General Manager, Bank for International Settlements
As head of the BIS since 1994, Andrew Crockett has shepherded this “central bank of central banks” from a European-focused organization to a clearinghouse and standards-setter for central banks worldwide. BIS is currently drafting Basel II, revisions to the 1988 Basel Capital Accords, which recommended a risk-weighted capital ratio for internationally active banks.
He has aggressively resisted attempts by politicians, most recently German Chancellor Gerhard Schroder, to interfere with the financial standards-setting process. Notably, he has defended Basel II’s emphasis on letting banks use their own internal methodologies to structure loan portfolios, rather than adhering to a broad-brush capital ratio focus. This rectitude, coupled with extensive experience at the IMF and previous tenure as executive director of the Bank of England, puts Crockett on the short list to become the next governor of the Bank of England.
First Deputy Managing Director, International Monetary Fund
In her attempts to structure a fair, streamlined way for nations to restructure their sovereign debt with increasingly diverse, non-centralized creditor groups (thanks to the increased use of securities and decrease in more-centralized syndicated loans), Krueger has found herself going head-to-head with John Taylor, undersecretary for international affairs at the U.S. Treasury Department.
Taylor, a George W. Bush appointee, predictably abhors the regulation-oriented approach Krueger suggests — changes to IMF rules that allow a “supermajority” of creditors to agree on restructuring plans. Taylor’s proposal calls for new contract language in all sovereign debt issues that allows the debtor to outline exactly how it would restructure in the event of impending default. Even IMF critics like Joseph Stiglitz hail Krueger’s proposal, which is a reversal of an earlier plan that many felt gave the IMF too much power over restructuring proceedings. Stiglitz has called Krueger’s plan a long-overdue recognition that market forces are often not enough to facilitate sovereign debt restructuring and economic reforms.
World Trade Organization
According to its literature, the WTO, headed by former New Zealand prime minister Mike Moore, technically “does not dictate to governments” and “simply provides administrative and technical support” for its 144 member countries.
Yet, as the world’s primary trade-dispute referee, the WTO can move billions of dollars from one country to another with expert-panel decisions. U.S. companies learned that lesson last January, when an appeals panel sided with the EU in declaring that the U.S. law allowing companies to set up tax-favorable foreign sales corporations overseas was illegal. To recoup damages, the EU has already threatened to levy up to 100 percent tariffs on goods ranging from cereal to airplanes. Conversely, WTO intellectual-property rules promise to yield U.S. companies an extra $19 billion per year, according to a recent World Bank study, while costing Indian businesses $900 million.
With nearly all major nations as members, the WTO can use sheer peer pressure to force change. Just look at China, which was granted membership in 2001 only after 15 years of negotiations and 1,000 pages of stipulations. If all goes as planned, the $1.1 trillion Communist economy will eliminate hundreds of subsidies and quotas in the next decade, while allowing foreign financial-services providers freer rein by 2005, among myriad other changes. Russia is now racing to get its laws in order, according to its officials.
The WTO moves slowly, but its authority is likely only to accelerate in the coming years.
James D. Wolfensohn
President, World Bank
Wolfensohn, an Australian-born former investment banker, had a short reprieve from relentless antiglobalist protest after the terrorist attacks. The break seems only to have given protesters time to regroup. They’re now redoubling their attempts to bankrupt the World Bank by calling for a boycott of its bonds, its primary fund-raising tool.
Meanwhile, new criticism of the bank — one of the major funding sources in the developing world — is coming from the U.S. Congress, which recently released a committee report that called its development efforts “dismal.” Deflecting the censure hasn’t interrupted Wolfensohn’s efforts to improve living conditions for the world’s poor. He recently called for a doubling of aid from all nations and announced a pilot plan (which could cost up to $5 billion) to bring primary-school education to the 125 million children in poor nations who do not attend school. One of his biggest challenges: heading off a Bush proposal to increase the percent of aid given out in the form of grants, not loans.