Nominations for the head of the World Bank have now closed, and there are three candidates:

  • Jim Kim, nominated by the United States; President of Dartmouth College, former head of HIV at the World Health Organization, and a founder of Partners in Health;
  • Ngozi Okonjo-Iweala, nominated by Nigeria, South Africa and Angola; finance Minister of Nigeria, former foreign Minister of Nigeria; former Managing Director of the World Bank
  • José Antonio Ocampo, nominated by Brazil; a professor at Columbia University; former UN under-secretary for economic affairs; former Finance Minister of Colombia.

That means that for the first time ever there is a genuine contest. In previous years other shareholders were faced with the choice of accepting or rejecting the US nominee. This time round, with three serious candidates to choose from, it is not clear that the US nominee has to win. The other shareholders should now take a moment to consult, and assess which candidate they think is best for the job; and it is very important that they should do so in an accountable way, for the sake of the integrity of this appointment and for the future of the governance of international institutions.

Should merit or nationality determine which person becomes President of the World Bank?

In the past, the head of the World Bank was nominated by the United States, and has been a US citizen, under a so-called ‘Gentleman’s Agreement’ reached shortly after the Bretton Woods conference in 1944.  This does not reflect, as is sometimes supposed, the fact that the US alone has sufficient voting power to veto an appointment. The origin of this arrangement was that the US Treasury Secretary at the time, Frederick Vinson, convinced John Maynard Keynes that it was necessary for the World Bank to have an American at its head to secure the confidence of Wall Street, which was to be the main supplier of capital to the Bank in the early years. Of course today capital markets are global, and this rationale for US leadership of the World Bank no longer applies. In return for the leadership of the World Bank, the US gave up their claim to appoint the Managing Director of the IMF.

An appointment requires an 85% super-majority of the votes of the Board [UPDATE: I now believe that this appointment can be made by simple majority]; this means that the US can veto an appointment, but it also means that a candidate could be blocked by a coalition of three European directors plus the nominating constituency of one of the candidates; or by any four of the directors from the UK, France, Germany, Spain, Italy, Sweden and Switzerland.  In other words, if the European shareholders choose to act together they have at least as much power as the United States to block an appointment.

In the past when there was only one nomination, it made little sense for any other country to oppose the person on offer – since that would mean getting off on the wrong foot with the new World Bank President and annoying the US administration to boot. Opposing the nominee would mean having to mount an invidious attack on the individual that the  US government had nominated. So any US candidate had unstoppable momentum.

But with three candidates on offer, all this changes. If the European shareholders were to make it clear right away that they do not regard this as a done deal, and that it has not been stitched up already in private conversations between officials, then the dynamics change completely. Anyone can win, and that means that it no longer makes sense automatically to back the American nomination.  That would make it both possible and necessary for each of the shareholders to consider the candidates on merit.

The world needs more effective global economic governance more than ever.  This appointment can make an important contribution to that: as well as giving direction to an economically significant institution, the President of the World Bank has a seat at the table of G-20 meetings alongside the heads of state of the most powerful nations.

In the past, these decisions have been made by governments negotiating privately, with no public accountability for the choices they make. Europeans blamed the US for having nominated Paul Wolfowitz in March 2005, but their own governments did not exercise their power to prevent his appointment.  The consequence of this lack of accountable decision-making was a series of poor appointments (such as Strauss-Kahn at the IMF and Wolfowitz at the World Bank) and the exclusion of highly qualified alternatives, to the detriment of the reputation and authority of both institutions.

These deals behind closed doors for posts in key institutions based on nationality are an obstacle to effective global governance. Right now the UK will be offering to support Jim Kim for the World Bank in return for US support for the UK candidate for the EBRD, Sir Suma Chakrabarti.  But that is no way to make either appointment.   Jim Kim should not be appointed because of his nationality; nor should he be precluded on that basis. Let all three candidates be judged on their merits against the criteria of who has the best qualifications for the post.

The United States and the European governments have all said that they favour an open, merit-based competition. A good step would be for shareholders to set out publicly what they consider to be the ‘merits’ required for the post.  Do the governments agree with a CGD survey some years ago whose respondents ranked the criteria as (in order): efficient manager, experience of international organisations, knowledge of development, political and diplomatic experience, and banking and finance?

