Print
Share
The Next World Bank President: A White House Stuck between Promises and Political Realities
February 13, 2012
World Bank president Robert Zoellick has announced he will step down at the end of his term in June. In this post written shortly before the announcement, Nancy Birdsall offers advice to the White House on about how to proceed.
The insider talk on the next World Bank president is heating up, with rumors that Robert Zoellick will formally initiate the process in the United States system shortly by indicating to the White House that he will step down at the end of his term in June.
Then begins the collision in the White House between its promises to the global community and political realities at home. The collision boils down to the question of whether or not the White House will try to ensure that the longstanding U.S. privilege of picking World Bank presidents prevails once more—arguing that the Europeans after all got their way on another European at the IMF last summer. (For more on this issue, go to the updated CGD Initiative page on the Future of the World Bank here or a Bretton Woods Project site on the World Bank president here).
Related Content
On paper, the United States is committed to a process for selection of the next president that is “open, transparent and merit-based”—so spoke the G-20 with the United States at the table at its June 2010 G-20 Summit in Toronto. The year before a High Level Commission convened by former president of Mexico Ernesto Zedillo at Zoellick’s request went further, urging that “nominations from all qualified candidates should be welcomed, regardless of their nationality.” And that was the near-unanimous view of more than 700 respondents from 70 countries, including the Americans, who responded to this 2007 CGD survey.
But then there is the political reality: can the Obama White House in an election year, facing a Congress suspicious of a globally honored president, eschew pushing through its own American candidate? And anyway would a non-American at the helm in the World Bank be able to raise the resources on Capitol Hill that have already been committed in principle by the United States for the next several years? The election year timing puts the White House in an especially unenviable position. There is a risk that the World Bank could become a highly partisan, U.S. hot-button issue, as the UN has too often been.
Meanwhile: will the Chinese get together with the Indians and the Brazilians and other emerging markets to support a candidate of their own (as they did not in the case of the IMF)? Will some eminently eligible candidates—former heads of state included—from some countries be overlooked because they are members of the wrong party at home? Will the board of the World Bank (as did the IMF board) announce its plans to formally interview all candidates that are nominated? Will the Europeans signal early to the United States their understanding and sympathy and full support for whomever the White House proposes—or, as did the United States when Christine Lagarde was the European candidate, wait and see where the chips are falling?
With the White House between a rock (sensible promises) and a hard place (the U.S. Congress) the best that can be hoped is that it doesn’t panic and doesn’t rush (if it hasn’t already). Let there be time for a global search for the best possible candidate. Let there be space for candidates—American and otherwise—to emerge and campaign. There are excellent American candidates who might prevail in an open competitive process (as did Christine Lagarde at the IMF). Should an American end up as president, he or she would benefit tremendously from the legitimacy that only an open selection process can bestow.
For one thing, the next president will need global legitimacy to rescue the bank from the risks of growing irrelevance, and the need for a new vision and direction, if it is it to address the looming challenges of this century to its mission of ending poverty.
In the meantime (if there is that time and space), we at CGD will be offering suggestions about the process and possible candidates (stay tuned!)—and about that new vision and direction. To that end, we have reactivated a CGD initiative on the Future of the World Bank (again, for more on this see here) including recommendations to earlier incoming presidents plus new work on the future of IDA, the Bank’s concessional lending arm, and its new lending instrument (just the third ever), the Program for Results (P4R). For email notifications of updates including CGD blog posts on the World Bank during the anticipated transition, sign up here.
Possibly Related Posts
- The World Bank as a Foundation? Why I’m Scratching My Head Over the World Bank’s New Vision
- What WOULD It Take for the US and Europe to Give Up Control of World Bank and IMF Leadership?
- World Bank Results Initiative: The U.S. Should Support It – But with Independent Verification Please
5 Responses to “The Next World Bank President: A White House Stuck between Promises and Political Realities”
Post a Comment
We value frank and constructive exchanges and encourage you to use your real name in your comments.
February 14th, 2012 at 9:02 am
Nancy, you ask a number of important questions about the process. Indeed much of this will be covered over on http://www.worldbankpresident.org over the course of the spring. Our information indicates that this may be the week of the announcement by Zoellick.
Anyway I only want to take issue with your implication that the process to select Christine Lagarde was a good model to follow. I would hardly call the Lagarde selection the result of an “open competitive process”. The US surely had already given reassurances to the Europeans that they were prepared to abide by the gentleman’s agreement. The European countries as a block backed Lagarde before she was even nominated or just shortly after – ie before even the names of any other candidates were known. Sure Agustin Carstens put his name forward, but he had about as much chance as a snowball in hell. Lets not take the European stitch-up for Lagarde as best practice!
February 14th, 2012 at 12:13 pm
Nancy, it is disingenuous to blame US Congress for partisanship after the World Bank stonewalled the GAO inquiry requested by three US Senators into corruption at the World Bank under US leadership. The U.S. Consolidated Appropriations Act, 2012, signed into law by President Obama on December 23, 2011, provides in Section 7082 of H.R. 2055 “prior to the U.S. Congress disbursing funds for the general capital increases of the International Bank for Reconstruction and Development, the Secretary of the Treasury must report that each institution is, among other things, making ‘substantial progress’ toward implementing best practices for the protection of whistleblowers from retaliation, including best practices for legal burdens of proof, access to independent adjudicative bodies, results that eliminate the effects of retaliation, and statutes of limitation for reporting retaliation.”
