Exclusive: The campaign to oust Malpass seems to have run out of gas

An informal campaign to oust World Bank President David Malpass over alleged climate denialism has largely sputtered to a halt amid a growing realization among bank watchers that the cost of taking down the embattled Trump nominee would exact too high a political cost.

Just two weeks ago, former U.S. Vice President Al Gore called for Malpass’ removal, setting off a chain of events resulting in the World Bank chief’s refusal in a live interview with a New York Times reporter to acknowledge that global warming was caused by the burning of fossil fuels. Malpass subsequently backtracked repeatedly and apologized, insisting he was no climate change denier.

The White House sharply criticized Malpass’ remarks. But the Biden administration has shown no indication that it plans to press the matter at the World Bank, according to more than a dozen foreign diplomats, Congressional aides, former officials, and environmentalists who spoke to Devex. 

Some observers say that there are still officials in the Biden administration, particularly policy people focused on climate change, that advocate for Malpass’ removal, but that they have little chance of convincing the White House to act before the midterm election in November.

Moreover, Democrats, including those in Congress, have exhibited limited enthusiasm for a battle over the future of the World Bank president, whose five-year term is set to expire in April 2024.

“This would probably not go down very well,” said one climate advocate who has been following the issue closely. “We have to think about the upcoming midterms and the fact that the Republicans have so much power in Congress right now, and it would piss them off severely for the Biden administration to chuck out Malpass right now.”

Further, the Biden administration “does not want to be doing this unilaterally,” said Joe Thwaites, international climate finance advocate at the National Resources Defense Counsel. “It would want to have the support of other [World Bank] shareholders.”

But Thwaites said he wouldn’t want to rule out the prospect of Malpass’ ouster sometime in the future, saying he understands the U.S. is engaging in “ongoing conversations among major shareholder countries” about Malpass’ fate. “It could be the quiet before the storm.”

Setting a bad precedent

Late last month, 27 Democratic lawmakers in the U.S. House of Representatives signed a letter urging President Joe Biden “to advocate for the removal or forced resignation of David Malpass as World Bank Group President.”

“People and governments now more than ever need a World Bank leader who listens to the science and is a global leader in combating climate change,” the letter stated.

However, the lawmakers’ effort seems to have ended there. No one in the Biden administration was prepared to take on a costly public battle, according to multiple climate advocates, who spoke on condition of anonymity to avoid offending allies in the Biden administration. And, despite some fierce tweeting in the Senate, no letter or other concrete momentum emerged from the upper chamber of Congress.

For the White House, there are several risks to forcing Malpass from office before his term ends. They include the possibility of antagonizing Republican lawmakers, who recall the resignation of a top Republican politician, Paul Wolfowitz, from the bank’s top post 15 years ago. Wolfowitz stepped down after an internal bank panel found he had violated the institution’s rules by promoting his girlfriend and raising her pay.

Further, another Trump nominee, Mauricio Claver-Carone, was just removed from his job heading the Washington-based Inter-American Development Bank last month due to ethics concerns. The Biden administration backed his dismissal. Claver-Carone, for his part, has denied the allegations against him.

Part of the concern for the Biden administration is that pushing for Malpass’ removal would hurt future funding for the bank and turn the institution into a political football, damaging its ability to carry out its mission of fighting poverty.

Ousting a Trump nominee would also, some observers said, create a precedent that U.S. presidents would rid international institutions of their predecessor’s nominees, leading to instability.

American nationals have traditionally held a monopoly on top jobs at key international institutions where they provide the largest share of financial support, including the World Bank, the Word Food Programme, and UNICEF.

Shifting the bank’s mission

In the meantime, the U.S. Treasury Department has begun a push for a plan to reform the World Bank — and potentially other multilateral development banks — by refocusing it on global and regional agendas, rather than country-focused issues. This would potentially better position it to tackle overarching problems facing the world.

In a speech last week, Treasury Secretary Janet Yellen said she will be calling on World Bank management at the annual meetings to work with shareholders “to develop a World Bank evolution road map by December.”

The move reflects growing pressure on the bank and other MDBs around the world to step up their financing, particularly on climate. This could mean taking on more risk and acting to stimulate private sector investments in climate projects. By moving first, the MDBs could then act to bring in investors who would otherwise be wary of putting their money down.

But if the Biden administration were to seek to fire Malpass, it could also face potential resistance from African states that are big beneficiaries of World Bank lending, especially of late, according to two people familiar with shareholders’ thinking.

Some nations appreciate the fact that Malpass has not applied intense political pressure on their governments to completely forgo fossil fuels — since they consider gas a transitional energy source — and that the bank considers certain gas investments as worthwhile, despite pressure from climate groups.

Kenya these days stands out as a fairly lone voice pushing for a sharp shift to a green economy, whereas Uganda, Nigeria, Senegal, and others are seeking to build new pipelines or exploit natural resource reserves.

No appetite for a succession battle

One ambassador from an Asian country to the United Nations said there has been no active push by the Biden administration to force Malpass to the exit.

“Despite Gore’s withering attack, I am not sure the Americans want a succession battle when things aren’t going so well on the geopolitical front … unless they have a ready-made consensus candidate they can just roll in, which would be unlikely,” the diplomat told Devex by text message, requesting anonymity as not to be seen commenting on a domestic American political matter. “Even then the incumbent isn’t going gently into the good night.”

“Also, let’s not forget IMF Managing Director Kristalina Georgieva and how she weathered thru last year when IMF staff criticized her for watering down language on Brazil’s climate policies.”

One former World Bank staffer, who was dismayed by Malpass’ recent comments, said that in his view the bigger blow to the institution’s reputation in recent years was the scandal involving its flagship Doing Business report, in which Georgieva was found to have applied “pressure” to have China ranked more favorably in the annual country rankings. Those involved also saw no real repercussions by the board.

It may feel like ages ago, but during last year’s annual meeting, the big question was whether Georgieva would survive the controversy.

Malpass is now in the process of reviving Doing Business under a new name, raising questions about what lessons were learned from a scandal and a product that was accused of distorting development objectives by forcing countries to make market reforms that may have run against their interests.

Outside observers, including one who interacted with the Biden administration on the topic of Malpass’ removal, said that while there may have been opportunities earlier in the Biden presidency to move against Malpass, the moment has passed.

But this means the fight over who takes over the bank in 2024 is only just getting underway. Whoever gets the job will have some cleaning up to do with progressive activists.

Nadia Daar, head of the Washington, D.C. office of Oxfam International, said Malpass’ exchange with the New York Times reporter was “shocking, but not terribly surprising,” citing longstanding concerns among climate activists about his commitment to battling global warming. But she said his stance has hurt the World Bank’s standing in the eyes of the public.

“The bank is suffering from a credibility crisis when it comes to climate change,” she told Devex.