OPINION: LATER THIS month the executive board of the World Bank will meet in Washington DC to appoint the next president of the bank, one of the most prestigious and influential positions in the world of international finance.
But in a historic development, for the first time in its history, three strong candidates, an American, a Colombian and a Nigerian will vie for the post in what appears to be an open contest.
For more than 60 years, the heads of the premier international economic organisations, the International Monetary Fund and the World Bank, have “by tradition” been headed by a European and an American, respectively.
In order to be appointed, the candidate must receive the support of a majority of the votes cast by the organisations’ member governments (voting entitlement is based on subscribed share capital).
In the case of the IMF, the Europeans (with more than 30 per cent of the votes) have needed to agree on one candidate who is also acceptable to the US (which has almost 17 per cent of the voting power). Although there have been some attempts at a competition (including most recently last year when Christine Lagarde of France had to fend off a challenge from Augustin Carstens, Mexico’s minister for finance), once Europe and the US settle on a person, the outcome has been essentially a foregone conclusion.
So far as the bank is concerned, until now there has never even been the appearance of a contest. Successive US administrations simply “announced” their candidate, other governments meekly indicated their assent, and that was the end of the matter. The US typically drew from a varied assortment of bankers, senior administration officials or current or former political figures to fill the post.
For decades many have bemoaned the hegemony exercised by Europe and the US over these positions, calling instead for an open and structured selection process. These efforts met with little success. More recently, however, and apart from more enlightened thinking by the current Obama administration (US treasury secretary Tim Geithner, himself a former senior IMF staff member, has long urged reform), political pressures from the increasingly powerful group of emerging market economies could no longer be ignored.
The process currently under way for selecting the bank president, while not perfect, is a massive improvement compared to the past. Following caucuses among all the member governments, three representative candidates “emerged” – a US nominee, a representative of the middle income group (both male), and an African woman.
The choice will be in the end a political one (as it should be – to believe otherwise is naive) but subject to a full and open scrutiny of the applicants’ qualifications and suitability for the job.
The US candidate, Jim Yong Kim, a Korean-American medical doctor, represents a further departure from the traditional US approach of relying on ex-banker, ex-administration types. His main experience is as head of the HIV/AIDS department at the World Health Organisation. He is currently president of the prestigious Dartmouth College in New England. Although not widely known as an international bureaucrat, his expertise in public health matters may be highly useful since a major feature of the bank’s current role is to interact with private foundations heavily involved in the area, such as those run by Bill Gates and Warren Buffet.
It is likely that Kim received strong support from both Bill and Hillary Clinton, given the interest on both their parts in issues of public health policy.
Colombia’s candidate, José Antonio Ocampo, comes from a more traditional bureaucratic, financial background. He is a former minister for finance of Colombia and has been in charge of the United Nations Commission for Latin America and the Caribbean.
The most well-known applicant, by some margin, is the current minister for finance of Nigeria, Ngozi Okonjo-Iweala. She has twice served as minister, reportedly resigning during her first stint following differences with the then president of Nigeria over the pursuit of anti-corruption policies. A strong professional economist, she has spent much of her career at the World Bank where she rose to one of the three number two managing director positions.
Her relations with IMF head Lagarde, with whom she earlier worked closely on a rescheduling of Nigeria’s debt, are said to be excellent.
By all accounts she is well respected and liked by World Bank staff as attested by a recent “open letter” from three dozen senior retired staff supporting her candidacy. All three applicants will undergo an extensive round of interviews before the final selection is made. It is difficult to say how bank member countries will line up. The US will obviously push its candidate, but if in the end one of the other two win this should not be – and hopefully would not be – seen as a major defeat for the US administration.
The ability of Ocampo to capture support from Latin America as well as other emerging market economies is something of an unknown at this stage. Okonjo-Iweala, who has already received the strong endorsement of the Economist and the Financial Times , can expect significant support from some European countries.
While the possibility of a prior “deal” whereby the US backed Lagarde’s IMF candidacy in return for a promise of European support for a US nominee for the bank job cannot be excluded, it seems unlikely that Europe will vote as a bloc.
The attitude of the Irish Government, which has a (small) vote on the matter, has not been made known so far.
Some cynics have said that in the end politics – which is usually meant as a code word for US pressures – will emerge victorious. But the fact that the contest is open does not mean the US is somehow disqualified from putting forward what they see as a strong and suitable person who might win out.
What makes this moment potentially historic is that for the very first time the US has not followed the well trodden path of all previous administrations – Republican and Democrat – and simply “imposed” a candidate. Credit is due to president Barack Obama and his officials for recognising that, in the current globalised world, sustaining the legitimacy of the World Bank requires a reformed approach to governance at the highest levels. It can only be a matter of time before the IMF follows suit.
Donal Donovan was a staff member of the IMF during 1977-2005, retiring as a deputy director. He is adjunct professor at the University of Limerick and visiting lecturer at Trinity College Dublin.