At a time when the legitimacy of the World Bank as a development institution is at stake, countries from around the world are in the process of recruiting the new president of the institution. Any member of the World Bank can put forward a candidate. But since its founding, there has been a gentlemen’s agreement where the United States and its European allies work behind closed doors to ensure a U.S. citizen leads the World Bank, in exchange for the European leadership of the International Monetary Fund.
The White House put forward David Malpass — a long-time critic of multilateralism — as its nominee for the institution’s next president, while Lebanon just put a new name on the table, Ziad Hayek, the only known challenger so far to Trump’s nominee.
Challenge a failed model
The leadership change at the World Bank, traditionally one of the most influential international organizations, takes place against a backdrop of increasing polarization and ongoing economic challenges and growing inequalities continue to take root. We see governments ignoring lessons learnt from the financial crisis, while we are stumbling into the next one. These trends are exacerbated by the effects of climate change which are threatening the livelihoods of the poorest around the globe.
Read more on the World Bank presidential race
In recent years, we have seen that, under Jim Kim’s leadership, the World Bank promoted a vision of the bank that closely aligns with Wall Street — and keen on attracting private equity firms, insurance companies, and sovereign wealth funds. This approach resulted in the controversial “maximizing finance for development” approach, which focuses on crowding in private finance and creating markets, without sufficient assurance that the realization of citizens’ rights, including their rights to essential services, are fulfilled.
More than ever, the success of the next president’s tenure depends upon his or her willingness to critically assess the role the bank can play in challenging the failed model that has led us here.
Call for an effective development finance institution
Meanwhile, emerging economies’ frustration about U.S. dominance in the World Bank has led to new institutions emerging, such as the Asian Infrastructure Investment Bank and the BRICS’ New Development Bank. These two are seen as a political response to an institution failing to adapt to the new economic order, with a governance structure that is preferring richer over poorer nations and is therefore considered unjust by many.
As the commercial financial sector is unlikely, of its own accord, to provide the finance needed to support sustainable economic development, the world still needs institutions such as the World Bank. Its leadership should therefore effectively promote policies for the poor and marginalized.
Raise the accountability bar
If we are to accelerate efforts to address growing inequality, climate change, and social justice challenges, the aforementioned gentlemen’s agreement must end. The World Bank is still the most influential public development bank in the world and needs a leader who truly supports its mandate to end extreme poverty and promote shared prosperity for everyone in every developing country.
This is also the opinion of the over 130 signatories to the Open Letter to the World Bank Group Board of Executive Directors. In the letter, prominent academics, politicians, and civil society groups from the U.S., Latin America, Africa, Europe, and Asia call for the selection to be a transparent and competitive process that is open to any applicant and actively encourages candidates from the global south to apply. Given that the World Bank operates in developing countries, and has the strongest impact in the poorest of them, a majority of votes only on the basis of shares in the institution is no longer valid as a method of decision. The candidate should be also supported by a majority of member states, and a public declaration of member state preferences should raise the accountability bar.
A transformative global development agenda rooted in international human rights can be reached. However, this is only possible if all countries around the world show a firm commitment to multilateralism by playing their part at the board of directors of the World Bank and nominating a candidate that stands out as the most appropriate leader for an institution with a development mandate.