The news that Ivanka Trump and the World Bank have teamed up to launch a women’s economic empowerment facility has caused a stir in the Washington development community. Some see it as an astute move by an institution keen to maintain a good relationship with the White House — and hold on to its United States funding; others see it as a potentially serious reputational own goal.
More detail about the venture — dubbed “The Ivanka Fund” — has been steadily emerging since President Donald Trump’s daughter first mentioned it during a W20 meeting in Berlin in April. She and World Bank President Jim Kim also expressed a shared vision for boosting economic opportunities for women in a joint op-ed published by the Financial Times newspaper late that month.
The plan is for a $1 billion women’s entrepreneurship facility to be administered by the World Bank. According to the Financial Times, the facility will be set up with $200 million in seed funding, half of which will be provided jointly by Saudi Arabia and the United Arab Emirates — promised after a recent visit by President Trump and his daughter. The bank has stressed that Ivanka will be a figurehead for the project and will have no involvement in fundraising or operations, hopefully assuaging fears over a conflict of interest. The bank’s board is due to vote on the facility at the end of June.
Divided opinion
There are some indications that the arrangement reflects Kim’s attempts to woo a seemingly hostile U.S. president to support his institution.
It may have worked. The latest draft budget from the Trump administration indicates that the World Bank’s International Development Association can expect to receive $1.1 billion from the U.S. — which observers consider a relatively healthy contribution at only slightly less than the $1.3 billion agreed under the Obama administration. The same budget proposes an overall cut of 35 percent to all multilateral development banks.
Furthermore, as Devex reported, two former U.S. Treasury Department under-secretaries — Nathan Sheets and Tim Adams — have said that the pledge, and the announcement of the proposed Ivanka Fund, could point to a more positive relationship between the World Bank and the White House than might have been expected given Trump’s selection of outspoken World Bank critics for his Treasury picks, and his earlier anti-multilateral stance.
Scott Morris, an expert at the Center for Global Development and a former Treasury official under Obama, said that housing the Ivanka Fund at the World Bank is consistent with a longstanding practice whereby Kim hears that the White House is interested in a particular development topic and will “jump up quickly and says he’s happy to make it happen.” For example, the bank was keen to get on board with then-President Barack Obama’s Power Africa initiative.
Morris praised Kim’s proactive approach and said: “He’s both reflecting that his institution has the substance, resources and knowledge to play that kind of role and he’s also being a good political actor on behalf of his institution — the U.S. is his largest shareholder and he needs to show that the World Bank has utility to the White House.” From here, Kim will “hope to see further gains,” he explained, such as the capital increase that Kim announced he would be seeking for the bank in October 2016.
But others have reacted with dismay, accusing Kim of compromising his institution’s credibility and diverting its priorities. A recent editorial in the Financial Times said that “such obvious trading of favours for funding falls well short of required standards of probity.”
There could also be wider issues of the bank’s legitimacy and relevance at stake, as Ravi Kanbur, a professor of economics at Cornell University, wrote in a blog for Europe’s Centre for Economic Policy Research. Kim’s inability to say “no” to the president’s daughter points to a wider “existential threat to the institution,” which was set up 75 years ago to help rebuild Europe after World War Two.
Some commentators also fear the project may not be the best use of the bank’s time, will distract from its core business, and that the association with Trump could damage its reputation.
Balancing act
Paul Cadario, distinguished fellow at the University of Toronto's Munk School of Global Affairs and a former senior manager at the bank, believes Kim is using the facility as a way of securing his own position.
“It’s no secret that Dr Kim, after his premature reappointment last fall, has had some difficulty getting the attention of the White House,” he said. The Ivanka Fund represents a way to “reposition the bank’s messaging in ways that are more likely to be agreeable to the White House than they were before.”
However, while Kim may have successfully penetrated the White House — the Financial Times recently reported he had even sent a team of World Bank infrastructure experts to advise Trump — Cadario said Kim needs to make sure the Ivanka facility is more than “just a PR exercise” and that the bank’s owners are not “disappointed with the facility's results, compliance and risk management features.”
The facility will therefore need to be carefully put together so that it doesn’t duplicate existing work being done by the bank or by its private sector arm, the International Finance Corporation, which already runs the $600 million Women Entrepreneurs Opportunity Facility — a joint partnership with the charitable arm of investment bank Goldman Sachs that provides training and access to capital for female-owned enterprises.
A current World Bank employee, who wished to remain anonymous for professional reasons, said the move was about political point-scoring and undermined the integrity of the institution.
“The view around the institution is that Kim is getting too political. We have a gender strategy which has been very carefully thought out which talks about enabling opportunities for women entrepreneurs … What is happening is that a globally-considered agenda is getting deflected in one direction because the daughter of the president has decided this is important,” the employee said.
They also described the situation as demeaning for the bank. “When you’re the head of an international organization … you have to acquit yourself with dignity in situations like these. By all means be responsive, but I think a lot of people feel this is cringeworthy,” they added.
According to another staffer, who also did not wish to be named for professional reasons, the institution has been struggling to distance itself from the term “Ivanka Fund”, which has been widely used by the U.S. media.
“This term ‘Ivanka fund’ was an unfortunate bit of misreporting. Ms. Trump is expected to be a strong advocate for this issue, but she would not be involved in the administration of any proposed World Bank facility nor directly fundraise for it,” they said.
The staffer was keen to point out that the facility came out of conversations with German Chancellor Angela Merkel as well as with the first daughter. It has been suggested that it was the Germans who first proposed that Ivanka should speak to the World Bank about her idea.
In an official statement released by the World Bank, Kim underscored the facility’s governance structure. “The World Bank Group is working with partners on the details around creating a facility for women’s economic empowerment … Typically, the governance of facilities we manage is decided among donors, and the secretariat sits within and is administered by the World Bank Group. We are very grateful for the leadership Ms. Trump and Chancellor Merkel have demonstrated on this important issue,” it said.
“Existential threats”
The issues around the Ivanka Fund can be seen in the context of debates about “existential threats” facing the World Bank, which Kanbur describes in his blog.
Challenged by a new cohort of development finance institutions, including the Asian Infrastructure Investment Bank and the New Development Bank, the World Bank is no longer “the only game in town,” Kanbur writes. To establish itself within this new field, it not only needs a large capital increase — one which the US seems unlikely to grant given the proposed cuts to multilateral development banks — but also a new way of working.
Kim and his top managers have recently laid out a new vision for the institution, which involves catalyzing more private sector-led development and a bigger focus on the funding of public goods, including climate change, rather than traditional sovereign lending.
However, achieving the capital increase needed to effectively deliver on these goals and managing to drive through a public goods agenda will be difficult under the current U.S. administration, which recently withdrew the country from the Paris Agreement on climate change and seems more likely to cut than increase the bank’s budget. The U.S. remains the bank’s largest shareholder — a position it is unlikely to relinquish, Kanbur writes.
With this in mind, many commentators suggest the bank’s hands are tied by Trump. Its proposed $1 billion fund, created at the behest of his daughter, may look like a short-term way to ease the pressure of a long-term bind.
Update, June 15, 2017: This article has been updated to clarify that $100 million was pledged jointly by the UAE and Saudi Arabia.
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