March 26, 2012
Common Dreams, March 24, 2012
For the very first time, the U.S. government has nominated a qualified candidate to be the President of the World Bank. In order to maintain control of the institution by donors, rather than those impacted by its decisions, the U.S. and EU share a tacit agreement that the World Bank president has always been the American nomination – just as the head of the International Monetary Fund (IMF) is always a European (although one that Washington approves of). This job’s previous occupants included several top U.S. military brass (including Robert McNamara after the Vietnam War debacle, and most recently Paul Wolfowitz) as well as top bankers from Chase, Bank of America, JP Morgan and Goldman Sachs.
Today, however, President Obama nominated Korea-born Jim Yong Kim as the U.S. candidate for the position. Dr. Kim is a co-founder, with Paul Farmer, of Partners In Health. In an email to supporters, Farmer and another PIH co-founder, Ophelia Dahl, said that “Jim is an inspired choice to lead the World Bank. Having seen him work in settings from inner-city Boston to the slums of Peru, from Haiti to Rwanda to the prisons of Siberia, we know that for three decades Jim has committed himself to breaking the cycle of poverty and disease. This has been his goal as a physician, a teacher, a policy maker, and a university president; it was ever his goal as a founder and director of Partners In Health, which now operates in more than a dozen countries.”
How did this seismic shift occur?
First, the BRICS countries (Brazil, Russia, India, China, and South Africa) have argued for years that the process for selecting the head of the IMF and World Bank should be open, transparent, and merit-based. They succeeded in pressing the issue, and in ensuring that the institutions at least officially committed to an open process. But last summer, when Dominique Strauss-Kahn was forced to resign as head of the IMF, the French candidate, Christine Lagarde, easily got the job, since the only developing country candidate to appear – Mexican Finance Minister Agustin Carstens – is to the right of Lagarde policy-wise. Thus, the BRICS originally forced the issue, but without a candidate, the issue would have floundered.
Then, last month, well-known U.S. economist at the Earth Institute of Columbia University and development expert Jeffrey Sachs took the unprecedented step of announcing his own candidacy. Sachs put forth a platform of changes that the World Bank must undertake, in order to end global complacency with the horrors of extreme poverty. He focused on the need for Bank leadership to achieve the Millennium Development Goals such as drastically reducing poverty, ensuring universal education, and guaranteeing access to health care, particularly along the lines of the successful Global Fund to Fight AIDS, Tuberculosis, and Malaria, for which he was a strong advocate. Significantly, he also highlighted the importance of supporting sustainable development instead of military responses, such as in areas of conflict like the dry lands of Africa and the Middle East.
In statements viewable on his website, Sachs was then nominated by Malaysia, Jordan, East Timor, Kenya, Bhutan, Chile, Guatemala, Ghana, Honduras, and Uganda, and received declarations of strong support from Namibia, Mexico, Colombia, Uruguay, and Costa Rica. He also received the unprecedented support of 27 members of Congress who wrote to President Obama, asking him to nominate Sachs.
Throughout the process, it was nearly a foregone conclusion that Larry Summers would be Obama’s pick. Every “short list” that was leaked to the press included his name along with candidates who had already stated clearly that they didn’t want the job: Hillary Clinton, Susan Rice, and John Kerry, among others. Thus, the “short list” was a fake, according to Robert Naiman of Just Foreign Policy, intended to lead to the conclusion that Summers was the only choice available. He was the undisputed front-runner on global betting sites until yesterday. The myriad ways in which financial deregulator Summers was actually a terrible candidate have been well-documented, and campaigns by women’s and consumer groups – which together garnered about 60,000 public petitions – helped dislodge his candidacy.
