The World Bank’s recipe for irrelevance
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.