In the past, civil society has been quite forceful about what they want in terms of process for selecting a World Bank President, basically it can be summed up as anyone but an American. That battle has been lost.
But now that it is certain that David Malpass will be World Bank president, perhaps NGOs and other civil society groups should think what stance they want to take to the Malpass Presidency. Civil society organisations probably have many different opinions of this – reflecting back on the welcoming reception some of the health-oriented groups gave to the nomination of Kim in 2012. CSOs have always been a diverse bunch.
How will World Bank watchers respond? Will they turn back to 1990s style anti-World Bank opposition at all costs? Will some of them continue trying to work with power rather than against it? Will there be efforts to influence the politics at the board to reduce the harm of the Malpass presidency? Or perhaps they will step back and watch, as they hope the World Bank crumbles into irrelevance under inept and politicised leadership? Continue reading →
There are big questions in development finance that the new World Bank President will need to answer. There is a big question about what direction David Malpass will take at the World Bank. Will civil society be pushing the Bank to answer these questions in a positive way? Here are just a few things on the agenda:
How should the World Bank engage with the rise of new creditors and funders in the system – particularly Chinese banks?
Without being a “self-service shop” for investors – what is the vision for the Bank’s role vis-a-vis private finance? It’s easy to say don’t privatize health and education sectors, but what about beyond those easy platitudes? What is the role for the IFC that accords with a sensible vision for a multilateral bank that is now supposed to be supporting sustainable development, rather than what an aid agency should do?
Given worries about debt crises building in developing countries, how should the next World Bank president manage lending to countries increasingly heading towards debt distress but in desperate need of investments to hit their Sustainable Development Goal (SDG) targets?
Many have focused on how David Malpass will implement the directives coming out of the Trump administration in Washington. In particular that means viewing international affairs, including international economic affairs, as a zero-sum game. And the principle target of the Trump administration has been China.
But what will a Malpass presidency really mean for China after all? Much like the discussion of the trade war, when the US places indiscriminate tariffs on Chinese goods, while this may hurt Chinese exporters, the ones who really pay for the tariffs are American consumers. A Malpass-led World Bank attempted assault on China might end up hurting the US more than China. Let’s look at some of the most relevant areas:
Belt and Road Initiative (BRI) projects – the presumption is that a Malpass-led World Bank will steer clear of BRI projects, in line with Trump administration views that there should be less financial cooperation with China. But BRI projects are again not generally capital constrained. There are plenty of other lenders lined up to work in conjunction with BRI projects, particularly the Chinese policy banks – behemoths with much bigger balance sheets than the World Bank. There are also other development finance institutions and regional development banks ready to cooperate. In the end the World Bank will be side lined in many important infrastructure and economic development projects, reducing its scope for influence as countries increase their cooperation with, and possibly reliance on, other financial institutions. Malpass thus looks like a gift to the Asian Infrastructure Investment Bank, the BRICS New Development Bank (NDB) and the Chinese policy banks, who will all gain influence while the influence of the World Bank declines.
Energy sector – the denials of the Trump administration and their republican backers have zero impact on the reality of climate change. In the meantime there is a global race to develop leadership in low-carbon technologies and industries. A World Bank that eschews clean energy projects in favour of coal financing, oil exploration or other high carbon projects, will leave the way clear for others in this space. World Bank financed clean energy projects could certainly use Chinese technology, as the Bank-mandated procurement frameworks would have been fairly open, level playing fields. Non-World Bank projects, especially those financed under BRI (see above) are free to tie financing to certain procurement choices. This leaves Chinese wind turbine, hydropower and solar conglomerates well placed to use Chinese financial muscle to help them drive down the marginal cost of their offering with learning-by-doing approaches. A World Bank change of heart on clean energy is not likely to actually reduce the demand for these technologies, so the Chinese will be aiming to develop dominant market shares for their companies. That’s a win for Chinese industrial policy.
“Ivanka is overseeing the internal search for a nominee to lead the World Bank”
That is an amazing statement. The search for the World Bank president nominee by the US Administration is being headed by an unpaid aide with no background in economics, finance, or development! If I were in the Treasury I would not not be amused.
Javanka – as the combination of Jared and Ivanka is known – will have their hands full trying to figure out a nominee. Or will they? They could just pick a loyal friend or someone whom the Trumps owe a favour. That wouldn’t be too different than the processes to pick some of the past Presidents. But in today’s climate and with this US Administration that is less likely to a lifelong Republican stalwart and more likely to be someone who has been on the fringes of politics for most of their life. Continue reading →