Outside of the U.S., many highly qualified names from developing countries also circulated. Colombian national José Antonio Ocampo, a professor at the School of International and Public Affairs at Columbia University, appears to be an excellent candidate, given his prior experience as the Under-Secretary-General for Economic and Social Affairs at the United Nations; Executive Secretary for the Economic Commission for Latin America and the Caribbean; and separate stints as the Colombian Minister of Finance, of Agriculture, and of Planning, as well as the head of the country’s Central Bank. After initial speculation that he was, then was not, going to be nominated, his name made the final list of candidates circulated by the Bank on Friday.
Also on Friday, Nigerian Finance Minister Ngozi Okonjo-Iweala was nominated by South Africa on behalf of Angola and Nigeria. A former Executive Director of the World Bank and former Foreign Minister of her country, she is a formidable leader whose candidacy should be taken seriously. This nomination also represents an unprecedented challenge to the U.S. government’s traditional domination in choosing the next World Bank president. So now, instead of one white male U.S. banker or politico, we have an Asian American male health expert, a Latin American male development expert, and an African woman development expert as candidates.
All the pressure – from Sachs’ candidacy, nominations of candidates from developing countries, and campaigns against Summers – made Obama have to change his choice. In his announcement today, Obama echoed many of the talking points in recent articles by Sachs: “[t]he leader of the World Bank should have a deep understanding of both the role that development plays in the world and the importance of creating conditions where assistance is no longer needed,” Obama said Friday. “It’s time for a development professional to lead the world’s largest development agency.” Wow.
Mark Weisbrot, who endorsed Sachs early in the process, noted today that “[t]his is a huge step forward. If Kim becomes World Bank President, he’ll be the first qualified president in 68 years,” Weisbrot said. “Kim’s nomination is a victory for all the people, organizations, and governments that stood up to the Obama administration and demanded an open, merit-based process.”
So, what now?
First, now that there are candidates, it is important to have a merit-based decision among the World Bank Executive Directors who are charged with the final selection. How about this: an open debate among the candidates, so that the best person can be chosen for the job?
In the future, it is important to keep pushing for changes, because the process is still deeply flawed. The majority of the world’s countries should have a much more active role in proposing candidates in advance, so that the assumed U.S. monopoly can be permanently abandoned.
Also, it’s not just the top job that has always been allocated based on nationality and not qualifications. The World Bank Group also includes the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA); these two powerful agencies are always headed by a European and a Japanese person, respectively. The second position at the IMF is always American. This must end.
Most importantly, of course, it is not just the leadership, but the policies of the World Bank that must be transformed. Throughout the years, campaigners successfully forced the IMF and World Bank to abolish user fees – charges imposed on the poor for the most basic of health and education. The IMF is still imposing austerity measures all over Europe, and in developing countries – even throughout the global economic crisis. The World Bank is still supporting climate-changing fossil fuel industries, including coal plants in Kosovo and South Africa which are opposed by civil society. Several Latin American countries are leaving the International Center for the Settlement of Investment Disputes (ICSID), a World Bank agency which almost routinely rules against developing countries and in the interest of private corporations. And the debts that are still on the books for so many countries – even though most countries have already paid back to the IMF and World Bank more than they borrowed, usually for failed development projects and terrible advice – need to be cancelled.
But today we can celebrate – that for the first time in its history, the choice of who will lead the World Bank will be among qualified candidates who do not owe their allegiance to the U.S. government. Perhaps, with time, the institution can be pressured – under its new leadership – to abandon its commitment to fossil fuels, to neoliberal economic policies and deregulation, and instead commit to scaling up funding for real development needs like primary education, universal health care, and global access to clean drinking water. Perhaps the world can reach those Millennium Development Goals yet.
Deborah James is the Director of International Programs at the Center for Economic and Policy Research, and coordinates the WTO campaign of the OWINFS network. Prior to CEPR, she was the Director of the WTO Program of Public Citizen’s Global Trade Watch, where she worked to inform civil society and governments worldwide about the potential impacts of the WTO’s proposed Doha Round expansion. She was also the Global Economy Director of Global Exchange, where she did similar work around the proposed Free Trade Area of the Americas.