How long will the nomination take?

Apparently we are still at first base when it comes to appointing a new World Bank president. Many people are keen for a quick resolution on this issue – not least many of us bloggers, the German government (which would hate to have the full G8 summit dominated by this same question), and Bank staff. It appears, though that we may have to wait some time. Deputy Secretary of the US Treasury Robert Kimmit told reporters at the G8 finance ministers meeting in Potsdam that his boss Henry Paulson “is not at this time talking names of people but how best to run the process to end up with the best person to run this important institution”.

One thought on “How long will the nomination take?

  1. Comments from before this site shifted to WordPress (30 May 2007) re-posted en bloc below. Alex

    Taking a look at the background of some of the contenders, James Leach deserves a careful look.
    He is a moderate republican (which hopefully doesn’t disqualify him) but more importantly has clear credentials on the key aspects of this job – he understands and has a record of supporting multilateral institutions, financial services, international affairs, and is an expert on at least East Asia and China. If I remember right, he chaired the House Financial Services Committee and the House International Relations subcommittee on East Asia. Wolfowitz tought us that management and consensus-creating ability counts. Leach’s management skills might have rusted in 30 years in the House, but at least he was a businessman and was on the board of a bank before politics. He’s pretty low key and may not want the job, but it seems he should merit a close look and could add a lot of positive values.

    Speculating ~ May 21, 2007, 01:49 PM

    READ THE FINE PRINT: The price of the Wolfowitz face saving is the US lost big on its birthright.

    The Reuters commentary strongly suggest that the process or picking a President has changed.

    The telltale phrase is this one:

    “U.S. Treasury Secretary Henry Paulson is consulting European colleagues on a new World Bank chief but is not shopping specific names.”

    In the past, the US selected a candidate, and then in background, shopped the name to the Europeans and Japanese to be sure that the candidate is acceptable. Then they hold a Board meeting to annoint the leader.

    However, take a look at this next comment from the Germans:

    “The (German) federal government continues to support the notion that the Americans have the right of first suggestion and nomination,” Steinbrueck said in response to a question.”

    Right of first suggestion —- that means that Americans can suggest, but they do not DECIDE.

    ie sure, make a good suggestion, but if you pick a turkey (fill-in-the-blanks, ie Karl Rove, Alberto Gonzales… etc.) the rest of the Board (read EU) will put forward their own candidate.

    As for “[right of] nomination”, well, ANYONE on the Board has that right.

    Take this together with the ED statement about beginning the process of nominating a new President immediately, and it is flatly clear that the process has changed. Historically the Board did nothing of that sort — it left the nominating process to the Americans.

    Note that Paulson is consulting with the EU NOT about the proposed candidate(s), but the PROCESS and is NOT shopping names.

    The agreement between the EU and the US must be that he can consult about the process, the credentials, etc. but not about a specific individual or individuals. If that one individual were proposed and it was rejected, the US would have used up their ‘first suggestion’ and it becomes a free for all.

    Here is the real story:

    Strip away the diplomatic codewords, read the ED’s statements from the resignation, and the following picture appears.

    The United States will no longer unilaterally DECIDE who the President of the World Bank will be (subject to very few limitations such as a post candidate selection consultation about the candidate prior the the decision being made public.)

    The United States is entitled to the ‘first suggestion’, with the proviso that if it is someone unacceptable (like another Wolfowitz), it will be rejected by the Board.

    If the first suggestion fails, it is a ‘free for all’ for any Board member to nominate a candidate. This process would be very much like any UN election process.

    The EU agree (discretely) to not rub the United State’s face in the dirt by making public that the US has lost its traditional right to pick the President of the World Bank.

    The United States agree to ensure that PW resigned (rather than face a board vote on terminating PW which the US would have lost.)

    The EU accepted giving a face saving (not really, if you read the “Parsing the statement”) statement on PW’s resignation in lieu of taking the PW case to a vote.

    In other words, the Bush administration traded off a birthright to give a little face to PW on his way out.

    None ~ May 21, 2007, 02:04 PM

    Re the preceding comments,

    I have yet to understand the boosterism for Leach. He wasn’t all that great in Congress, and I fail to see how his business experience 30+-years ago is in any way in the plus column for running this institution.

