Bessma Momani is a senior fellow at The Centre for International Governance Innovation and professor at the Balsillie School of International Affairs, where Xenia Menzies is a CIGI junior fellow in global governance.
With the American Robert Zoellick’s term as World Bank president drawing to a close, now is the time to acknowledge global economic reality and allow a developing country candidate to take the helm.
There have been calls for an open, merit-based selection process for the World Bank Group and International Monetary Fund heads since the institutions were first proposed during the Second World War. At that time, the United States was the bulwark multilateralist that stopped John Maynard Keynes’s proposal that the institutions should be run by a U.S.-U.K. duopoly. The U.S. argued for a broader governance arrangement and won in light of overwhelming economic power. In spite of the multilateralist intentions that won out at Bretton Woods in the formal agreements, the “gentleman’s agreement” that was struck informally has let Europe head the IMF and the US head the World Bank virtually without a fight for more than half a century.
Just before the global financial crisis emerged, the G20 called for an “open, merit-based and transparent” presidential selection process. Like the shift from the G8 to the G20, economic power has shifted meaningfully towards emerging economies. As emerging donors become more important, the United States has become less of a sure thing in the multilateral realm. Last year's debacles over the budget ceiling and the recent withdrawal of funding from UNESCO (albeit on foreign policy grounds), as well as in aid initiatives for health and agriculture, have cast a shadow on American global leadership. The euro zone’s protracted problems are further proof that the G8’s once unequivocal leadership in world economic governance is on shaky ground.
The entire financial and monetary system is looking to reserve-rich sovereign backers, like China, Brazil, Russia, and the Arab Gulf states. However, these countries are hesitating to throw their capital into these institutions, given how little power and clout they have inside the institution's decision-making bodies. An institution that was more inclusive of views outside the G8 could do well to garner more emerging donor support. A move on leadership, even as a credible contest -- if not a developing country appointment -- would do well to instill confidence that these institutions are not just U.S.-EU instruments.
As the banker for the world’s poor, it is fitting that the World Bank would be a place where the world’s poor would have the loudest voice. After all, the World Bank’s mandate is development and poverty reduction. Its only clients are developing countries, and much of its revenue comes from interest on loans made to these countries.
Last spring, support quickly gathered around Christine Lagarde to succeed the embattled Dominique Strauss-Kahn for IMF Managing Director. The IMF had adopted the same “open, merit-based selection process” rules, but they were set aside in light of the challenging expediting circumstances. One of the arguments brought forward then was that there was no obvious developing country candidate that other countries and their voting power could rally behind in time. It is now imperative that developing-country candidates be credibly put forward in a truly open, merit-based presidential selection process if the Bretton Woods institutions want to remain as credible multilateral institutions.
Procedurally, the Executive Board approves nominated candidates for President. With effective veto power, the United States can block other candidates and push through a candidate of its own unilateral choosing. The most notorious is the case of the appointment of Paul Wolfowitz, chief architect of the Iraq war. The U.S. unfortunately appears poised to take the unilateral appointment route again. Treasury Secretary Geithner has issued a statement claiming that the US would put forward another candidate.
The United States has a chance to show leadership here by following another path. The U.S. has long been a supporter of governance reforms that enhance legitimacy. Ramming through another appointment would expose American stubbornness. A concession here, at least on process if not on final appointment, could win the U.S. reputation points for living up to its rhetoric. Even if it does relax its hold on the presidency, the United States would retain its effective veto in important decisions and might be even more likely to retain power in the next rounds of share negotiations if it shows its flexibility. If the U.S. wanted to use its announcement to show a leadership role in keeping the process and the institutions credible and multilateral, it could consider putting forward a developing country candidate, putting support behind multiple credible candidates, or stepping aside on nominations in order to signal an open field.
There is a great deal of talent in the developing world that would be well suited and well qualified for consideration. Many potential developing country candidates have held senior ministerial posts in their own countries as well as senior roles within the World Bank Group and other multilateral institutions. They include: Nigeria's Ngozi Okonjo-Iweala, China's Justin Yifu Lin, and Mexico's Ernesto Zedillo. There are many more developing country candidates that can and should be considered.
The U.S. can show real leadership by passing the torch to one of these fine candidates. Failure to do so will lead to continued disengagement of emerging market economies from international financial institutions. The consequence of this will be catastrophic if global imbalances continue with cash strapped countries holding on to nothing more than their privileged seats at the helm.
Potential Candidates for the World Bank presidency from developing countries
There are a number of well-qualified developing country candidates that could be considered and put forward as candidates in the next selection round for the President of the World Bank Group. These include:
- Ngozi Okonjo-Iweala – Current Finance Minister of Nigeria, former Foreign Minister of Nigeria, and former Managing Director at the World Bank. Okonjo-Iweala was mentioned as a potential candidate when Zoellick was nominated.
- Justin Yifu Lin – Currently the Chief Economist at the World Bank Group. Lin is the first developing country economist to hold the role. He has held significant posts within the Chinese government and chairs an economic research centre at Peking University (Bei Da).
- Ernesto Zedillo – Former President of Mexico, former Finance Minister of Mexico, currently head of the Center for the Study of Globalization at Yale University. Zedillo recently headed an influential report on governance reform at the World Bank Group that bears his name
- Sri Mulyani Indrawati – Former Finance Minister of Indonesia, current Managing Director at the World Bank Group, former Executive Director on the IMF Board.
- Elizabeth Thompson – Former Minister of Energy and Environment of Barbados. Currently Executive Director of the Rio +20 UN Commission on Sustainable Development meetings this summer.
- Luisa Diogo – Former President of Mozambique, Former Deputy Minister of Finance, and former World Bank official.
- Michelle Bachelet – Former President of Chile. Bachelet currently heads the UN Development Program.
- Trevor Manuel – Current Minister of National Planning Commission, former Finance Minister, former Minister of Trade and Agriculture of South Africa
- Ashraf Ghani – Former Afghan Finance Minister and World Bank official, who was also rumored as a potential nominee in 2007