Sometimes he sounds like an old-fashioned, liberal redistribution-of-wealth kind of guy, as when he waxes lyrical about the goal of reducing poverty and putting a smile on a child's face. At others, his strictly private-sector capitalist credentials shine through, when he wishes aloud he could make client countries pay for all the expert advice the World Bank now doles out for free. One thing that James Wolfensohn is not is lacking in energy. His two years at the helm of the World Bank have seen a climate of reform sweep through the famously unwieldy institution. The 150 managerial staff, for example, who were asked to resign their posts and reapply may not all like the Wolfensohn style, but his determined renovation of the bank's internal structure finds a perfect parallel in its gleaming, modernist new Washington headquarters. Hong Kong, home of financial wizardry and the frenetic deal, will get a chance to see its deal-making comrade-in-arms up close when he arrives for the annual meetings of the World Bank and International Monetary Fund this month. Talking this week about his job and his thoughts on the coming event, the Australian-born former investment banker said: 'It couldn't be a better moment for us to hold the meetings in China, in Hong Kong.' Asia remains of prime concern to Mr Wolfensohn, not least because - as recent bank reports spelled out - the region's economic miracle has not yet succeeded in putting an end to poverty. But with a US$130 billion exposure in the region - a third of the bank's loans - its president believes he has a job to do in continuing to go where the private sector will not. 'There may be new lessons that we're now learning in terms of what happens after a miracle occurs, what can happen in terms of financial systems which are particularly of concern at the moment, to do what we can to ensure that there is stability in the region,' he said. Although he has been quick to admit the bank's faults, including a leaden bureaucracy and a lack of monitoring of its investments, he dismissed the 'commonly expressed fallacy' that since there is now so much private money flowing into Asia and other developing areas, the bank was slowly becoming irrelevant. He said that while the Hong Kong meetings would explore the theme of bringing in even greater private investment, the World Bank would continue to focus on its key roles. 'The objective of the bank is very straightforward. Wherever we can, we would like the private sector to do the job,' Mr Wolfensohn said. 'As evidence of that, we have reorganised ourselves so that we are making a major push to get the private sector to come in. I would really love you to understand that we are not here trying to continue our careers when someone else will do it.' Mr Wolfensohn uses the metaphor of a toll road as evidence of the private sector's limited reach. Private money will only back projects which bring returns, such as the toll road; but such pay-to-use highways only account for 3 per cent of most countries' roads, leaving organisations like the bank to help build the other 97 per cent. Health care, and above all education, are Mr Wolfensohn's other prime causes. 'The key to development is education,' he said. 'The classic example is Singapore, where you've now got $23,000 per capita income, and it started as being a place for unsecured labour originally. That's, if you like, the extreme example of what is possible in Asia, but my experience is that there is a deep commitment to education, to communications, to working hard, and the results are obvious.' Something of a renaissance man - he was chairman of Washington's premier concert venue and learned to play the cello in his 40s - Mr Wolfensohn expects the same versatility of the bank. Another area he is trying to expand is what he terms 'capacity building' - using bank staff to train client-country officials in the kind of skills needed to turn Third World nations into First World powers. The hot issue for the bank's team of advisers - a team Mr Wolfensohn is hoping to double in size - is that of providing guidance on banking systems. While the IMF put together the $16 billion bailout of Thailand's economy, the bank has sent seven advisers to Bangkok to help train the government on building a new, crisis-proof system. Providing such key consultancy work is, to Mr Wolfensohn's mind, also the most promising aspect of the bank's relationship with Chinese officials. He greets with a knowing smile suggestions that countries such as China, with tremendous reserves and a healthy growth rate, can afford to pay the bank for such free expert advice. 'As a private-sector preacher, I might have set it up differently,' he said. 'I'm just doing loyal service for the institution, and I do what I'm told to do. If the board ever decides to change, that would be a great day. I think.' Such modesty contrasts with the dynamic, against-the-grain changes Mr Wolfensohn has sought in the organisation's management structure. After complaining that a 'glass wall' of senior management was fighting against his reforms, he introduced his 'strategic compact' six months ago to revamp the system. As well as the 150 'resignations', he says 240 senior managers will be going through retraining to improve their skills. Also part of the compact is a decentralisation of the bank's operations, taking more of its 10,000-plus staff out of cosy Washington and into the field where the money is spent and projects carried out. 'We are very, very happy with the first six months,' he said. 'I will tell [the bank's governors at the Hong Kong meeting] that I think the culture is changing in the institution. 'Not everybody is happy, which is probably a reflection of the fact that something has happened, but there are many people who are, and I really feel we now have a team that is united to try and make this work.' Mr Wolfensohn also declared 'enormous progress' in the bank's year-old campaign to stamp out corruption in recipient nations. He said promises to delay projects where corruption was suspected were acted upon, such as in Kenya and Russia; in the latter, reports of a diversion of $11 million of bank money destined for a coal mine replacement project saw his own intervention with Russian officials, including Deputy Premier Anatoly Chubais. He is also proud that the word 'corruption', a semi-political notion in which the bank never got involved, has now been thrust to the forefront of Third World development. 'Twelve months ago, the word 'corruption' was whispered in the halls of the bank and the fund, but today, you have absolutely straightforward discussions about it,' he said. Despite the knock-on effects of Thailand's banking and currency crisis, Mr Wolfensohn declared himself 'very bullish' about the region's prospects, and sees the instability as a minor blip on the radar screen. He cautioned that even the US had had its own banking crisis - the Savings and Loans collapses of the 1980s - and stressed that the key problematic factor of Thailand's over-exposure to short-term external debt was not visible in other economies such as Malaysia and Indonesia. He also dismissed the claim of leaders, such as Malaysia's Mahathir Mohamad, that international players such as George Soros were prime culprits of the currency swings. 'I think the problems are more fundamental. I don't think Soros created some of the fundamental conditions of Thailand, and I doubt he created the conditions in Indonesia or Malaysia,' he said. China, he said, was a special success story of the region, and was fast approaching the per capita GDP cut-off point where, by the end of 1998, it would no longer need the zero-interest loans from the bank's International Development Association arm. Much of the $3 billion a year loaned to China would be transferred to the bank's main lending arm, the IBRD. It is a significant and symbolic development. 'If you take China, which is the largest of all countries, you have to be deeply impressed by the economic progress it has made,' he said. 'The investment today is going to the interior of China. The growth is coming from the interior. Last year, the GDP was greatly influenced by the resurgence in rural development. Prices were higher. It was a good season, and the centre of China was the engine.' Despite the concentration of most banking business in only four big state-run banks, Mr Wolfensohn said he was confident China's system was stable - supported, he said, by an 'immense' personal savings rate and good economic fundamentals.
