The World Bank: Alleviating Poverty And Promoting Economic Growth With Social Equity

Thursday, April 1, 2004 - 01:00

The Editor interviews Roberto Dañino, Senior Vice President and General Counsel of The World Bank.

Editor: After a very distinguished career, which includes service as Prime Minister of Peru and as Peru’s Ambassador to the United States, you have become Senior Vice President and General Counsel to The World Bank. Can you share with our readers what it was that brought you to the Bank?

Dañino: There are very few institutions that allow a person to have such a positive impact on people’s lives. This job for me is a lifelong dream come true. Almost 30 years ago, when I was just beginning my career fresh out of Harvard, I applied to the Bank’s Young Professionals Program – and I was rejected. Looking back, I can now say that this was a fortunate event since it gave me the opportunity to have many other diverse and very rewarding professional experiences.

I believe that multilateral development institutions make an important contribution to making the world a better place. That is the real reason why I am here. And now, as the Bank’s ?rst General Counsel from Latin America, I have an exciting opportunity to continue to live out my commitment to public service in an institution with a global reach, a marvelously diverse staff and a strong leadership.

Editor: What do you see as the principal challenges in your new position?

Dañino: I see the principal challenge in my new position is being able to contribute effectively to the ful?llment of the Bank’s mission, which is to alleviate poverty and promote economic growth with social equity. In somewhat more concrete terms, the principal objective of my of?ce is to provide effective and timely service to our clients, while, at the same time, protecting the integrity of the institution. Clients include both internal constituencies at the Bank and the 184 member countries which constitute the Bank’s shareholders.

I expect the speci?c challenges to emerge and then evolve over time. At the moment, I see an immediate need to calibrate the Bank’s legal and policy framework in order to make the institution more agile and more responsive to its clients’ changing needs. This means further streamlining of the Bank’s operational policies as well as the legal agreements it uses to accomplish its work. Because so many of our borrowers value the Bank’s technical assistance as much as its ?nancing, it also means making sure that the Bank continues to provide world-class expertise in critical areas of development. This includes, among other important sectors, expertise in legal and judicial reform.

Editor: At the time you assumed very senior responsibility at the Bank, you became Secretary General of the International Center for Settlement of Investment Disputes. Can you tell us about ICSID and its mission?

Dañino: ICSID provides conciliation and arbitration services for the independent resolution of disputes between member countries and foreign investors. The organization was established at the initiative of the Bank in 1966 by a multilateral treaty, the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, as a way to foster increased ?ows of investment among member countries. At the present time 140 countries are parties to the treaty.

In recent years, there has been a tremendous upsurge in the number of cases submitted to ICSID arbitration. There are 65 arbitration proceedings currently pending before ICSID. This is mainly due to the proliferation of bilateral investment treaties providing for the submission to ICSID arbitration of the covered investment disputes. Some 1500 such treaties have been concluded to date.

Editor: Isn’t it something of a challenge to hold down two such positions at the same time?

Dañino: It is, but I enjoy the diversity of challenges each entity provides me every day. I am fortunate in being able to call upon very strong staff teams at both the Bank and ICSID. In the Bank’s Legal Vice Presidency we have a high quality team of about 175 people from 60 countries, and in ICSID we have an excellent staff of 19 from 14 countries.

Editor: The World Bank was established as a special agency of the United Nations at the end of World War II. Can you describe how its mission has evolved over the past sixty years?

Dañino: The World Bank was originally established toward the end of World War II as a way to assist in the reconstruction of countries devastated by the war and to support the economic development of poorer countries. These origins are re?ected in the Bank’s formal title: the International Bank for Reconstruction and Development. In its almost sixty years of existence, as the needs of its member countries have changed, the Bank has evolved to focus its mission on poverty reduction. Thus the Bank still pursues its original mission, but it does so in the broader context of the international effort to ease the hardships of poor people in developing countries by promoting economic growth and social equity.

In recent years, the Bank has evolved from being, primarily, a lending institution toward what some call a “Knowledge Bank,” an institution which provides advice and technical assistance in addition to traditional project ?nancing. Under President’s Wolfensohn’s leadership, there has also been a major shift in the Bank’s approach to development, from a Washington-centered decision-making process to a partnership that puts each client country into the driver’s seat for its own development agenda. To facilitate this process, the Bank has placed over 50 percent of its operations staff outside of Washington.

Editor: During your tenure as Prime Minister of Peru you were responsible for the implementation of a program to modernize the public sector. Inasmuch as the Bank is engaged in similar initiatives all over the world, do you have any plans to draw upon your earlier experiences to aid the bank in its efforts?

Dañino: I certainly hope to use the full range of my previous experiences to serve the Bank. Having been on the borrower’s side of the table, I have a perspective on how the Bank can be much more responsive to borrower needs. I hope my private sector background will come in handy as well, to promote a more client-oriented culture at the Legal Vice Presidency.

Editor: You were instrumental in bringing together Peru’s leadership in the implementation of the Acuerdo Nacional, a set of long-term policy guidelines for the coun-try’s development. Is this a model for other Latin American countries? Other places where the Bank has operations across the world?

Dañino: The Acuerdo Nacional was an unprecedented national consensus-building effort to establish long-term development goals for Peru. It was a prime case of long-term planning for results, through an integrated approach built upon the participation of all the local stakeholders, including the government, political parties, civil society and the private sector.

I strongly believe that some basic consensus on key objectives is essential for development. I am aware, however, that we cannot point to any one approach as a universal model for development. At the Bank we need to look at each country’s development needs and the local context if we are to give meaningful assistance. At the same time, one of the Bank’s competitive advantages is that we do have global experience. This concentration of experience allows us to bring a unique perspective to the table.

Editor: One person may use aid to guide the recipient; another to coerce him. Is there a difference? Where do you draw the line?

Dañino: I don’t believe in coercion. I believe in competitiveness. The key issue here is why countries continue to turn to the World Bank for advice and support. Based on my experience as Prime Minister of Peru, where I was on the other side of the table, countries place great value on the assistance the Bank provides them. And it is not only the funding that they value, but also the knowledge that comes with it. They know that the Bank has a wealth of knowledge and experience, employs highly skilled staff, and offers ?nancing at rates that are in many cases well below what ?nancial markets or commercial banks would charge them. That is not coercion; it’s competitiveness.

Editor: What about the future? Are you optimistic about accomplishing the tasks that remain?

Dañino: I have always been an optimist; otherwise, I would not be in public service. At the present moment it is obvious that the Bank’s mission to reduce poverty and inequity is far from a won battle. To pursue this goal successfully we need continued support for the development agenda from nations that are relatively well off. And, at the same time, we need to improve the Bank’s effectiveness in providing timely and valuable support to its borrowers. In my role as General Counsel, and as an optimist, I will do everything in my power to contribute to the ful?llment of the Bank’s mission.