Out of the frying pan, into the fire? Malpass’s departure, Banga’s likely arrival, and the rebirth of the ‘Billions to Trillions’ zombie as climate saviour

Credit: DisobeyArt / Shutterstock

Few in the civil society community that works on the World Bank Group will shed tears at the early departure of the World Bank’s outgoing president, David Malpass, who announced last month that he will step down by 30 June.

After being nominated by US president Donald J Trump in February 2019, and appointed in April of that year, Malpass has spent much of his four years at the helm of the world’s largest development finance institution as a walking cautionary tale of the negative repercussions of the gentleman’s agreement – an informal pact among the Bank’s most powerful shareholders that has seen the US handpick every Bank president to date.

While Malpass’s history of climate change scepticism – including at a September New York Times event when he repeatedly refused to confirm he accepted the scientific consensus on climate change, when pushed by NYT reporter David Gelles – rightly received strong condemnation, the issues with his presidency went much deeper.

Malpass opposed the TRIPS waiver for Covid-19 vaccines, despite the lethal health and other dire consequences of massive corporate profiteering by pharmaceutical companies during the Covid-19 pandemic and the fact that the vast majority of the Bank’s member countries supported it. Under his leadership, the World Bank’s flagship Doing Business Report (DBR) – which promoted corporate-friendly reforms – was discontinued, with lingering questions about when Malpass became aware of alleged data manipulation by Bank staff in the report. Whatever the case, Malpass was clear that despite DBR’s demise, his support for the Bank’s efforts to promote a pro-business ‘enabling environment’ in its borrower countries remained undimmed.

Although Malpass rarely mentioned climate change in his first year in charge, when he belatedly warmed to the topic as the 2020 US presidential elections approached, it was very much through the lens of what economist Daniela Gabor has dubbed the Wall Street Climate Consensus, where the role of the state is reduced to ‘de-risking’ private sector investments. Malpass enthusiastically engaged with the notion of creating ‘investable project pipelines’ for the private sector as a means of greening World Bank client country economies, and met with BlackRock CEO Larry Fink to discuss the topic at the 2021 Annual Meetings.

In this regard, at least, Malpass – a Wall Street veteran, including an ill-fated stint as chief economist for Bear Stearns, which was one of the high-profile casualties of the 2008 global financial crisis – shares an uncomfortable level of similarity with his likely successor, US nominee Ajay Banga, a former CEO of Mastercard – whose qualifications for the job, according to the Biden Administration, include “forging public-private partnerships”.

Banga’s nomination coincides with a World Bank ‘evolution’ process where all signs point to a potential deepening of the World Bank’s Billions to Trillions approach, which has been variously referred to as the Cascade, Maximising Finance for Development, and – in the post-Covid-19 era – Green, Inclusive and Resilient Development.

However, promises that the Billions to Trillions agenda would bring private finance at scale to development initiatives have thus far rung hollow, even in the relatively more favourable environment prior to the outbreak of the pandemic.  

The World Bank evolution roadmap takes this policy paradigm in a potentially even more counterproductive direction, via proposals to securitise World Bank projects and sell them off to institutional investors.

Advait Arun warned of the dangers of such an approach in a February piece in Phenomenal World, noting, “While securitization may free up balance sheets in the short term, in the long run this is yet another financial “innovation” that will put private investors in the drivers’ seat of the green transition―likely at considerable cost to everyone else.”

While comparisons between Banga and Malpass may seem imprecise, another World Bank president who promotes the Wall Street Consensus raises the possibility of policy reform discussions being dominated by more vain, and developmentally illiterate, efforts to crowd in private finance from the very institutions that have helped finance the climate crisis in the first place and remain heavily exposed to the fossil fuel bubble – which itself represents a potentially destabilising feature of the current, financialised global economy.

It’s difficult to see how ‘private-sector solutionism’ will facilitate ‘green’ economic transformation in World Bank ‘client’ countries that is rooted firmly in a human rights-based approach, rather than Wall Street profit motives.

