World Bank: Kim and be­yond

Tani Alex and Joe Athialy dis­cuss what good and bad came out of Kim’s reign as the bank’s pres­i­dent and what seems to be the fu­ture of the cov­eted ti­tle

Millennium Post - - In Focus -

Jim Yong Kim re­signed from the pres­i­dency of the World Bank on Jan­uary 7, 2019. The world of devel­op­ment fi­nance, mul­ti­lat­eral in­sti­tu­tions, and in­ter­na­tional fi­nan­cial in­sti­tu­tion watch­ers woke up to this un­ex­pected news from New York ear­lier this week. Then soon came Kim’s an­nounce­ment to join a pri­vate firm which spe­cialises in in­fra­struc­ture in­vest­ments in poor economies.

Spec­u­la­tions and sto­ries have been float­ing. What could have trig­gered this quick-step­ping down? Was it the long-drawn re­ported story of con­flict with US Pres­i­dent Don­ald Trump and his ad­min­is­tra­tion? Trump thump­ing over dif­fer­ences in poli­cies on cli­mate change and aid to mid­dle-in­come coun­tries, in­clud­ing China? While we wait for more ‘of­fi­cial’ in­for­ma­tion from New York and some un­of­fi­cial news as well, un­til the dec­la­ra­tion of next elec­tion for the new chief at World Bank… it’s a hap­pen­ing month.

Kim’s pres­i­dency had started with high hopes. He was a first-time non­bu­reau­crat ap­pointee of the US at the helm of the bank, some­body who claimed him­self to come from the civil so­ci­ety and who pub­licly men­tioned his as­so­ci­a­tion with ‘50 Years is Enough!’, which “is a coali­tion of over 200 US grass­roots, women’s, sol­i­dar­ity, faith-based, pol­icy, so­cial and eco­nomic jus­tice, youth, labour and devel­op­ment or­gan­i­sa­tions ded­i­cated to the pro­found trans­for­ma­tion of the World Bank and the In­ter­na­tional Mon­e­tary Fund (IMF)”.

Kim told Vice, in 2015, that he had even ad­vo­cated that the bank is shut down at that time – but quickly added that now he was glad he failed. How­ever, he presided over an in­sti­tu­tion which ended up strug­gling to stay rel­e­vant in the wake of new devel­op­ment banks and surg­ing pri­vate eq­uity funds, weak­ened bank’s own safe­guard poli­cies to “stay com­pet­i­tive” with its ri­vals. He “en­sured that large in­fra­struc­ture projects for the pri­vate sec­tor were made risk­free and that prof­its were guar­an­teed by devel­op­ment funds”.

Fur­ther­more, his sud­den unan­tic­i­pated sign­ing off now seems very prob­lem­atic. And this is not be­cause one is deeply con­cerned about the fu­ture of the first mul­ti­lat­eral bank

of the world [now that the devel­op­ment banks from East as well as young mul­ti­lat­eral banks from China are also in place from last four years, fol­low­ing the lines of Bret­ton Wood In­sti­tu­tions in poli­cies and in­vest­ments]. Also, not be­cause the watch­dogs of in­ter­na­tional fi­nan­cial in­sti­tu­tions can plainly see in broad day­light that Kim’s reign was not a bright pos­i­tive pe­riod for us, our en­vi­ron­ment and our com­mu­ni­ties. It is ac­tu­ally the du­bi­ous and alarm­ing trend of the new re­volv­ing door to the pri­vate sec­tor which has be­gun with Kim, who is join­ing Global In­fra­struc­ture Part­ners from next month as its part­ner and vice-chair. This is a plain con­flict of in­ter­est.

Dur­ing his ten­ure at the bank, he had tena­ciously pro­moted the need for pri­vate cap­i­tal and ad­vo­cated de-risk­ing pri­vate in­vest­ment play­ers through blended fi­nance dur­ing his ten­ure at the bank. The new role of rais­ing cap­i­tal from sov­er­eign wealth funds, pri­vate foun­da­tions etc, apart from that of donor coun­tries, has made it pos­si­ble for the pri­vate sec­tor to ex­ert con­sid­er­able in­flu­ence on global deals, which is then ve­he­mently in­tro­duced to bor­row­ing coun­tries’ poli­cies. This is the on­slaught on poor and emerg­ing na­tions, with­out a tinge of thought and heart.

