With the conclusion of last week’s annual meetings, Robert Zoellick completed the first stage of his tenure as World Bank president. When he first took over from Paul Wolfowitz this past July, the Bank staff was in rebellion; a major campaign to replenish the Bank’s coffers was looming; donor countries were uncertain about the Bank’s effectiveness; and the Bank was under attack for corruption and mission creep. Yet thus far, Zoellick has proved a remarkably skillful manager.

One of the easiest mistakes to make at an international institution like the World Bank is to overestimate the autonomy of the leadership. An effective leader can do a great deal at the Bank, but only by bringing along the Bank’s board of directors, who represent the shareholding countries. Neglect in this area can spell doom. Zoellick began wooing the shareholding countries before he took office and appears to have continued the effort since becoming president.

His handling of Bank staff has been equally adept. He began by leaving his American entourage behind and making it clear that he would draw on the expertise of the Bank’s staff and management. Given the heterogeneity of the Bank’s 10,000 employees, that hardly committed Zoellick to any given set of policies. But it has done wonders for morale. Senior management may not enjoy his early-morning meetings, but his energy seems to have heartened the rank and file.

The staff tensions that Zoellick inherited were most acute at the top level. The two managing directors, New Zealander Graeme Wheeler and El Salvadoran Juan José Daboub, had been caught up in the turmoil surrounding Wolfowitz’s departure. Rather than rekindle those tensions with a brusque personnel move, Zoellick handled the situation masterfully. In early October, he announced the appointment of the former Nigerian finance minister, Ngozi Okonjo-Iweala, as an additional managing director, and reshuffled the portfolios of Wheeler and Daboub. Okonjo-Iweala now oversees the Africa, South Asia, and Europe and Central Asia regions, which include most of the Bank’s low-income recipient countries. She brings to the job 21 years of prior World Bank experience.

Not only did her elevation defuse a difficult situation, it also demonstrated an understanding of how to tackle the Bank’s hardest challenges. A major concern of the past two Bank presidents has been corruption in recipient countries. Critics have objected to a lack of transparency and public accountability in Bank lending. Just last week, Indiana Democrat Evan Bayh, chairman of the Senate Banking Committee’s panel on international trade and finance, publicly joined those critics.

Zoellick is a pragmatist, not an ideologue, unlikely to please those who favor radical change. But he may well turn the Bank into a more effective institution.

Given the sensitivity of this topic, Zoellick must handle it delicately. A frontal assault risks reopening the fissures of the last year. Yet to ignore the issue risks undermining the Bank’s effectiveness at promoting good governance in the developing world. Whatever his plan, it will be easier to craft and convey with an African deputy who has an impressive track record of service and integrity.

The other big problems facing the World Bank are money and mission. Decades ago, when the Bank was still relatively new, economists wondered how developing countries could raise the capital they needed to finance growth. Now, with China sitting on international reserves of over $1.4 trillion, it seems less necessary to have the Bank provide lending for such middle-income countries. Among others, Senator Bayh has argued that continued lending to countries such as China makes it more difficult to justify U.S. taxpayer support for the Bank.

Zoellick linked money and mission in September by cutting the interest rate the Bank charges to middle-income countries. He also pledged to use $3.5 billion of money from other Bank funds as a contribution towards the goal of raising $30 billion to replenish the coffers of the Bank’s International Development Association, which aids the poorest countries. The effort was intended to win support for Bank work in those countries.

In an address last week to the World Bank Board of Governors, Zoellick declared, “It is the vision of the World Bank Group to contribute to an inclusive and sustainable globalization—to overcome poverty, enhance growth with care for the environment, and create individual opportunity and hope.” He justified the Bank’s involvement in middle-income countries by noting that they were home to 70 percent of the world’s poor and that their progress had not spread benefits evenly.

This sounds dangerously close to an institution in search of a mission. Yet these are real missions that would be seeking out an institution if the Bank did not already exist.

In the area of basic development assistance, there is a strong international desire for the Bank to fund progress in the poorest countries. But when that money flows through too many different channels, it creates a burden on understaffed recipient countries. The Bank can also serve as a repository of knowledge about how to address development problems. But it would be even more useful in this regard if it became more transparent and more self-critical.

Over the long haul, effective solutions to the world’s most controversial trade and environmental problems will likely involve both the Bank’s technical expertise and its ability to facilitate financial transfers from the developed to the developing world.

Zoellick is a pragmatist, not an ideologue, and is unlikely to please those who favor radical change. But he may well turn the Bank into a more effective institution. He is certainly off to a promising start.

Philip I. Levy is a resident scholar at the American Enterprise Institute.