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.