The World Bank’s recipe for ir­rel­e­vance

The Myanmar Times - - Views - DEVESH KAPUR news­room@mm­times.com

WORLD Bank Pres­i­dent Jim Yong Kim’s nom­i­na­tion for a sec­ond term is in­ex­orably mov­ing for­ward with a lack of trans­parency that has be­come all too typ­i­cal. Many ob­servers are once again gnash­ing their teeth at the United States’ con­tin­ued mo­nop­oly over the top post, de­spite the poor per­for­mance of past US nom­i­nees. As the late Yogi Berra once put it, “It’s like déjà vu all over again.”

The US has been par­tic­u­larly brazen in sub­vert­ing the nom­i­na­tion process to en­sure Kim’s re-ap­point­ment. For starters, de­spite hav­ing another 10 months left in his first term, Kim – surely with the US gov­ern­ment’s bless­ing – asked the bank’s ex­ec­u­tive board to ac­cel­er­ate the ap­point­ment process. The board agreed – with no no­table dis­sent – and even short­ened the se­lec­tion process to a mere three weeks.

A com­pressed sched­ule makes it dif­fi­cult for World Bank mem­bers to rally around an al­ter­na­tive can­di­date. And Kim al­ready had a head start, af­ter qui­etly lob­by­ing mem­ber gov­ern­ments at the G7 sum­mit in Ja­pan this May and in per­sonal vis­its to China and In­dia in recent months.

More­over, as the in­cum­bent, Kim can grant favours to win sup­port: make loans that play to in­flu­en­tial share­hold­ers’ pet pref­er­ences, prom­ise cer­tain coun­tries spots on the lead­er­ship ros­ter, and stamp the bank’s im­pri­matur on par­tic­u­lar gov­ern­ments’ own do­mes­tic ini­tia­tives. Given the con­tents of Kim’s po­lit­i­cal tool­kit, this match was never go­ing to be played on a level field.

Many peo­ple can stom­ach ques­tion­able means if they con­sis­tently gen­er­ate pos­i­tive ends, but this has not been the case with Kim, who is among the worst pres­i­dents in World Bank history. His ad­min­is­tra­tion has been marked by au­thor­i­tar­i­an­ism and capri­cious­ness, and he has forced out se­nior man­agers at un­prece­dented rates, some­times re­quir­ing the bank to reach quiet set­tle­ments with those af­fected. In four years, the pres­i­dent’s of­fice has had five chiefs-of-staff, and sev­eral of the bank’s se­nior women have left, hint­ing at a capri­cious lead­er­ship cul­ture.

Last month, in a let­ter to the bank’s board warn­ing of a “cri­sis of lead­er­ship” un­der Kim, the World Bank Staff As­so­ci­a­tion wrote, “We preach prin­ci­ples of good gov­er­nance, trans­parency, di­ver­sity, in­ter­na­tional com­pe­ti­tion and merit-based se­lec­tion. Un­for­tu­nately, none of these prin­ci­ples have ap­plied to the ap­point­ment of past World Bank Group Pres­i­dents.”

Kim has set such a low bar for the bank pres­i­dency that it would not be dif­fi­cult to find a bet­ter can­di­date. A short list would in­clude Ngozi Okonjo-Iweala, a for­mer fi­nance min­is­ter of Nige­ria; Nan­dan Nilekani, an en­tre­pre­neur who led an im­pres­sive bio-iden­ti­fi­ca­tion pro­gram in In­dia; and Thar­man Shan­mu­garat­nam, Sin­ga­pore’s deputy prime min­is­ter.

But even if Kim were to go, Amer­ica’s prob­lem­atic role would re­main. The US has long in­sisted that the bank’s pres­i­dent be a US na­tional, and yet it has re­peat­edly nom­i­nated un­suit­able can­di­dates to run the in­sti­tu­tion. For ex­am­ple, for­mer US Deputy Sec­re­tary of De­fense Paul Wol­fowitz’s World Bank stint, from June 2005 to July 2007, was a dis­as­ter, but the US faced no con­se­quences (such as los­ing the right to choose the next nom­i­nee).

The US has chas­tised China for re­ject­ing the Per­ma­nent Court of Ar­bi­tra­tion’s rul­ing against Chi­nese ter­ri­to­rial claims in the South China Sea. And yet, in sup­port­ing Kim for another term – in the face of ob­jec­tions from the World Bank’s own staff – the US is show­ing it­self to be no less de­fi­ant when its own in­ter­ests are at stake.

There is noth­ing new or sur­pris­ing about great pow­ers mak­ing and break­ing rules as it suits them. The sur­prise has been emerg­ing economies’ ap­par­ent non­cha­lance re­gard­ing Amer­ica’s roughshod reign at the World Bank. While other mem­ber gov­ern­ments of­ten ex­press out­rage at the US mo­nop­oly over the bank’s lead­er­ship, and at Europe’s sim­i­lar mo­nop­oly over the In­ter­na­tional Mone­tary Fund’s lead­er­ship, they too are will­ing par­tic­i­pants in the cha­rade.

One rea­son is that coun­tries are happy to strike their own side deals to en­sure gen­er­ous lend­ing. This fact is re­flected in the World Bank Group’s of­fi­cial lead­er­ship, where the first three peo­ple listed af­ter the pres­i­dent – hail­ing from Brazil, China and In­dia, re­spec­tively – are care­fully dis­trib­uted by na­tion­al­ity.

A sec­ond rea­son is that, while emerg­ing-econ­omy mem­bers dis­like the US mo­nop­oly, they are even more wor­ried about the prospect of a pres­i­dent from a ri­val emerg­ing econ­omy. The Euro­peans and Ja­panese have their own mo­nop­o­lies – over the IMF and the Asian De­vel­op­ment Bank, re­spec­tively – and the Chi­nese have created their own with the Asian In­fra­struc­ture In­vest­ment Bank.

These ar­range­ments amount to a ca­bal of mu­tual com­plic­ity, whereby world pow­ers des­ig­nate eco­nomic spheres of in­flu­ence through re­gional gov­er­nance in­sti­tu­tions. Each ma­jor power knows that if mo­nop­oly con­trol is threat­ened in one sphere, then it is threat­ened in all spheres, so they hang to­gether to avoid be­ing hanged sep­a­rately.

But, perhaps most im­por­tant, the world’s emerg­ing pow­ers no longer need the World Bank as much as they once did. Hav­ing found their own al­ter­na­tives for most of what the bank does, their in­dif­fer­ence to a sec­ond term for Kim sug­gests that they sim­ply don’t think the bank mat­ters much any­more. In­deed, it is the US, whose global in­flu­ence is wan­ing, for which main­tain­ing con­trol at the World Bank mat­ters the most.

So, be­cause US Pres­i­dent Barack Obama’s ad­min­is­tra­tion has not both­ered to fol­low cred­i­ble pro­ce­dures in mak­ing its nom­i­na­tion, much less se­lect a bet­ter can­di­date, a failed World Bank pres­i­dent will get another crack at the job. By the time he leaves, his suc­ces­sor may well be wel­comed with a col­lec­tive shrug. – Project Syn­di­cate Devesh Kapur is a pro­fes­sor of po­lit­i­cal sci­ence at the Univer­sity of Penn­syl­va­nia.

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