What is desperately needed are strategies to mobilise public finance at scale and a greater role for the developmental state in allocating green finance, in order to avert the worst impacts of the climate crisis.

Such a world is possible, but not if corporate finance continues to rule the day.

Civil society demands the end of the ‘gentlemen’s agreement’ and calls for merit-based, open and transparent World Bank presidential selection process

The undersigned organisations and individuals write to demand that the World Bank use the opportunity of the resignation of President David Malpass to heed long-standing calls from global civil society and countries from the Global South and ensure the next World Bank president is selected in accordance with a merit-based, open and transparent process, underpinned by well-defined and publicly available selection criteria and civil society engagement with the candidates. The time has surely come to put an end to the archaic gentleman’s agreement, which has its origins in the times of empire and continues to damage the institution’s standing and legitimacy. 

The selection of the World Bank’s next president takes place at a time of mounting global challenges, such as the existential climate and nature crisis, rising inequality, increasing debt distress and the related increase in social and political instability. It also occurs against the backdrop of increasing threats of the fragmentation of the multilateral order. The proposed expansion of the BRICS grouping and the establishment of the New Development Bank and Asian Infrastructure Investment Bank are clear evidence of the frustration with and consequences of the continued lack of democratic legitimacy of the Bretton Woods Institutions, and the need for an urgent change in their governance. 

Discussions of the World Bank’s evolution roadmap, the G20 MDBs’ capital adequacy frameworks, alongside the Bridgetown Initiative and commitments made at COP26 to meet global goals for nature, climate and people, are signs of a recognition that the World Bank must change if it is to rise to the occasion, meet its development mandate and gain the trust of the population and states of the Global South.  

The next president must have the qualifications, experience and commitment to integrity to ensure that the Bank’s policies and approaches seriously engage with the vast academic and civil society literature that documents the need for urgent reform. The president must ensure reforms are the result of a clear, critical and evidence-based analysis of the serious flaws and shortcomings of the World Bank’s approach to date. 

As the World commemorates the 75th anniversary of the Universal Declaration of Human Rights and the 50th anniversary of the UN General Assembly Declaration on the Establishment of a New International Economic Order, we demand that the criteria for the next World Bank president include: 

  •  Minimum of 20 years of professional work experience in the field of sustainable economic and social development, including at international and country levels; 
  • A demonstrated commitment to international human rights law and standards, to ensure that  the World Bank does not work against human rights but to advance prosperity for all, including by developing a human rights policy for the institution and helping to deliver the right to a clean, healthy and sustainable environment; 
  • A demonstrated understanding and commitment to urgently tackle climate change and ensure development supports nature, peoples and the planet;
  • Sufficient experience in development issues to lead a critical analysis of the Bank’s development approach and private sector bias to date; 
  • An understanding of and commitment to feminist principles, equitable development and the green and just transition; 
  • A commitment to ensuring that World Bank policies and programmes advance community-led development, are truly country-led and support ending poverty, reducing inequality and creating shared prosperity for all, as well as the economic transformation necessary for a global green and just transition; and 
  • A commitment to engagement with global civil society and, importantly, civil society at the country and local levels and with under-represented communities, as core to its mission. 

We also demand that the selection process be open and transparent and includes an opportunity for civil society to engage with the candidates. In that regard, we demand that: 

  • The World Bank publishes the revised and detailed selection criteria, including the minimum standards outlined above; 
  • Shareholder votes are made public; and  
  • The World Bank hosts exchanges between candidates and civil society at the upcoming Spring Meetings in Washington DC. 

The process used to select the next World Bank president will speak volumes about whether the reforms undertaken under the banner of an ‘evolution’ of the Bank will result in urgently needed change in policies and approach, and thus enable it to play a positive role in supporting an equitable, feminist, green and just transition, or will rather result in a little changed, but marginally better resourced, institution.

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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

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