By Iolanda Fresnillo, Jean Saldanha (Eurodad)
The speed with which the US nominated Wall Street veteran Ajay Banga as their candidate for the World Bank Group’s (WBG) President came as a surprise to many in civil society. Malpass’ resignation, announced just a week before, was a new opportunity to rethink the role of the institution to address the multiple challenges that countries in the global south are facing. Instead, hope turned to incredulity and anger – as the US government announced that the vice-chair of a US private equity group, and former chief executive of MasterCard, was their choice to lead an international institution with a mandate to promote sustainable development and eradicate poverty.
It is a widely held view that the WBG is in urgent need of a rethink. Following the publication of two damning reports in 2021, revealing serious ethical improprieties, conflicts of interest in the Bank’s Advisory Services and data manipulation in the development of its flagship Doing Business Report, more than 100 civil society organisations and academics from around the world called for the overhaul of the institution. Then in September 2022, environmental organisations demanded that Malpass step down as President after his non-committal response when questioned about whether he believed in human-driven climate change. Yet he remained. And he remained defending until the end the assertion that it is more important to retain the AAA rating of the World Bank than to open the door to debt cancellation, not even for a temporary suspension of debt payments.
On the other side of the spectrum, the Bank’s shareholders have also stepped up their call for reform. With the Bridgetown initiative – presided over by Barbados’ Prime Minister Mia Mottley – leading the vanguard, and the G20 following with their particular appeal for more firepower, the World Bank and other multilateral banks are under pressure to be bolder and step up concessional lending.
The next leader of the World Bank must break with the past and have a vision for the future. The President must understand that the Bank has at best been floundering, and at worst completely failing to achieve its objectives – and it must change. It must play its part in implementing rather than undermining the global agenda on development, inequality, climate change, and social justice. It needs to earn the trust of the communities and countries where the World Bank does – or should – provide finance. Human rights must be at the centre of its policy and democracy and inclusiveness at the heart of its governance model. And it is high time that a woman – a feminist – an heterodox economist – a person truly representing the global south, is given the job.
Instead with Banga it will be more of the same. And doubly so. US President Biden noted his ‘decades of experience building global companies and public-private partnerships’ as valued credentials when announcing Banga’s nomination. Yet there is very little documented evidence of global companies of the likes of Citigroup, Dow, Pepsico or Nestle that Banga has earned his stripes with – or public private partnerships in general – creating shared prosperity in a sustainable way. On the contrary: both Exor, the investment holding company of which he is the Board Chair and Temasek, Singapore’s state owned investment fund where he is a director, invest in fossil fuel projects. He cashed in on share sales after Trump-era tax cuts allowed MasterCard to inflate its share price through buybacks. Biden’s choice for the World Bank leadership sends a clear message: the future they picture is private. Banga is amongst the believers that climate action will happen through private finance and private investment. We strongly disagree.
Banga’s rapid nomination also continues the archaic and deeply neocolonial ‘gentlemen’s agreement’ whereby the US gets to choose the head of the World Bank and Europe, the head of the IMF. Having crafted an ‘elegant solution’ to the diversity conundrum – as India’s IMF Executive Director described the nomination of Indian-born Banga – it is not expected to receive great opposition from other parts of the world.
Irrespective of this the US’ rapid nomination of their candidate demonstrates their intent to maintain an antiquated arrangement. This could not be further away from the good governance principles of transparency and efficiency that the World Bank and its shareholders preach, but do not practice.
Well into the 21st century, it is time for responsive, inclusive, democratic and accountable governance of the World Bank, starting with the selection of its President in an open and transparent process. Right now, this feels more Empire than meritocracy.
Read and sign the letter of rejection here. This is an Open Letter, which will be sent to the World Bank Board of Directors.
This post was originally published on Eurodad’s website.