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.”
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.
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
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 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
As Jim Kim enjoys his last day at the helm of what he obviously considers an organisation of fairly limited influence, it is a good time to do a bit of stock-taking of our own.
One could of course say many things about the doctor’s reign at the Bank (and I would in fact invite you, dear reader, to do so in the comments section below). Given his proud mention that he had ‘read up one side of Marx to the other’ and his near religious faith in the private sector’s miraculous metamorphosis into a benefic development actor, one hopes he was a more attentive medical student.
He at least seemed to be more engaged in whatever management consultancy books he used to assist him in convincing shareholders to agree a capital increase in the absence of any significant structural changes to the way the organisation works. In light of well-documented concerns within the Bank about the lack of focus on development outcomes and the pernicious impact of counter-productive staff incentives, this seems indeed quite an ‘accomplishment’. Perhaps he is right in asserting that it is the right time to depart and, literally, capitalise on the work he has done in making the world’s most important public bank ever more like one of the private sector firms he so admires.
While much has been written about the negative consequences of his, er… less-than-stellar, management acumen, his trend toward centralisation and exclusion of opposing views, to me the most significant element of his legacy is his energetic contribution in turning the Bank further away from its development mandate and into a poster-child for corporatized and financialised development (if one can use this word here). Continue reading