who will be next World Bank President What will they do


Reform for next Prez? Don’t hold your breath. With no government officials calling for systemic change, the WB board looks likely to sidestep any change to business as usual (i.e., the U.S. calls the shots).

The salient question, as I argued back at the beginning of this episode, is whether there will be substantial reform in how the World Bank president is chosen. That may take a little longer to play out, or it may not.

Recent newspaper articles have suggested that an all-too-predictable process may be underway – a negotiation between Wolfowitz’s lawyer and the World Bank board to find a face-saving and mild-mannered way out of the crisis. The board would admit its own errors in creating the mess, and Wolfowitz would agree to leave for the noble cause of putting the Bank’s mission first – simply because, he will contend, without contradiction from the Board, some of the staff can’t put aside their ressentiment over his achievements in his “previous position.” The president of the U.S. would submit a new name – maybe a woman, or a Latino or African-American, or maybe even some sort of non-American. The choice would be confirmed, and, the internal critics mollified to whatever degree, the Bank could go on with “getting back to ‘normal.’”

Although I don’t think even dramatic reform in the process of selecting the institution’s president will mean much in terms of the Bank’s policies, it might be worth reminding people just where “the bar” on such things is. The last time the International Monetary Fund selected a new head, beginning in March 2004, it was forced, through protests (including from eleven of its own executive directors) against the routine practice of alloting the office to Western Europe to modify its behavior. The board actually interviewed two candidates, one of whom was former IMF official Mohamed El-Erian, an Egyptian-born dual citizen, holding both Egyptian and French passports. True, this was done *after* the decision to give the job to Rodrigo Rato was made, but it was not quite an entirely meaningless gesture. What was important about this strange exercise, from the reform perspective, was the acknowledgement of some “shoulds” -- that the board should play a role in actually choosing from among several candidates, and that the winner shouldn’t have to be nominated by Europe.

The U.S. chose to ignore this precedent when George W. Bush nominated Paul Wolfowitz, but the Europeans, who compose one-third of the IMF’s board members and control a similar proportion of the votes, didn’t object. Who would expect them to in the circumstances? Procedural backtracking was not going to make any headlines with a very ugly gorilla sitting in the middle of the room. Besides, letting that little impropriety slide might mean getting to forget that partial-precedent next time ‘round at the Fund.

So, while some of the critics, including former Banksters like Robert Calderisi and former IMF chief economist Kenneth Rogoff, have focused attention on the need to democratize the selection process, the noise is going to have to get a lot louder if there’s going to be much hope of it happening.

Thus far no one remotely connected to any government has said anything about such reform. We shouldn’t expect to hear such sounds from borrowing countries, who don’t want to risk irritating anyone with potential control over their funds. Nor should we hold our breath to hear someone from a Northern country say it, since their governments all think they have a stake in the process as it is now. Japan, which has voiced discontent in the past (since it is out of the running for both the IMF and WB position, and gets the very sorry consolation prize of MIGA), may be a possibility. Or maybe a middle-income country no longer feeling very dependent on the Bank.

But it’s more likely that eveyone will be trying to humor the U.S. – let’s not irritate Bush too much more. Let him make a nicer choice this time, and we can get back to our other business.

I hope I’m proved wrong.

Soren Ambrose ~ May 04, 2007

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