Opinion – A new president and new role for the World Bank

Governance Multilateral Development –

Financial Times
Opinion The editorial board
A new president and new role for the World Bank
The bank’s head should be appointed on merit, not nationality
10 January 2019

Jim Yong Kim’s appointment as World Bank president in 2012 came as a surprise. Although an expert on epidemiology who had headed the HIV-Aids programme at the World Health Organisation, Mr Kim, then president of Dartmouth College, lacked broader development experience.

Given the high calibre of other candidates, it was unfortunately his citizenship rather than his résumé that ensured his appointment. Absurdly, given the shifts of power in the global economy, the rich world maintains a reciprocal stitch-up: the World Bank presidency goes to an American, the managing director of the International Monetary Fund, the Bank’s sister institution, is always a European.

Following Mr Kim’s resignation on Monday, it would be extraordinary if Donald Trump, in thrall to his America First ideology, permitted a non-US replacement. With the US and Europe still dominating the bank’s board, and the latter unlikely to want to pick a fight with the White House, the fix will probably continue.

It should not. Mr Kim’s sudden departure will have done nothing to defuse criticism among emerging markets about the rich shareholders’ erratic governance of the bank. Another president lacking broad-based political legitimacy would continue to weaken the credibility of an institution whose development function is being eroded year by year.

Mr Kim has struggled to find a new role for the bank now that country-by-country external financing in the developing world is increasingly supplied by private investors, regional institutions like the Asian Infrastructure Investment Bank and direct bilateral finance from China. To his credit, he realised the need for the bank to move away from its country and regional focus, and effected some limited organisational reform towards a thematic approach.

But to turn that idea into a new model for the bank will require a president with the clout to persuade member governments to shift substantial amounts of financing towards the provision of global public goods such as managing water, combating pandemics, maintaining biodiversity and addressing the development impacts of migration and refugee crises.

There will still be a role for country programmes, not least to implement the bank’s knowledge base. But there will need to be a new emphasis on broader-based loans and grants. The bank should also be able to manoeuvre in a new world where the regional institutions such as the AIIB and the African Development Bank have increasing influence. The World Bank must regard such bodies, particularly if they adhere to minimum safeguards on environmental and human rights, as partners rather than rivals.

A new president therefore must be capable of dealing with organisations which have a much stronger influence from China and other emerging markets. The World Bank’s credibility was damaged during the cold war by its politicisation, frequently rewarding US allies with soft loans. In a possibly protracted economic or strategic hostility with China, it must not be seen to be taking the American side.

A new World Bank chief faces a stiff task. Neither the manner of Mr Kim’s appointment nor his departure helped the bank’s credibility. His successor needs to operate even-handedly in a tense geopolitical environment while effecting major structural change in an organisation which is itself scarcely less fractious. Perhaps more than ever, this is the moment for the World Bank president to be appointed on merit, not purely on nationality.