Sympathy for the Devil

A personal reflection on the World Bank, Jim Kim, and David Malpass

As a U.S. citizen and a global justice activist, I’ve always opposed the US’s prerogative to nominate the World Bank president. And I certainly never expected to like any U.S. candidate for the World Bank presidency. In 2012, then, I was startled when Barack Obama nominated Jim Kim.

I had met Kim back in 1995 at a protest against the IMF and World Bank in Washington, DC. It was no more than a handshake, but I was thrilled to meet the lead editor of Dying for Growth, a remarkable compendium of articles about the disastrous impact of IMF/WB policies on health around the world. It was one of the pillars of the multi-sectoral work I did with the 50 Years Is Enough U.S. Network of IMF/WB critics.

He had left Partners in Health well before his nomination and gone on to other, less movement-friendly positions, such as the presidency of Dartmouth College. But still, he was Jim Kim; he at least had been “one of us.” What was I, a dedicated campaigner against the U.S. monopoly on the WB presidency, to do?

I didn’t support the U.S. nomination of course, but I wasn’t so passionate in opposing it as I might otherwise have been. Less sentimental colleagues led the charge. But now that Kim has left, we know that he will be remembered primarily for turning the Bank into an even bigger booster of private-sector domination of development than it already was. So much so that he decided to bail on the job when Trump could nominate his replacement, apparently to get the obscene payoffs that await investment bankers with insider experience. Not exactly what I had been hoping for. Continue reading

Open letter to the World Bank Group Board of Executive Directors

Appointment of the new World Bank Group President

The selection of the new World Bank president takes place amid a crisis of multilateralism reflected in the ascent of anti-establishment and nationalist parties and increased trade tensions. These arise from persistent challenges to the world economy ranging from the growing inequality crisis, the increasing importance of finance, financial markets, and financial institutions in the economy, a looming debt crisis and increased corporate capture that is resulting in the erosion of states’ sovereignty and their ability to meet their human rights obligations. These trends are exacerbated by the quickly evolving climate change crisis, which threatens the livelihoods of the poorest around the globe.

The World Bank requires a leader able and willing to critically assess the role the Bank can play in challenging the failed model that has led us here. The next president must ensure the institution leads by example and uses its privileged position to articulate the need for radical change. More than ever the World Bank requires a president who is qualified to lead what is still the world’s principal public development bank.

It is therefore imperative that the selection process results in the appointment of the best candidate, chosen from a wide-ranging pool of people with the background and experience required.

One thing is certain, at a time when the legitimacy of international institutions is increasingly under attack, reliance on the previous process, where the US and its European allies work behind closed doors to ensure the selection of a US World Bank president in exchange for the European leadership of the IMF will only further erode confidence in the multilateral system. It is of vital importance therefore that the next president has the support of the majority of low and middle-income countries, to which World Bank lending is restricted. Continue reading

‘America First’ Comes to the World Bank

As first reported by Politico on Monday, the US administration has chosen senior Treasury Department official David Malpass as the US nominee for the World Bank presidency. The official announcement of Malpass’s nomination took place earlier today.

With Malpass’s nomination, all eyes now turn to see how the other WBG executive directors respond when formal nominations open on 7 Feb. Will other nominees enter the race? Although an American has held the post of World Bank President throughout the Bank’s existence, a number of voices from civil society, the media and elsewhere, have already encouraged other shareholders to oppose Malpass’s appointment as president (see here, for example), with Justin Sandefur of the DC-based Center for Global Development arguing, “there is no case for Malpass on merit.” Not surprisingly, Malpass’s supporters disagree.

Following Jim Yong Kim’s resignation in January, the World Bank’s Board vowed to undertake a merit-based process of appointing Kim’s successor, but – given that executive directors must nominate potential candidates – the integrity of the process now rests, in the first instance, on other genuine contenders for the presidency entering the race.

Otherwise, the ‘selection process’ risks descending into a farce. Continue reading

Comment on the Nomination of US Treasury Under Secretary David Malpass as World Bank President

Washington, D.C./Sassenberg,

Ute Koczy, World Bank campaigner at Urgewald, comments on the nomination of US Treasury Under Secretary David Malpass as the next President of the World Bank Group, which was reported by insiders:

“This way of determining the next World Bank President perpetuates an unfortunate tradition: ruthlessly and exclusively in the interest of the US government. The selection committee is already useless before it could even begin with interviewing possible candidates. By nominating Malpass, US President Trump wants to lift a follower of his ‘America First!’ approach to the top of one of the key multilateral institutions. That would be a disaster for the World Bank. It could put an end to initiatives of the World Bank to get out of fossil finance.