When I informed the United States’ Congress of corruption, misinformation to the World Bank’s Board of Executive Directors, and violations of the World Bank’s Articles of Agreement, the World Bank retaliated by falsifying evidence in the World Bank’s Administrative Tribunal, promoting the Executive Secretary of the Administrative Tribunal who admitted the falsified documents, refusing to admit a Statement of Support from the World Bank’s Staff Association that staff were now too intimidated to report misconduct, and fired me.
I met with the Chairman of the World Bank’s Audit Committee on February 27, 2009 and the Audit Committee appointed KPMG to audit the World Bank’s internal control over financial reporting, but KPMG gave an unqualified audit opinion in contravention of Generally Accepted Audit Principles and Standards.
I met with the UK’s Serious Fraud Office on September 28, 2010, and the SFO called the US Securities and Exchange Commission on October 12, 2010 about compliance of the World Bank on the capital markets, but the SEC only stonewalled.
I testified before the European Parliament on May 25, 2011, and Mr. Luigi de Magistris, Chairman of the Committee on Budgetary Control, wrote, “I share the opinion expressed by the Members of the Committee that it was very interesting and inspiring to learn about your case at the World Bank and especially the ideas you have presented to us to make whistleblowing more effective.”
This World Bank’s compliance on the capital markets is currently before the three major rating agencies, the International Organization of Supreme Audit Institutions, the European Parliament Committee on Budgetary Control an online file , the US Court of Appeals for the DC Circuit, Case No. 11-7109,http://www.prweb.com/releases/.....010726.htm, and the American public. http://bosco.foreignpolicy.com.....ent-938011 .
February 19th, 2012 at 4:08 pm
Since an initial professional contact with the Bank in the mid-60’s, and after joining it almost a decade later, I could tell you enough stories about the institution to bore your socks off! But of course I won’t. However, I would like to remark about a sea change in the nature of the Bank’s principal “product line” in the last decade. This change appears to have not been widely commented on, although last year the Bank’s Independent Evaluation Group (IEG) produced an extensive report describing this tectonic shift in the Bank’s activities: http://lnweb90.worldbank.org/o.....f_eval.pdf
This Report chronicles that rather than continuing as a major financial intermediary for mobilizing and channeling capital resources into the member countries’ development investment process – as outlined in the Bank’s and IDA’s Articles of Agreement – Bank staff have been increasingly engaged in administering more than 100 bilateral and multilateral donor “trust funds” for a myriad of programs and purposes. These funding resources may be dwarfing the loanable funds mobilized by the Bank and IDA, and competing for limited Bank staff and management resources, as well as obliging the Bank to reassess its operational management and reporting procedures and fiduciary responsibility commitments. In many respects, the Bank may appear to be competing with other agencies also engaged in such activities, as the UNDP. The ballooning of this donor trust fund administrative role occurred during previous Bank management, but it may be an appropriate time to reconsider whether the institution should continue in this operational mode or try to rebalance its activities. And the resolution of the question won’t be easy, in view of the vested interests which have grown up around the new modus operandi.
February 22nd, 2012 at 8:59 am
Del Fitchett’s comment on the “sea change” at the WBG involving adminstration of trust funds and management of techncial assistance projects is deserving of anxious scrutiny. I too am former WBG staff with insider knowledge of trust fund project management.
First, the WBG manages over a thousand, not some 100 trust funds as indicated. See the links below for a full list of audited trust funded projects in FY11 and FT10.
http://siteresources.worldbank.....eAudit.pdf
http://siteresources.worldbank.....eAudit.pdf
Now ask the question – what do the tax-paying public and intended aid recipients actually know about all these projects and use of funds?
A major issue is the almost complete lack of transparency and accountability about the vast majority. Disclosure of detailed Trust Fund Project Administration Agreements and Financial Arrangements between the WBG and donors is not permitted. These establish specific inputs and outputs including scope of activities and breakdown of associated costs, monitoring, evaluation and audit activities over the life of the project. The WBG also uses its immunities and privileges to prevent independent investigation of irregularities when such allegations arise. Its in-house investigations unit (INT) is not independent and cannot be relied upon.
The inconvenient truth is that donor funds are being poured into the WBG to support frequently ill-conceived projects of dubious value, often duplicating project initiatives already on foot. The WBG secures funds by duping donors into believing it has in-house technical expertise that they value and do not themsleves have to design and manage TA projects. This is not correct. The WBG more and more retains ‘contract managers’ who, for lack of specific technical expertise and know-how have to hire in technical consultants to perform project work. These contract managers will often hire more consultants to ‘peer’review’ original consultants’ work. This modus operandi not only nicely perpetuates a need for donor trust fund mobilization which, significantly, generates hundreds of millions of dollars p.a. for the WBG in administration fees, but also delays project implementation which allows extended time for the WBG to invest trust funds. In the interim period a further TF project will invariably be launched under the guise of another name or perhaps as part of a ‘regional’ or ‘thematic’ program as opposed to country-specific project, to more or less undertake the same activities and achieve the same objectives.
The unveiling of the scam that is the WBG’s use of trust funds is long over-due.
March 23rd, 2012 at 10:31 am
Major newspaper’s across the United States are reporting that President Obama has tapped the president of Dartmouth, Jim Yong Kim to be the new head of the World Bank. It seems that even with emerging countries such as China, Brazil and India asking for more input into the selection process that the United States has once again nominated one of its own.
While I agree with the author that an open process would be the preferred method its hard to ignore the political realities facing the Obama administration at home. Letting an open process take place that could led to a non-US citizen getting the position would have been something that the Republican Party would have used against Obama to show the American public that under his watch the country has declined in power.