Editorials

Chance to change the World Bank's governance

Jim Yong Kim has announced that he is resigning as president of the World Bank, three years ahead of schedule. The announcement surprised many: Kim was re-elected to a second term two years ago to avoid the unseemly fight that is likely to accompany selection of his successor. Kim’s departure raises fundamental questions about how the World Bank president is chosen, and whether practices that have guided that process need to be reassessed. It is time to make the appointment process more democratic and meritocratic.

The World Bank was set up in the aftermath of World War II and was intended to be one of the pillars of the postwar economic order. Today, it is the world’s second-largest development bank. Its members include virtually all governments, and it provides low-cost loans for development projects around the globe. In 2018, it made $66 billion in commitments to developing country governments and private sector investment projects.

When Kim was chosen by U.S. President Barack Obama to become the organization’s 12th president, he was president of Dartmouth University and had a background in global health issues, previously serving as chair of the global health and social medicine department at Harvard Medical School and executive director of Partners in Health, a nonprofit organization that took modern medical science to the world’s least developed countries. It was a relatively thin resume for the leader of the world’s leading development lender, especially when compared to those of rival candidates, Ngozi Okonjo-Iweala, who twice served as Nigeria’s finance minister, and Jose Antonio Ocampo, a former minister of public finance and credit and minister of agriculture in Colombia, as well as United Nations undersecretary general for economic and social affairs.

That discrepancy did not matter, however — and that is the problem. Since the World Bank was founded, the U.S. president has picked its leader. That power is not spelled out in the institution’s rules or by laws. According to the bank’s Articles of Agreement, the president is selected by its 25 executive directors. In reality, the board defers to the judgment of the United States. This has been facilitated by a corollary agreement: The head of the International Monetary Fund has been picked by European governments. The current IMF managing director is Christine Lagarde, the former French politician and finance minister. She took the post when her predecessor, former French politician Dominque Strauss-Kahn, was forced to resign following a scandal.

While Kim faced several crises during his tenure, there is no indication that scandal forced him out. He said he was resigning to join a private sector institution that will focus on infrastructure development and to rejoin Partners in Health. He will be succeeded on an interim basis by World Bank CEO Kristalina Georgieva, and the executive board said that it would begin searching immediately for a permanent successor.

There is little indication that the U.S. administration of President Donald Trump, despite its contempt for international institutions in general, is ready to abandon the U.S. prerogative of picking the World Bank’s leader. The U.S. has complained about World Bank policies, in particular its readiness to lend to China, a seeming anomaly when China is bankrolling several facilities to promote development throughout the world. According to one analysis, the World Bank loaned China an average of $2 billion a year, or more than $7.8 billion since it surpassed the bank’s income threshold for lending in 2016.

Nevertheless, the time has come to ensure that the best person heads the World Bank. The U.S. no longer dominates the global economy and it can no longer claim to be protecting the global interest when its top officials insist that they are putting their national interest first. The Trump administration’s record of appointees to international institutions is mixed: Its candidate to head the U.N. Migration Agency was rejected last year for making anti-Islam comments — a difficult position to defend given the organization’s mandate and the people it protects. The U.S.-European bargain to support each other’s nominee to head the World Bank and IMF is strained like the rest of the trans-Atlantic relationship.

A successful challenge to the U.S. choice will require that the rest of the world coalesce around a single candidate, a consensus that has been elusive. Other governments, such as Japan, must decide whether it is worth courting Washington’s ire in defense of the principles of democracy and meritocracy. Given the creation of new development banks, such as the Asian Infrastructure Investment Bank, which could undercut facilities like the World Bank, it is vitally important that critical institutions be headed by the very best individuals. Kim’s resignation provides an opportunity to set new standards for professionalism and leadership.