For the World Bank shareholders outside the USA, it is time to take a stance against this sort of power politics. The times should be over when the USA and Europe could decide over the World Bank and the IMF top position single-handedly. Large shareholders like Germany now must step up and show courage in the World Bank’s Board of Directors. They must insist on the selection benchmarks they have set out publicly. This is the only way to prevent multilateralism from suffering further serious damage. The haggling over posts at the expense of developing and emerging countries must stop.”

Background:

The official nomination deadline for the successor to World Bank President Jim Yong Kim, who unexpectedly resigned at the beginning of the year, is due to begin on Thursday. As it became known from media reports, US President Donald Trump wants to try to create facts the day before by nominating the US Treasury Under Secretary and Economist David Malpass. Until shortly after the outbreak of the global financial crisis in 2008, Malpass was chief economist at the investment bank Bear Stearns, which could only be saved from bankruptcy by a takeover. Shortly before the meltdown of the US real estate market, he described the housing market as a long-term growth factor of the US economy. In various articles, Malpass presented himself as a critic of multilateral treaties and economic regulation. In addition, he stands for the continued use of climate-destroying fossil fuels.

David Malpass? Really?

CDG’s President Emeritus Nancy Birdsall didn’t call being World Bank president the hardest job in the world for nothing.

Personal traits are important.

Now that David Malpass is rumored to be the Trump Administration’s nominee to succeed Dr Kim, the Board’s fifth criterion “effective and diplomatic communication skills, impartiality and objectivity in the performance of the responsibilities of the position” goes without saying if you take the Board’s first four assessment criteria seriously.

Cheerleaders for financial recklessness that led to widespread adverse impact and expensive fixes without accountability need not apply. Modest in judgment in one’s profession or field of expertise, and learning from one’s mistakes, are essential. 

Partisan attachments are to be avoided. That includes campaign fundraising and giving bad advice that isn’t listened to. The line between blunt, and candidly descriptive and persuasive, is a difficult one. It needs to be clear. 

No pettiness or abusing of subordinates. Tone at the top matters. So does respect for expertise, experience, and perspective.  Continue reading

The World Bank and the “new” multilateralism

More than a bland statement, the Board’s fourth criterion, “a firm commitment to and appreciation for multilateral cooperation”, is particularly important at this inflection point in global development and geopolitics.

As Gilly Wright has reminded us—again—“Since the inception of the World Bank, Europe has backed the US choice of an American to head it, while the US in return leaves Europe to pick a European to head the IMF—a tradition that now seems unnecessary and outdated. Donald Trump’s anti-multilateral stance and antagonism toward Europe will perhaps see the end to this “gentlemen’s agreement,” and it remains to be seen if the Trump administration will resist the urge to nominate a lackey in favor of a globally respected candidate, and whether a non-funding stick will be wielded.”

This defeatist view has an element of realism: as long as the Eurozone’s economy remains fragile and risky, Europe is unlikely to relinquish leadership of the IMF, which will have to play a key role in Greece, Spain and Italy by lending its credibility to a EU-crafted solution led by the European Central Bank and Germany.

Against this background, the Trumpian view of “multilateralism” means many things, from bullying NATO allies to pay up more for collective defense, to withdrawing from important international agreements like the Paris Accord and TPP, and renegotiating—with much fanfare and little practical change—important regional and bilateral trade pacts, the noisiest one being NAFTA 2, for lack of a more mellifluous acronym.  Continue reading

The right messenger for the right messages

The World Bank’s Board established as its third criterion ”the ability to articulate a clear vision of the World Bank Group’s development mission.

It’s not a prospective candidate’s fault they have to do it: the Board’s word salad Forward Look strategy, and the IBRD/IFC capital package agreement as articulated in the Sustainable Financing for Sustainable Development Paper would challenge a Kennedy, an Obama, and even a Churchill. A PowerPoint would be so long with small-font slides that Donald Trump would go back to watching FoxNews. 

“Our Dream is a world free of poverty” was a clear message Jim Wolfensohn used to inspire the Bank and its partners. Eventually its sentiment became the headline of both the MDGs and SDGs, and the first goal of each. Freeing the world of poverty has inspired development practitioners, official development agencies, and civil society organizations. Dr Kim’s Twin Goals embraced and expanded the poverty eliminated goal. But the expanding shared prosperity lacked the clarity of meaning, and inspired little agreement on how, so that the “Twin Slogans” got little traction as a lodestar with practical actions attached. Various attempts to be practical, like “Cascade” were advanced, but haven’t won universal favor. Dr Kim’s Human Capital Index was another framing, and reflected (some) research and his own proclivities and comfort zone. Inside the Bank, there’s resentment about yet another framework for client dialogue. The Bank’s external critics have seized on it as abandoning a rights-based approach, obscuring long-standing critiques of Human Capital Theory (HCT) and its notion of ‘capitalisable humans’, seeking to shame, and ignoring income inequality within a country. Continue reading