Why Jim Yong Kim’s move has shaken up the World Bank

The departure of the bank’s head raises questions about its future amid Trump administration suspicions of international institutions

The day after suddenly announcing that he was ditching the presidency of the World Bank for a Wall Street private equity firm, Jim Yong Kim made an appearance before staff to muster an explanation.

In the packed atrium of the bank’s headquarters, just two blocks away from the White House, Mr Kim said he was leaving three years earlier than expected to take a lucrative job that sounds similar to his World Bank role — helping the private sector finance infrastructure projects in emerging markets. “This opportunity came, and, you know, it is very hard to predict when these things come to you in your life,” he said.

The 59-year old former academic and health official then dashed off because he had a “a lot of phone calls” to make, leaving other top officials to field remaining questions. Many in the audience — with whom Mr Kim had repeatedly clashed since taking the reins of the World Bank as Barack Obama’s appointee in 2012 — left unsatisfied. “The town hall didn’t clear up a thing,” one World Bank employee lamented.

Mr Kim’s abrupt, voluntary exit has not only triggered confusion and frustration for staff at the bank, but raised profound questions about the leadership and the future role of an institution that has been a centrepiece of the Us-led international economic order.

Created in the aftermath of the second world war in conjunction with the IMF to help reduce global poverty, the World Bank’s influence has been waning as it has faced growing competition from private sources of capital and from regional development banks and much more assertive bilateral lending by China to many poor countries. While the World Bank lent $64bn in fiscal year 2018, some estimates have pegged Chinese lending overseas at several multiples of that.

Moreover, since it has traditionally been led by an American, it is now facing the prospect — much sooner than many inside the Bank could fathom — of a new president chosen by Donald Trump, who has been openly sceptical of multilateral institutions and could attempt to reshape the way it operates.

A World Bank president chosen by the Trump administration could, in particular, try to limit its financing of projects intended to tackle climate change, as well as any work that is seen as supporting the building of Chinese infrastructure through the Belt and Road Initiative — and may insist on other big course corrections as well.

“I think frankly right now people in the bank are worried about how do we protect the institution,” says one former senior World Bank official.

That an American will lead the World Bank is likely but not a given. Its board has launched a selection process, vowing that it should be “open, merit-based and transparent” — meaning it would not necessarily be tied to nationality. Some observers have hoped that Mr Kim’s early exit could be the opportunity for the world to coalesce around an alternative candidate, finally breaking the gentleman’s agreement that allows the US to choose the head of the World Bank and Europeans to manage the IMF.

But others say that may be wishful thinking. David Dollar, a former World Bank official and US Treasury emissary to China who is now at the Brookings Institution, says if there were an attempt by other countries to block America’s nominee it could backfire.

“It is a very complicated game,” he says. “My instinct is that there is a very strong likelihood that the US nominee will be approved. The world has an interest in the US staying engaged with the World Bank.”

Possible names are already floating around Washington, including David Malpass, a current top Treasury official on international affairs, Nikki Haley, former ambassador to the UN, Mark Green, head of the US Agency for International Development, and even Ivanka Trump, the president’s daughter. A Treasury department spokeswoman says it has received “a significant number of recommendations for good candidates” and was “beginning the internal review process” to make its selection.

Still, people familiar with the process say a contest could yet materialise. Among possible emerging market alternatives are Ngozi Okonjo-iweala, a Nigerian economist who challenged Mr Kim for the job in 2012, Donald Kaberuka, a Rwandan economist and former president of the African Development Bank, and Sri Mulyani Indrawati, Indonesian finance minister.

Whoever emerges as the winner will have to grapple with Mr Kim’s thorny legacy. When he was plucked from the presidency of Dartmouth College in 2012 to lead the bank, the Korean-american had little previous experience in finance or public service. Yet Mr Kim plunged the bank into a major internal shake-up to get rid of the “silos” within the institution and encourage more sharing of information.