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    What does Joe Biden's win mean for the World Bank?

    The World Bank's president is a former Trump administration official who once said multilateralism has "gone substantially too far." Can David Malpass forge a working relationship with the Biden administration?

    By Michael Igoe // 25 November 2020
    BURLINGTON, Vt. — Many expect President-elect Joe Biden’s White House will be more supportive and engaged with multilateral institutions than President Donald Trump’s administration has been. What that means for the World Bank could depend on how fully the institution’s own president, David Malpass, has embraced an organization he harshly criticized in the past. Malpass began his term in April 2019, and he will have more than three years remaining when Inauguration Day arrives on Jan. 20. While few experts expect a Biden administration would seek to somehow remove Malpass from the post — something they have no formal authority to do — it remains to be seen whether a president nominated from the ranks of the Trump administration can remake himself for the Biden era. “You can’t have the largest shareholder of the institution, the architect of the institution, the country that has always nominated the person who will be president, in a fundamentally different place than the institution itself. That would have to be resolved in some way,” said Scott Morris, a senior fellow at the Center for Global Development. On some key issues, Malpass has already moderated his positions in ways that could help minimize those differences, Morris noted. “You would not have seen any statement out of him as Treasury undersecretary that suggested a need to prioritize a climate agenda. It just never happened. And yet very early on as bank president, he was at least willing to acknowledge that as a legitimate and key agenda item for the bank,” he said. Malpass seems to have made a similar pivot when it comes to broader questions of World Bank financial resources and spending. “The challenge for Mr. Malpass is — that [it] is significantly harder if the U.S. shareholder doesn’t view you as one of your own.” --— Scott Morris, a senior fellow, Center for Global Development As a U.S. Treasury official, Malpass told lawmakers in 2017 that, “globalism and multilateralism have gone substantially too far.” Referring to multilateral institutions he said, “They are not very efficient. They are often corrupt in their lending practices, and they don't get the benefit to the actual people in the countries.” While some analysts have criticized the speed and scale of the bank’s COVID-19 spending for not going far enough, their concerns are a far cry from initial fears that Malpass would be openly hostile to the idea of a well-resourced and globally-prominent World Bank — something a Biden administration is likely to push for. “In terms of the volume of lending he’s going to get more support than he did before,” said Christopher Kilby, a professor at Villanova University who has researched the relationship between U.S. politics and the World Bank. “If you had talked to him while he was at Treasury he would have wanted a smaller World Bank. I don’t think that’s his goal anymore,” Kilby said. Malpass has already sought to position the World Bank as a global leader on COVID-19 response. Under his leadership, the bank has committed to mobilizing up to $160 billion to its client countries, including $12 billion to support vaccination efforts in low- and middle-income countries. The Biden administration — widely expected to pursue a larger global response to the pandemic — will likely want to see the bank do even more. “I suspect the bank will be under considerable new pressure,” Morris said. The challenge with any global response will be coming up with “significant sums of new money,” he added, and because of its business and lending models, there is a lot that recommends the World Bank as a lynchpin in any financing effort. “I suspect that as the Biden people start running the numbers … it’s going to be a big number for the global community, and that just very quickly takes you to the World Bank,” he said. The question of financial resources will likely come to a head quickly. Malpass has already alerted the bank’s shareholders that because the International Development Association — the bank’s fund for low-income countries — is spending more of its money earlier in its funding cycle in response to COVID-19, it will likely need an emergency replenishment from donors. That request is expected to be on the agenda at the institution’s Spring Meetings in April 2021. The bank will need consistent support from its shareholders in order to maintain a sharp focus on the lowest-income communities in its client countries, with a particular emphasis on additional concessional financing, said Nadia Daar, head of Oxfam International’s Washington D.C. office. “I do think that a Biden administration could be more supportive on this,” Daar added, while noting that European shareholders have also had questions about whether this additional funding is needed. According to Kilby, there is another factor that could influence the relationship between the World Bank and the Biden administration, but it will not be resolved until January 2021, when Georgia holds two special elections that will determine which political party holds a majority in the U.S. Senate. If Democrats, who already hold a majority in the House of Representatives, win those elections and take control of the Senate, a united Democratic government would give the Biden administration significant opportunity to pursue its global development and foreign policy goals through bilateral assistance programs, Kilby said. If Republicans keep control of the Senate, and the White House and its Democratic allies have less budgetary power, history suggests the White House will lean harder on multilateral institutions such as the World Bank to advance its international priorities. “The historical pattern with divided government is that the U.S. administration, because it’s constrained [in] what it can get through bilateral aid, ends up applying more pressure on the World Bank to achieve U.S. geopolitical goals,” Kilby said. That might suggest a Biden administration — faced with a divided Congress — would look to push the World Bank even harder on issues including COVID-19 response, climate change, and other global public goods, Kilby said. While Malpass has not been antagonistic to the climate agenda, he has also not been the sort of vocal, global champion for the issue that a Biden White House might hope to see at the helm of the world’s most prominent multilateral development bank. Instead of advocating for big, global initiatives and policies like his predecessor, Jim Kim, Malpass has sought to return the bank to a focus on country-based programs, handing more power to its regional offices, rather than to thematic experts. Malpass has faced criticism for suggesting that as part of their response to COVID-19, countries receiving World Bank grants and loans ought to undertake structural reforms to help with economic recovery. Critics charge that the bank’s priority ought to be delivering large and rapid assistance to countries in the middle of an unprecedented crisis, not attaching an ideological agenda to lifesaving support. “He’s going to have much less of a free hand to do that kind of thing under a Biden administration,” said Kilby. Tension between the White House and the World Bank president is not unusual, even between a president and the administration that nominated him, Morris said. Upon taking office, World Bank presidents quickly come to understand that they answer to a broader range of shareholders, and sometimes that puts them into conflict with their largest shareholder, the United States, he added. “The challenge for Mr. Malpass is — that [it] is significantly harder if the U.S. shareholder doesn’t view you as one of your own,” Morris said. Update, Nov. 25, 2020: This article has been updated to reflect that the World Bank has committed $12 billion to support vaccination efforts in low- and middle-income countries.

    BURLINGTON, Vt. — Many expect President-elect Joe Biden’s White House will be more supportive and engaged with multilateral institutions than President Donald Trump’s administration has been. What that means for the World Bank could depend on how fully the institution’s own president, David Malpass, has embraced an organization he harshly criticized in the past.

    Malpass began his term in April 2019, and he will have more than three years remaining when Inauguration Day arrives on Jan. 20. While few experts expect a Biden administration would seek to somehow remove Malpass from the post — something they have no formal authority to do — it remains to be seen whether a president nominated from the ranks of the Trump administration can remake himself for the Biden era.

    “You can’t have the largest shareholder of the institution, the architect of the institution, the country that has always nominated the person who will be president, in a fundamentally different place than the institution itself. That would have to be resolved in some way,” said Scott Morris, a senior fellow at the Center for Global Development.

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    About the author

    • Michael Igoe

      Michael Igoe@AlterIgoe

      Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.

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