In 2015, un­der his pres­i­dency, World Bank an­nounced that it was not go­ing to fi­nance coal projects. How­ever, a closer look into its lend­ing will re­veal that while the bank stopped fi­nanc­ing coal projects, it con­tin­ued and in fact pro­pelled its lend­ing to key as­so­ci­ated fa­cil­i­ties for coal projects like trans­mis­sion and dis­tri­bu­tion lines, ports for im­ports of coal and rail cor­ri­dors for the trans­porta­tion of coal. Most sig­nif­i­cant was his ab­ject re­jec­tion of the find­ings of World Bank’s own mech­a­nism, the Com­pli­ance Ad­vi­sor Om­buds­man (CAO), which is the ac­count­abil­ity mech­a­nism of the bank’s pri­vate sec­tor arm, the In­ter­na­tional Fi­nan­cial Cor­po­ra­tion (IFC), on the is­sue of Tata Mun­dra Ul­tra Mega Power Project in Gu­jarat In­dia.

The CAO had re­ported a bla- tant vi­o­la­tion of IFC’S poli­cies in the project right from its plan­ning to its run­ning. Kim was em­pow­ered to rec­om­mend ac­tions, but he did noth­ing to ad­dress the find­ings and re­pair the dam­ages, be­tray­ing his com­mit­ment to peo­ple and the en­vi­ron­ment. It is also in­ter­est­ing to view his res­ig­na­tion with a view that for the first time the bank is fac­ing a law­suit filed by In­dian fish­ing com­mu­ni­ties at the US Supreme Court chal­leng­ing its im­mu­nity and the ver­dict is ex­pected soon.

Now, as one would nor­mally ex­pect, the next round of dis­cus­sions in this shift­ing dy­nam­ics is guess­ing who would be the nom­i­nees for the can­di­da­ture of the cov­eted ti­tle. Tra­di­tion­ally, a Euro­pean would be at the helm of In­ter­na­tional Mon­e­tary Fund and a US cit­i­zen would steer the World Bank.

What about the next one?

Talks are on and ar­ti­cles are al­ready up on an emerg­ing need for tran­si­tion of this process – es­sen­tially ask­ing for a non-us pres­i­dent for World Bank. The first rea­son be­ing that the bank’s role has evolved over the years from a global len­der for re­con­struct­ing war-torn economies to pol­icy and ad­vi­sory body for ‘re­duc­ing poverty’ and now ‘re­duc­ing in­equal­ity’. And se­condly, that a large num­ber of mem­ber coun­tries, the share­hold­ers, should be­gin hav­ing a stake in de­cid­ing who needs to run the bank.

Can it be that the dom­i­na­tion of the ma­jor­ity share of US cap­i­tal with the bank and the dol­lar vote led to a sit­u­a­tion where any dif­fer­ences with the US pres­i­dent will not al­low any­one to con­tinue in the bank? When can one ex­hort both the bank and the US ad­min­is­tra­tion to an­a­lyse that Kim’s sur­pris­ing res­ig­na­tion was a pos­si­ble warn­ing that all is not well with the World Bank.

This brings us to the larger is­sues, which are be­yond one pres­i­dent. The elec­tion of a new pres­i­dent should be through an open process, in­volv­ing all, in­clud­ing the civil so­ci­ety, and should end the hege­mony of US in the ap­point­ment. But go­ing for­ward, the bank should heed the crit­i­cal call to un­dergo rad­i­cal struc­tural changes, democra­tise the in­sti­tu­tion, stop pro­mot­ing neo-lib­eral poli­cies in emerg­ing economies and pre­vent in­flu­enc­ing the poli­cies of poor coun­tries to work to­wards al­le­vi­at­ing poverty and not the poor.

An in­sti­tu­tion which re­sists such changes will con­tinue to face the op­po­si­tion of civil so­ci­ety and com­mu­ni­ties af­fected by its wrong lend­ing. Kim lost a chance to steer the in­sti­tu­tion away from dis­as­ter.

Let the ap­point­ment of his suc­ces­sor kick start a process to make the in­sti­tu­tion change its course and be rel­e­vant to the ones who need it the most—the poor. If not, we will con­tinue to meet them in the streets.

Kim lost a chance to steer the in­sti­tu­tion away from dis­as­ter. Let the ap­point­ment of his suc­ces­sor kick start a process to make the in­sti­tu­tion change its course and be rel­e­vant to the ones who need it the most – the poor. If not, we will con­tinue to meet them in the streets

DOWNTOEARTH

(The views ex­pressed are strictly per­sonal)

Tra­di­tion­ally, a US cit­i­zen would ac­cede the cov­eted post and steer the World Bank

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.