New World Bank president: Is the US candidate a good choice?

Zoellick is leaving the Bank when his term expires at the end of June. 

This provides an extraordinary opportunity to demonstrate the commitment by the World Bank to implement the policy guidance that it and its sister institution, the International Monetary Fund (IMF), adopted last year in the context of governance reform for both institutions. The policy is aimed at changing the outdated, nationality-based tradition of appointing a European as head of the IMF and an American for the World Bank. The practice has been followed for nearly 70 years since these Bretton Woods institutions were created in 1944. 

The new policy calls for a merit-based approach rather than nationality. It also calls for an open, competitive and transparent process.

The IMF faced the new policy in May last year when its disgraced managing director, Dominique Strauss-Kahn, had to resign suddenly under accusation regarding his sexual indiscretion. The IMF was able to speedily shoehorn in former minister of finance, Christian Lagarde, a French national, as its new managing director, and successfully sidestepped the break with tradition. The World Bank is facing a tougher challenge. 

Many critics have called on the World Bank’s Board to end the monopoly of the two top jobs based on nationality, following the nomination by US President Obama of Dr Jim Yong Kim for the job. Kim is president of Dartmouth College, a public-health professor, an anthropologist, and former head of the HIV/Aids department of the United Nations World Health Organisation.

This will be the first time that a US nominee will have to compete with two other candidates on the short list: Ms Ngozi Okonjo-Iweala, Nigeria’s minister of the economy and finance and former managing director of the World Bank under outgoing president, Robert Zoellick; and Mr Jose Antonio Ocampo, Columbia’s former minister of economics and finance, former minister of agriculture, and currently a distinguished professor at Columbia University. 

Okonjo-Iweala was nominated by Angola, Nigeria and South Africa, and Ocampo by the Dominican Republic but not by his own country, Columbia. Professor Jeffrey Sachs of Columbia University was also put forward by several small, developing countries, and Kenya. He withdrew from the race and endorsed Kim for the job.

Following interviews of the three candidates with the World Bank Board last week, Ocampo withdrew from the race and endorsed Okonjo-Iweala.  According to the Financial Times, Kim appears to be on track to become the next World Bank president. He has gained support from key countries that include Canada, Japan, Korea, Mexico, and Russia. Voting power is proportional to countries’ shareholding; it is weighted heavily toward the US, Japan and Western European countries. 

Kim’s candidacy has attracted criticism. They centre around three issues.  First, critics are concerned that Kim has no experience and scant knowledge of economics, especially macro-economics and finance needed to lead a financial institution such as the World Bank. After all, the World Bank is a bank. Second, Kim is an “outsider” and does not have experience in the government to head the world’s premier development institution. Finally, Kim is a US national. 

The Economist magazine, which endorsed Okonjo-Iweala, suggests: “In appointing its next president, the bank’s board should reject the nominee of its most influential shareholder, America, and pick Nigeria’s Ngozi Okonjo-Iweala.”

Underlying these criticisms is the argument over the merit of the candidate and the spirit of the reform, which is to end the privilege accorded to the US. Setting aside the question of nationality, Dr Kim is well qualified to lead the World Bank in spite of not being an economist nor having the financial expertise. He described himself as a good listener and has appreciation of the importance of economics and other social sciences in addressing development challenges.

His coming from the “outside” may actually prove to be advantageous. His multi-disciplinary background of medicine and anthropology will bring fresh perspective to issues and challenges. His experience and record suggests a strong commitment to evidence-based solutions and a results-oriented approach. It will allow him to challenge the status quo and existing bureaucratic practices. 

If the US was not ready to give up its privilege that comes with being the largest shareholder, it did not abuse it. Dr Kim is a good candidate and well qualified for the job. He is not someone coming from US politics or Wall Street. It is different this time.

 

Kiertisak Toh is a former senior Foreign Service officer with the United States Agency for International Development. He is currently a member of the economics faculty at Radford University, Virginia, and a senior fellow at Duke Centre for International Development, Sanford School of Public Policy, Duke University, North Carolina.