Having set out what they consider to be the main requirements for the job, the member governments should say publicly which candidate they plan to support.  They should set out the case for their favoured candidate, which they can do without criticizing the other nominees. It may be clear quite quickly which of the candidates is best qualified for the job; or further discussion may be required.

Such a focus on qualifications will make it harder for appointments to be made in future on the basis of nationality. Governments would find it harder to acquiesce in the appointment of inferior candidates, based on some tawdry trade-off, if they have to set out the basis for their choice and be held to account for it domestically.  Using transparency and accountability in this way would help to improve the governance and effectiveness of our global institutions.

Of course, much of the public has never have heard of the President of the World Bank and they are unlikely to be much interested.  But there are some who will care, as befits international financial institutions which are ever important for the stability of the world economy. Furthermore, the average British household contributes more than £30 a year to the World Bank, and that alone entitles them to some involvement in the decision about how their representative  on the World Bank board will vote on their behalf.  The British government has a very good record of promoting transparency and accountability of the development system; they should put that into practice for this appointment.

The fact that there is, for the first time, a contested election, and no automatic presumption that the US nominee must win, creates an important opportunity to improve the way our global institutions are managed. Shareholders can act now to ensure that this really is an accountable and transparent appointment based on merit, and so start the world down the road of cleaning up the way we make these important international appointments.

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8 Responses to Choosing a new President of the World Bank

  • Perhaps in the name of transparency, the Bank’s board of governors could post their applications online and open them to comments – it would be easier to form a judgement about who is best suited. Perhaps these top posts are too grand to require the applicant to make a case for the role? But it would be good to see their ‘manifestos’ or personal statements before coming to a view.  

  • One criteria that I would beg to for to be applied when choosing the next World Bank president is the one of not being prone to be entrapped by groupthink or, much worse, being a promoter of a groupthink.
     
    While being an Executive Director of the World Bank, 2002-2004, the search for a new Chief Economist was announced, and we directors were told that although it was obviously quite a delicate task, it should not take too long, as the search had to be carried out within “quite a small and exclusive community of development economists”… and I immediately reacted with a “hold it there!… being in the hands of a small and exclusive community of development economists sounds like something really frightening and unhealthy to me.
     
    One of the reasons why I support Ngozi Okonjo-Iweala is precisely because I remember her, in the context of a very risk-adverse World Bank, to be more willing to discuss new ideas in delicate issues than most of her peers. This does of course not mean that any of the other two candidates, whom I do not really know, would not be capable of doing that as well.

  • Earth calling Owen, 

    This is not a real application process, but rather an election, with delegates of MS having voting rights. 

    At the UN, a lot of the positions are genuinely elected by the member states. Anybody who has been around these “elections” has heard how the campaigns are run. 

    Some countries (I hope the UK is one of them) play by the book, and will boast the credentials of their candidate, and help them to make their case to the delegates. Other countries give presents to ambassadors to buy votes. 

    Even elections in “democracies” seldom really compare  merit of the different candidates. 

    The real question is: what process will lead to the best candidate chosen? The current situation looks like near optimal: real elections, with a free for all, could lead to a corrupt process, like it often does at the UN. The current system with a US candidate being chosen, but wit a real risk of a veto by others if the candidate is sub-par, has promise. 

    I could go on, but this is your post, I should not hijack it. 

  • Yesterday’s Observer had a very negative piece about ‘Jim Kim’, headed “Obama goes for virtual unknown in World Bank nomination“, questioning both his economic and managerial competencies. (See http://www.guardian.co.uk/business/2012/mar/23/world-bank-nomination-jim-yong-kom.)  Two letters in today’s Guardian come to his defence: http://www.guardian.co.uk/business/2012/mar/25/world-bank-jim-yong-kim. They can’t all be right!
    I take Sam Gardner’s point about the potential dangers of making these key appointments by election. On the other hand, experience in the real world seems to suggest that secret deals in smokeless rooms are capable of producing highly unsatisfactory results. The kind of transparency suggested in Owen’s post look to be the best protection against corruption in the electoral process. (Full disclosure: I’m his father, and in the far distant days when I was a diplomat I saw plenty of evidence of private deals between governments to support each other’s candidates for jobs in international institutions.  I’m afraid a certain amount of this is probably inevitable: it even happens, at non-governmental level, in the Eurovision Song Contest!)

  • Thank you Owen. An excellent, iinformative post.

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