World Bank needs to pass on Malpass

The news that the White House is nominating David Malpass, a senior official at the US treasury, to be president of the World Bank is not good for the institution, nor for multilateralism in general.

It is bad enough that the US insists on retaining the de facto power to appoint the president of the bank, as if by birthright – the counterpart of the duopoly that allows European governments to select the head of the IMF. It is even worse if the White House shows its contempt for the bank by nominating a president who falls well short of the outlook, judgment and experience the role demands.

Nominating a candidate of sufficient stature can at least damp the legitimate complaints from other countries about the duopoly. Across the road from the World Bank at the IMF few would doubt that the leadership of Christine Lagarde as MD has been a success, whatever role her French nationality played in her appointment. Malpass’s judgment even on economics, his supposed speciality, is wanting. Notoriously, as chief economist at Bear Stearns he was blithely confident about the strength of the US economy in 2007 — a year before the global financial crisis hit and his own employer went under. As early as 2011 he suggested tightening monetary policy and driving up the dollar, a hard-money philosophy entirely at odds with the reality that the Fed had averted economic disaster.

Malpass is also deeply sceptical of multilateral institutions. With an increasing number of rival sources of development finance — not to mention private capital — the bank needs to think hard about where it can best add value. One of the obvious areas is providing global public goods such as managing scarce water supplies, combating pandemics and coping with the effects of climate change. But effecting this shift requires the president to be a critical friend of multilateralism who recognises that its institutions need to be adapted to a changing world, not an instinctive ideological enemy. /London, February 6