    The continued overwrought interpretations of statements here lately are amazing. I’m sure some of these people could take something like “I love milk” and turn that into a condemnation of its author’s prediliction for beastiality. Relax and take a breath, people.

    Joe Mama ~ May 21, 2007, 03:04 PM

    Good take by None there. I agree with most of it.

    But maybe we should give more emphasis to the predispositions of Ministers of Finance – I’ve remarked on this board that we’d see much better development if development-oriented ministries called the shots, but those Ministries of Finance it seems to be!

    A cold-eyed lot. What interests them? Above all, the IMF presidency, by 1000 percent.

    The IMF presidency may seem the smaller deal to us on this board right now, but Ministers of Finance and Governors of Central Banks around the world see it as a very big deal indeed, relating to stability of the entire global economy. A $40 trillion deal. Over 6 billion people. And it will have an “infinite” lifespan.

    The World Bank in contrast only has real influence over a small and declining fraction of the global economy. Remove the BRIC countries from the equation, and its sphere of real influence only amounts to a trillion or two dollars of GDP and a billion or two people. It probably only has a very finite life.

    Disbursing a mere $20 or so billion or so a year? It hardly even seems like a fill-time job any more.

    In fact it rather looks like the US got sandbagged at Bretton Woods (that huge old hotel is worth a visit if you are in NH by the way) and ended up with the less significant (and increasingly less significant) of the two presidencies.

    A shot at MOF perspectives, not mine, please note!

    Peter Quennell ~ May 21, 2007, 05:22 PM

    Nice analysis from None. See also:

    “UK’s Brown – New World Bank chief likely to be American

    POTSDAM, Germany (Reuters) – World Bank President Paul Wolfowitz is likely to be replaced by another American, British Finance Minister Gordon Brown has said. …

    … Asked for his views on such speculation, Brown told reporters: “The information I have is that the American administration are likely to nominate an American.” …

    … “I understand that the American administration wishes to make early progress on this,” he told reporters on the sidelines of the G8 finance ministers meeting near Berlin this weekend.

    The White House has said U.S. President George W. Bush will soon name a candidate to replace Wolfowitz. ”

    http://thestar.com.my/news/story.asp?file=/2007/5/21/worldupdates/2007-05-21T101957Z_01_NOOTR_RTRMDNC_0_-299148-1&sec=Worldupdates

    Why is a financial news company employing Neocons?

    “Is It Time for the U.S. to Bolt From World Bank?: Kevin Hassett

    By Kevin Hassett …

    … (Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was chief economic adviser to Republican Senator John McCain of Arizona during the 2000 primaries. The opinions expressed are his own.)

    To contact the writer of this column: Kevin Hassett at khassett@aei.org

    http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=autJzT35pLS0

    Peter Jones ~ May 21, 2007, 05:27 PM

    The IMF is in fact a much bigger deal than the World Bank.

    The problem is, from the perspective of Bretton Woods, at the time, most of the world was undeveloped (or under developed), and it needed lots of credits, so at the time, the World Bank was bigger.

    Now, admittedly the IMF is the more powerful institution under certain circumstances (when there is a need for exchange stabilization, correct fiscal imbalances, etc.)

    The problem is, of late, few countries needed the IMF’s services, and other borrowers have repaid early, and so it has been running at a deficit.

    While that problem can be easily solved, there is a far bigger problem — whether or not the entire Bretton Woods system has a certain degree of inherent instability which can overwhelm any ‘rescue’ agency like the IMF?

    The evidence for systemic instability has quietly reared its head at odd times: during the Soros attack on currencies, the Long Term Capital crisis, and now, the collateralized mortgage / debt situation in the US and around the world.

    These markets are so vast, and the debt instruments underlying them so extensive and so pervasive, that no one really understands how it all fits together and how a conflagtion can start at one small spot and spread.

    The involvement of large hedge funds in markets for debt and equity and the lack of visibility as to what they are really doing makes it doubly hard to even know what is going on until it is too late: witness LTC’s meltdown or the crash of several hedge funds recently.

    To date, each crisis handled by the IMF did not involve the US. The US ones like Long Term Credit, the S&L crisis, were handled domestically.

