How Not to Choose a World Bank President

Time:2019-02-11 / Popularity: / From: The Internationalist

Donald J. Trump’s nomination of David Malpass to be the next president of the World Bank, replacing the retiring Jim Yong Kim, sets the stage for a global confrontation. The longstanding if informal U.S. right to choose that institution’s leader was already under threat before Trump took office. But the president has intensified that resistance by forwarding a candidate with views antithetical to the Bank’s mission. Malpass shares Trump’s misguided view that multilateral institutions inherently run athwart to U.S. sovereignty and national interests, and he can be counted on to undermine the Bank’s invaluable work around the globe. He is precisely the wrong person at the wrong time to helm the Bank, which desperately needs imaginative and inspiring leadership from a president selected on the basis of merit. Trump’s brazen selection also underscores the need for a more open, transparent leadership competition.
A Gentlemen’s Agreement for Another Time
Since its founding near the end of World War II, the World Bank has had twelve presidents: some with distinguished tenures, like James Wolfensohn, and others with forgettable ones, like Paul Wolfowitz. All twelve have been U.S. citizens, just as each IMF head—including the current occupant, Christine Lagarde—has been European. A gentlemen’s agreement that places national prerogative above merit has been central to the selection process throughout these institutions’ histories, a process that reflects the world less as it exists today and more as it existed at the time of the 1944 Bretton Woods conference, when the United States and Europe commanded the lion’s share of the world economy. In contrast, the secretary-general of the United Nations has traditionally been chosen through a system of regional rotation, with formal selection of the eventual office-holder ratified by the UN Security Council in a back-room deal. The process has improved recently; the 2016 secretary-general selection was the most open and competitive in the UN’s history.
International Organizations World Bank  Development Global Governance Emerging Economies
Patience with antiquated leadership selection techniques is waning, however, particularly among emerging powers, who complain that their growing weight is not reflected in the main institutions of global governance. Antipoverty activists, as well as development economists, demand that these jobs go to the most qualified individuals, regardless of citizenship. The World Bank’s professional staff shares this view, insisting that their leader should be chosen through an open, transparent, and meritocratic process.
To date, the results of this campaign have been desultory. When the Obama administration nominated Kim in 2012, Colombia and Nigeria put forward two highly qualified alternative candidates. But the result was a foregone conclusion—Kim easily won board approval. It helped that Kim, then president of Dartmouth College, had a background in development as one of the founders of the nongovernmental organization Partners in Health.
In a 2015 interview in Quartz, Kim predicted, “you will never again see an IMF or a World Bank election without very strong contention, coming especially from the developing world.” Trump’s nomination of Malpass increases the odds that simmering discontent will escalate into open diplomatic warfare over who should succeed Kim. Under the Bank’s president selection process, a candidate for the presidency must secure a majority vote from the board, though the 2011 guidance strongly suggests it be a unanimous consensus. While some European nations may hesitate to challenge the U.S. prerogative, given the knock-on effect for IMF leadership selection, some may break ranks. And non-European powers are sure in many cases to actively resist, demanding a qualified leader from Asia, Africa, or South America.
Pass on Malpass
Until recently, the Trump administration had largely exempted the World Bank from its full-frontal assault on multilateral institutions and international cooperation. This was partly a function of Kim’s savvy diplomacy. He endorsed the Ivanka Trump-driven Women Entrepreneurs Finance Initiative (dubbed the “Ivanka Fund” by Bank insiders). Such maneuvers helped to insulate the Bank from the administration’s assaults on “globalism” and even win U.S. support for a $13 billion capital increase.
Malpass, for his part, has at times been critical of the Bank, characterizing it as obsolete in an era of accessible private capital markets. While he played a role in shepherding the recent U.S. funding increase, he has also criticized the Bank’s failure to “graduate” countries no longer needing its resources (not least China), which he made a stipulation of the recent capital infusion. More generally, he regards the Bank as overly “intrusive” on its member states, part of a “multilateral system that often drifts away from our values of limited government, freedom, and the rule of law.” Malpass’s attitude toward the World Bank is reminiscent of the views of “Mr. Republican” himself, the late Senator Robert Taft (R-OH). During negotiations over the proposed World Bank, the isolationist Midwesterner likened providing U.S. resources to the World Bank to “pouring money down a rat hole.”
What Taft did not appreciate, and what contemporary Bank critics ignore, is that the institution often earns a positive income. It lends funds to governments on commercial terms, using some of these profits to provide grants to some of the poorest countries through its “concessional” window, the International Development Association (IDA). This arrangement allows the Bank to operate in poverty-stricken countries, including forty-odd of the world’s “fragile states,” which would otherwise be unable to secure the resources they need in sufficient quantity or on sustainable terms in international capital markets.
Given recent global developments, one can understand skepticism of the Bank’s enduring centrality. Beyond the emergence of global capital markets, the Bank faces numerous institutional competitors. These include not only the several regional multilateral development banks but newer players like the Asia Infrastructure Investment Bank (AIIB) and the BRICS Development Bank. The Bank, however, retains unmatched financial resources among public international lenders, and—not least—unparalleled technical expertise. It is also a repository of standards and norms for development cooperation—a status and function that has grown more critical as non-traditional donors, including China, emerge and forge partnerships based on mercantilist or predatory arrangements.
Malpass’s lack of a positive agenda for the Bank, then, is a glaring flaw in his candidacy. The Bank is facing an existential crisis over its appropriate role in a shifting global landscape. The institution—the world’s leading multilateral development agency—urgently needs a progressive, imaginative leader with an intimate understanding of the complexities involved in nurturing effective governance, meeting basic human needs, alleviating poverty, and advancing growth in some of the world’s most challenging institutional environments. Under Kim, the Bank embraced these trends in championing and helping to implement the UN Sustainable Development Goals.
Beyond preserving these vital roles, the next leader of the Bank will need to prioritize three missions that neither Malpass nor the Trump administration seems prepared to embrace. The first is infrastructure. Economists estimate that the world faces a deficit in infrastructure financing of about $3 to 5 trillion annually. The Bank can use its own resources to leverage private infrastructure investment, upholding good development principles while so doing. Second, as experts at the Center for Global Development have argued, the institution needs to increase the resources that it devotes to financing global public goods. These include supporting programs on climate and sustainable energy, health, and agriculture. Finally, it needs to enhance its ability to address the challenges posed by unexpected shocks like pandemics and natural disasters, as well as those in fragile and conflict-affected states, which constitute an increasing size of its portfolio (and where a growing proportion of the world’s poorest live).
Malpass, based on his background and comments, is uniquely ill-suited to take on this agenda. Since Trump is unlikely to revoke the nomination, believers in the World Bank must hope that his candidacy is defeated.
There are risks in such an approach. Rebuffing the president’s preferred candidate could stimulate blowback, hindering the good working relationship between mid-level U.S. and Bank officials. It could also increase skepticism on Capitol Hill and make American officials more hesitant to fund the institution. These risks are worth taking, however, if they can produce a candidate that is suited for the job.

Author: Stewart M. Patrick

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