The World Bank presidential race heats up

WASHINGTON — World Bank President Jim Kim’s surprise announcement that he is stepping down on Feb. 1 — more than three years before the end of his second term — has ignited a frenzied race to replace him. Names and scenarios, including one that could transform the campaign, are beginning to emerge.

The White House is scrambling to vet and interview candidates in hopes of finding one that President Donald Trump will endorse, candidates are ramping up their behind-the-scenes campaign activities, and the global development community is holding its collective breath about the outcome of this particularly unusual election.

The prospect of a United States president who has been hostile to multilateral institutions and multilateralism itself presiding over the selection of the bank’s leader is raising the stakes and may upend the traditional election process. Whether or not the result is the end of the U.S. hold on the World Bank presidency is very much on the line, sources told Devex.

Since the bank’s founding in 1944, it has always been led by an American — or more specifically, an American man. That is not just coincidence but the product of a historic “gentlemen’s agreement” between the U.S. and Europe, which collectively own controlling shares of the so-called Bretton Woods institutions — the World Bank and the International Monetary Fund. Under this agreement, the two blocs traditionally agree to support America’s nominee to lead the World Bank and Europe’s nominee to lead IMF.

In recent election — or selection — cycles, small cracks have begun to emerge in that status quo, which critics say is an anachronism from an era when a handful of powerful countries set the development agenda for the rest of the world.

In 2011, the bank’s board endorsed a set of principles to guide a transparent and merit-based selection process, and in 2012 the bank saw its first ostensibly competitive race that included non-American candidates. Kim, an American and ally of Hillary Clinton’s, ultimately prevailed, and in 2016 — despite widespread criticism of a rushed process — secured his reappointment.

Now that the Trump administration is suddenly faced with putting forward a new nominee, questions about how to weigh the board’s stated criteria with the candidate’s citizenship have surfaced once again.

“We view that this unwritten policy is anachronistic, and it needs to go. Our clients and our staff, we deserve the best that the world can offer, and the only way we’re going to get that is if we have a truly open, transparent, and merit-based international competition,” said Daniel Sellen, chair of the World Bank Group Staff Association.

“The Americans are going to put up — I hope — the best that they have to offer, and if that candidate is the best, let her or him take the job,” Sellen said.

Scott Morris, senior fellow at the Center for Global Development, agreed that whether America maintains its grip on the World Bank presidency will largely depend on who the Trump administration chooses to nominate, but he added that the bar for a successful American candidate might be lower than bank staffers would like.

If the White House puts forward a candidate most European leaders can support — or even just accept — it is unlikely other major shareholders would go to battle with the administration over the bank, or that enough smaller shareholders would coalesce around a challenger, Morris said.

“There is a credibility test that the Trump people will have to meet with their nominee. Frankly, maybe it is a lower threshold than one might have hoped,” he said.

“It’s going to take a lot to get the Europeans upset. I think they will be actually really desperate to see the Trump administration put forward a candidate that meets some level of credibility,” Morris said.

Within the Trump administration, Treasury Secretary Steven Mnuchin, acting White House Chief of Staff Mick Mulvaney, and senior adviser and first daughter Ivanka Trump are reportedly leading the process of vetting potential candidates. The names that have surfaced so far — in news reports and from credible sources who spoke to Devex on the condition of anonymity — include both Trump administration insiders and higher-profile business and political leaders.

The White House was quick to clarify that Ivanka Trump, whose name some outlets reported was “floating” around Washington, is not under consideration for the role. While many of the other people said to be in contention have policy views or political histories that could provoke backlash, none of them would likely prove as controversial as a polarizing president nominating his own daughter.

Given the Trump administration’s tendency toward controversial appointments, it is possible the president could throw his weight behind a nominee that other world leaders could not reasonably endorse. 

While Trump’s appointments have faced more domestic than international backlash, the administration has seen a previous multilateral nomination fall flat. When member states rejected Trump’s nomination of Ken Isaacs to lead the International Organization for Migration in light of his social media posts disparaging Muslims, they did so despite decades of American leadership at the institution.

The bank’s role in fighting climate change, for example, presents a potentially precarious point of tension between the White House and other world leaders who have put the issue front and center.

“Imagine a U.S. nominee who actively goes out to the capitals of the world and says, ‘look, my agenda for the bank is to get them out of this climate finance business in line with Trump administration views. I also think the IBRD [International Bank for Reconstruction and Development] doesn’t have a very compelling mission anymore. I don’t think the bank needs to be financing all these middle-income countries.’ It strikes me that that’s a pretty losing campaign platform for a lot of the countries that will ultimately build a majority,” CGD’s Morris said.

In that “extreme case,” it would be “relatively easy for countries to start a process of rallying behind an opposing candidate,” he added. The challenge for the Trump administration is to “recognize that this is not a cabinet pick. It’s not a U.S. government position. It’s about nominating someone to serve as the head of a multilateral institution, and that ought to give that individual some more degrees of freedom around their own agenda,” Morris said.

The compressed timeline could also complicate this process. March 14 is the World Bank’s deadline for nominations, as the board looks to have a new president approved in time for April’s Spring Meetings. Whether that means the Trump administration will look for a candidate capable of securing broad and quick approval from other shareholders, or keep the world guessing until it is too late to mount a challenge remains to be seen.

The short window also raises the possibility that in the absence of a consensus about who should succeed Kim, Kristalina Georgieva, the bank’s well-respected CEO who will take over as interim president when Kim leaves, could remain in place.

One potential candidate who has managed to secure broad support in the past — and who occupies an unpredictable place in the current discussion — is former Nigerian finance minister Ngozi Okonjo-Iweala.

Okonjo-Iweala campaigned for World Bank president on the back of broad support from African heads of state in 2012, but ultimately lost out to Kim, an outcome many viewed as a continuation of the American prerogative, as opposed to a truly competitive contest.

Okonjo-Iweala spent 25 years at the World Bank, eventually serving as managing director. She chaired the International Development Association’s successful replenishment in 2010, before returning to Nigeria for her second stint as finance minister in 2011. She holds a doctorate from the Massachusetts Institute of Technology and sits on the boards of Standard Chartered Bank; Twitter; Gavi, the Vaccine Alliance; and the African Risk Capacity.

Devex has learned from multiple sources — who requested anonymity — that since the 2012 race Okonjo-Iweala has also secured a credential that could shift the dynamic this time around: American citizenship.

As a U.S. citizen with a ready-made coalition of shareholder support, Okonjo-Iweala could make a compelling case if the White House elects to avoid a potential power struggle in favor of a relatively easy win.

If, on the other hand, Trump picks someone who provokes too much controversy or raises too many questions to secure broad shareholder support, Okonjo-Iweala could emerge once again as the world’s alternative candidate and challenge the White House nominee. This time around though, that may well be a contest between two Americans.