World Bank juggles politics and merit in race to name leader

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The Colombian was echoing the charge of critics that the race is no choice at all because an American has always occupied the top job at the bank.

It is one side of a convention that has seen a European head the International Monetary Fund (IMF), the international lender that was founded alongside the World Bank at the US resort of Bretton Woods shortly before the end of World War Two.

“We have had three very good candidates. We should not lose sight of that,” said Thomas Bollyky, a specialist in development at the Council on Foreign Relations. “But America should have committed itself to an election in which the leader must win a majority of the country votes, not just the largest shareholders.”

As the World Bank’s largest shareholder and donor, the US vote carries greater weight than every other member country.

Should Dr Kim, who moved from South Korea to the US with his family as a child, win, it risks casting a shadow over the semi-annual meetings of the World Bank and the IMF that begin in Washington next week.

Coming less than a year after former French finance minister Christine Lagarde was picked as the head of the IMF, Dr Kim’s appointment will do little to allay the concern of critics that the election process for both institutions gives little more than a polite nod to being merit-based and transparent.

Not that Dr Kim lacks supporters beyond The White House. “Kim is very strong on health policy and, more broadly, on building an evidence-based approach to policy,” explains Domenico Lombardi, a former executive director at the bank.

His background in public health policy – he ran the HIV/Aids department at the World Health Organisation – equips him with practical experience in one of the fastest-growing areas in the field of development. While the fact that President Barack Obama broke with the tradition of plucking the US nominee from a collection of former administration officials has also won applause.

Previous presidents have included Robert McNamara, who served as defence secretary during the Vietnam War war, and Paul Wolfowitz, once a senior defence adviser to President George W. Bush. The outgoing president, Robert Zoellick, is a former US trade official.

While Dr Kim’s likely election will prove a talking point in Washington this week, the greater concern for those worried about the future role of the World Bank is whether being the US nominee will prove a handicap for him at a critical time in the organisation’s history.

“I think he will have a challenge winning over the institution,” says Mr Bollyky of the CFR.

Experts appear united in their conviction that the bank needs to think afresh about how to implement its mission of cutting poverty at a time when the global balance of economic power is shifting so quickly.

The upward march of emerging economic superpowers means that the bank is now competing with the likes of China to make loans to some of the world’s poorest countries.

It is also confronting a world in which there are a growing number of people living below the poverty line in middle-income nations, which might sooner turn to private investment rather than loans from the bank. The institution’s lending to middle-income countries came in at under $8bn (£5bn) in the last financial year.

“All in all, this has acted in a way to decrease the World Bank’s role in the development architecture,” argues Mr Lombardi. “The bank, while taking note of these changes, has not put forward a sensible strategy to reposition itself.”

For some, this changing landscape presents a real opportunity for Dr Kim should he win the race.

With growing competition when it comes to lending, Mr Bollyky believes that the bank should increase its focus on tackling development problems that are not country-based – such as the spread of infectious disease and water shortages – and that also tap the knowledge and skills within the bank.

Given his career in public health, “Kim has the best skill set to address the cross-border issues,” said Mr Bollyky.

But the mixed reaction that Dr Kim’s likely nomination will bring is sharpened because of what many see as the strength of Ms Okonjo-Iweala’s claim to the job.

Now in her second stint as Nigeria’s finance minister, she was a managing director at the bank between 2007 and 2011. In a visit from Abuja to Washington last week, the Nigerian pressed her case based on her professional training as an economist, her experience as a senior government official in one of Africa’s biggest economies and her knowledge of how the bank operates.

“It’s going to be tough, including for the Europeans, to justify where they are going to cast their vote if it is based on merit,” said Mr Lombardi.

The 57-year old Ms Okonjo-Iweala said this month that if the US and Europe continue a monopoly on the top jobs at both the IMF and the World Bank “there will be less interest in these institutions and people will go make their own.”

At a summit in New Delhi last month, the leaders of Brazil, Russia, India, China and South Africa said they are exploring the possibility of establishing a rival bank focused on development. Such public declarations, alongside their growing economic muscle, suggest that these governments are keen to break America’s strangehold on the bank’s top job.

However, as with last year’s IMF race, none have yet declared their support for the Nigerian candidate. Indeed, on Friday night Russia said it would back Dr Kim because of his “professional qualities.” And there is no obvious reason why nations as diverse as India and Brazil should swiftly coalesce around a candidate from an emerging market.

In an echo of what has happened at the IMF, Mr Lombardi says that you are likely to see a victorious Dr Kim promote indivduals from the world’s emerging economic superpowers to very senior positions in the bank.

However the next week unfolds, the 12th president of the World Bank faces challenges in equipping the institution to tackle poverty in a fast-changing economic landscape.

In : Finance

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