It looks like things may be about to hot up. The BRICS group of major emerging market economies, meeting in the sidelines of a G20 meeting in Mexico said they will discuss whether to put forward their own candidate. The South African Finance Minister went furthest, saying: “”It is time we break the traditions of the U.S. and Europe sharing the two seats [at the Bank and Fund]”.
The Nigerian finance Minister – herself regarded as a possible African candidate –has made a pointed call for change, and – slightly bizarrrely – the Bangladeshi prime minister even proposed micro-financier Muhammad Yunus. And the voting in our poll suggests there’s a significant Indonesian campaign to promote Sri Mulani Indrawati.
Meanwhile, it looks like domestic momentum is building against possible US candidate Larry Summers – tens of thousands have already signed the online poll against him.
Zoellick, however, is beginning to show his true colours. He said a US president would be “good for the United States and the Bank”. At the same time, without irony, the World Bank (dubious record in designing programmes for economic growth and poverty reduction) issued a reportsaying China (possibly world’s most successful designer of such programmes) needed to change to reduce the role of the state and open up their markets. Plus ça change…
While the US, EU and Japan are important stakeholders, China, India and Brazil are also important stakeholders. Let’s not forget that the 2/3 of the Bank’s operations are financed not by donors but by the spreads on lending. Sure the capital base of the Bank allows it to borrow cheaply in the capital markets. But that capital base could easily be made up of Chinese reserves (estimated at about $2 trillion) as it is made up of contributions of US/EU/Japan. Doubt the Bank would in the slight way see its AAA credit rating disappear (in fact it might be burnished given the credit downgrades being visited upon US and EU countries!).
So lets come to IDA and donors. If we take at face value Jesse’s statement that the Bank has not been very good at designing programmes for economic growth and poverty reduction while China has – that argues that the Bank should not be trying to collaborate more with the US/EU/Japan; but should be trying to collaborate more with China. Of course that wouldn’t please a lot of NGOs either, not least of which are those with environmental concerns (see previous post by Tom). Food for thought.
Zoellick is right. The US, the EU, and Japan are all important stakeholders in the Bank, as well as being important donors whose collaboration with the Bank amplifies everyone’s contribution to development.
The NGOs should be discussing qualifications for the job and setting out ‘must haves’ for the Board to consider, not wasting their time on on-line petitions against a candidate who won’t be.