    Now, the problem that is beginning to creep up (but is nowhere near a real problem yet) is what if the US gets into trouble and itself becomes a candidate for an IMF bailout? Or what if there is a system wide (international) problem with a major area of finance like mortgages? Or CDOs?

    The system is not set up to bail out the US, though with some tweaks and things, the IMF can potentially do the job (armed with European, Japanese and Chinese credits).

    A wise President of IMF would be discretely undertake some hypothetical studies and start estimating the size of resources / action plans needed should any of these scenarios (mortgage meltdown, sizable fiscal imbalances in the US causing a collapse of the dollar, etc.) and what the Fund can do about it and how to go about it.

    Clearly there is room for much more participation by the Europeans, Japanese, Chinese, (and nearly everyone else in OECD).

    If there is an argument where the World Bank do not need visionary leadership, it certainly does not apply to the IMF. It needs a leader that is the opposite of Soros (who is a genius at taking down systems). The IMF needs a genius at build up a future system.

    I sincerely hope my speculation about the fragility of the Bretton Woods system is wrong.

    None ~ May 21, 2007, 08:03 PM

    Go to the IMF.org page and do a little research there.
    The job of the Fund is to be ready to deal with the risks of financial market instability. The institutions are resilient political institutions. Safety nets and lenders of last resort will do their work and there are many options to finance the Fund.
    The Managing Director of the IMF gave a little speech last week.
    http://www.imf.org/external/np/speeches/2007/051407.htm

    “Putting the Fund’s finances on a sustainable footing is therefore a central element of the Medium-Term Strategy. Last year I appointed a committee of persons with high standing in the international financial system to study this important issue. They examined this issue very carefully, and they have produced a strong report. Their central recommendation is that the Fund adopt a new income model to sustain its activities for the long term. They recommend a package of measures to diversify the Fund’s income, including:

    • broadening the range of the Fund’s investments, and investing a portion of the Fund’s quota resources, which currently can only be used to finance lending;

    • selling a fraction of the Fund’s gold reserves—400 metric tons, which is equivalent to one-eighth of total Fund holdings of gold—and investing the proceeds;

    • consider charging for services, such as technical assistance, provided to individual members; and

    • reestablishing the practice of the PRGF Trust reimbursing the Fund for the administrative costs of concessional lending.

    This report has now been considered by the Board and by the IMFC, and reflecting members’ views I will make specific proposals based on the report over the next few months.

    So how long will the nomination take? In mid-june we will be hearing about names.

    Because of the feathers he ruffle in his previous work one would hope that Zoellick’s name is not at the top of the list.

    Nonething Toworryabout ~ May 21, 2007, 10:18 PM

    Peter:

    You do realize that your link simply restates the position of Sameer, correct? He wants the WB eliminated as well.

    In the end, I agree with him on this point, though his perspective is from the Left. The WB is a dinosaur, its mission completed. Better to dissolve the body and free up some office space than to keep it running.

    DC Worker ~ May 21, 2007, 10:19 PM

    DC Wo ker,
    About the Jurassic Bank

    You dont need a shrink
    You can check this link
    to see what others think

    http://watchingamerica.com/index.shtml

    World is Watching ~ May 21, 2007, 11:37 PM

    I looked. The first thing I noticed was that the first picture had PW’s nose enlarged. Sorry, that’s enought for me to exit the web page.

    I don’t need drivel, WIW, this Board has enough of that. While I realize being anti-semetic and drawing Jewish cartoons with long large noses is par for the European crowd, I find it borish.

    DC Worker ~ May 22, 2007, 06:06 AM

    Mr. DC,
    Remember:
    A mind is like a parachute, it does not work unless fully open.

    World is Watching ~ May 22, 2007, 07:38 PM

    WIW: To which I quip that a parachute is filled with air in rejoinder.

    DC Worker ~ May 22, 2007, 08:36 PM

    Is an oviously non-working DC Worker, a “borish”….or simply a redundancy?

    Lovethehaters ~ May 23, 2007, 08:53 PM

    Looks like after Wolfowitz’ resignation the commenting season is coming to a close in this now venerable World Bank President website.

    All the attempts at a discussion of the main issues were forgotten and dilluted by the gossip and the rumors.

    Until the nominations come in from the White House

    Everyone, back to work now!

    Hasta la Vista Baby! ~ May 23, 2007, 09:14 PM

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