack of knowledge about the conclusions of debate at the UN is as likely to be the fault of the UN as of neglect in Washington. Those most centrally involved in negotiating political agreements should let agencies in the wider system know what is agreed. The UN needs a representative in Washington whose job it is to interpret the UN to the Bank and IMF, in the way that Alfred Sfeir-Younis does so excellently for the Bank in New York. The UN Secretariat should take the initiative more often.

     Genuinely inclusive debate is necessary. At present the Bretton Woods Institutions have speaking rights as observers at most UN conferences but the Under-Secretary-General of the UN responsible for economic and social affairs does not have speaking rights at the Interim and Development Committees. This is an unreasonable asymmetry and must change.

     Recognition and acceptance of the respective roles is important. The Bank is a lending institution, the UNDP a grant-giving institution. It is inappropriate for the Bank to try and take over that function by setting up a grant receiving and giving trust fund. The IMF has responsibility for stabilization on external account. That does not give it responsibility for any, let alone every, aspect of national macroeconomic policy. And it has not dealt effectively with the international dimensions of financial market instability. Many institutions have a legitimate role in that debate, including not least the UN.

     Finally, the staff of the UN Secretariat is too small. The UN Secretariat has about 600 working in the Department of Economic and Social Affairs, of whom about 300 are professional officers. This compares with a staff of over 10,000 at the Bank. Allowing some growth in the UN Secretariat staff would increase its technical capacity.

     To conclude, the UN Deputy Secretary-General and President of the World Bank are right – there is a convergence between the values and policies of the UN and the Bank underway at present – though less so with those of the IMF. But there are some fundamental issues that still have to be addressed before that can lead to the fully effective level of cooperation that we seek.



John Langmore is Director of the UN Division for Social Policy and Development, Department of Economic and Social Affairs, Room DC2-1329, 2 UN Plaza, New York, NY 10017, USA. Fax: 1-212-963-3062.
Email: langmore@un.org