World Bank chief's role on Trump-led Board of Peace prompts questions

World Bank President Ajay Banga’s participation in U.S. President Donald Trump’s Board of Peace for Gaza reconstruction has raised concerns over governance and reputational risk at the multilateral lender. While some insiders warn that the optics of Banga’s involvement could blur the bank’s long-standing separation from overtly political initiatives, others say his presence may help moderate the endeavor — provided the focus remains firmly on Gaza reconstruction and the bank carefully manages the risks. The main board is expected to comprise political leaders, while the initiative’s operational work is guided by an executive board, on which Banga sits alongside U.S. Secretary of State Marco Rubio, Jared Kushner, Middle East envoy Steve Witkoff, and former British Prime Minister Tony Blair, among others. Several countries have declined to join the overall initiative. The United Kingdom, France, Italy, Sweden, Norway, and Germany have so far stayed out, citing concerns that include the risk that the Board of Peace could undermine existing United Nations-led processes. Countries that have joined so far include Hungary, Argentina, Indonesia, Pakistan, Saudi Arabia, Turkey, the United Arab Emirates, and Qatar. Under the membership terms outlined in the charter, countries must provide $1 billion to the Board of Peace to become permanent members. Ahead of the board’s meeting in Washington, D.C., on Thursday, Devex spoke to over a dozen current and former World Bank officials and experts for their take on Banga’s participation in the Trump-led endeavor. For critics, unease centers on the Board of Peace’s perceived political nature. World Bank presidents are traditionally expected to steer clear of political bodies — the bank’s Articles of Agreement prohibit officers from interfering in the political affairs of member countries and require that only economic considerations guide their decisions. Banga has said he will not be involved in the political decision-making process, but rather the technical aspects that include economic advice. In an interview at the World Economic Forum in Davos, the bank president explained: “Our job is to do the work,” before going on to say: “The actual Board of Peace is the political leadership that agrees to take part. They are then fed the kind of work we think they can make decisions on. I call us the worker bees, them the deciders.” “The Bank Group brings technical expertise, experience in conflict-affected settings, and a focus on rebuilding institutions, restoring basic services, and creating the conditions for private sector-led job creation,” a World Bank spokesperson said in a recent statement to Devex. Speaking during Thursday’s Board of Peace meeting in D.C., Banga said the bank would also offer support by “leveraging public finance” thanks to its AAA credit rating, derisking private investment, and offering the expertise of its staff. Inherently political? But while Banga has stressed his participation is apolitical, there are questions as to whether that’s possible in a body chaired by a U.S. sitting head of state and populated by U.S. Cabinet-level officials — an arrangement which, some staff argue, blurs lines and puts the bank’s neutrality in jeopardy. World Bank staff raised the issue directly with management during a town hall meeting on Thursday, according to people who watched the event. Civil society groups are also protesting Banga and the World Bank Group’s involvement, including a small protest outside the bank’s offices in D.C. this week. An open letter signed by 16 organizations describes the Board of Peace as “an illegitimate and neo-colonial project” that seeks to profit from an undemocratic reconstruction of Gaza. A separate open letter calls on Banga to resign immediately from the board. “The entire [Board of Peace] structure depends on the World Bank lending its credibility. Without the Bank’s imprimatur, investors would see this as a highly politicized reconstruction effort with no independent accountability,” a senior bank insider told Devex, speaking on condition of anonymity. “Banga handed over that credibility without conditions.” Another bank insider said they were “shocked” Banga had agreed to join the executive board, saying that the move would tarnish his own reputation as well as the bank’s. If Banga was under pressure from the White House to take the role, then he should have resigned rather than accept it, the source added. But some bank officials are cautiously supportive. One executive director of a major shareholding country said they would have preferred more discussion but were comfortable with Banga’s involvement as long as the focus remains on Gaza and he recuses himself from political or security matters. The executive director added that the bank’s general counsel had identified no legal obstacles to Banga serving on the board as president of the bank, not in an individual capacity. “[B]roadly it’s a good thing he’s on there and able to offer a constructive voice,” the shareholder said. “It’s the main game in town for Gaza reconstruction, but we have to watch very closely and manage the risks.” Muddled mandate The U.N. Security Council passed a resolution last November to support Gaza’s reconstruction and economic recovery, and the World Bank was specifically named in the resolution to assist in that mandate. “Ajay has joined the executive committee of the Board of Peace to help implement reconstruction efforts authorized by the UN Security Council. Reconstruction is a core element of the World Bank Group’s mandate. We were created to help countries rebuild and restore economic opportunity — and that is exactly the role we are playing here,” a World Bank spokesperson said. The Board of Peace was formally ratified at the World Economic Forum in Davos in mid-January. However, the 11-page charter released in Davos makes no explicit reference to Gaza and appears to establish a permanent body with broader ambitions. The charter described the role of the board as to “secure enduring peace in areas affected or threatened by conflict,” not just Gaza. As a result, some staff fear the bank risks being drawn into broader U.S. foreign policy objectives. “The Board of Peace was sanctioned by the U.N. Security Council in a very narrowly drafted resolution that was focused on Gaza. But now it has clearly exceeded that mandate by a long shot,” Heba Aly, director of Article 109, a coalition of civil society groups working to reform the U.N., told Devex. Banga has rejected suggestions that the initiative would sideline the U.N. “I don’t think this is an alternative to the United Nations,” Banga said during an interview on the sidelines of Davos, calling the project “a once-in-a-lifetime opportunity to actually make a difference in Gaza and Palestine.” However, others argue that Banga’s support for the Board of Peace undermines multilateralism more broadly. “Trump has justified the establishment of the Board of Peace on the basis that the U.N. is ineffective and that he had to take matters into his own hands,” Aly told Devex. “And while we can’t deny that the U.N. has been ineffective, the answer is not to put the responsibility for maintaining global peace and security in the hands of one individual who sets up an exclusive club, names himself chairman for life, and charges a $1 billion membership fee, and where the governance is questionable and the decision making isn’t transparent. “Those who legitimize this effort would be putting a nail in the coffin of the U.N. and multilateralism more broadly,” she added. Shrewd move? Others say Banga was put in a difficult position from the start. “I can imagine the awkwardness of saying no when your largest shareholder asks you to sit on a Board of Peace endorsed by the UN Security Council, tasked to ensure peace and help get assistance to Gaza,” said Charles Kenny, senior fellow at the Center for Global Development. “I can imagine the additional awkwardness of having said yes as the chairman of the Board of Peace then sets out a far broader ambition for the body that is opposed by many of your other shareholders.” “Being a successful head of the World Bank clearly requires excellent diplomatic skills,” he added Indeed, Banga’s decision to accept Trump’s invitation to join the executive board may reflect the bank’s close relationship with its largest shareholder and is part of what some staff members perceive as a broader recalibration in response to U.S. priorities, including reduced emphasis on climate change. Other insiders described the move as politically pragmatic, arguing that maintaining a constructive relationship with the White House could help secure the financial and political backing the bank needs to continue its development work. The recent approval by the U.S. Congress of funding for the International Development Association — the bank’s concessional lending arm for the world’s lowest-income countries — at a time when other multilateral institutions have faced deep U.S. cuts, could suggest that Banga’s approach is yielding results, one source told Devex. Outside analysts struck a more cautious tone. Clemence Landers, vice president and senior policy fellow at CGD, said the decision reflects the broader geopolitical moment. “It’s an unusual move for a World Bank President, but these are unusual times,” she said. “The Bank has fared much better than most multilateral organizations over the past year, and that’s likely the result of effective behind-the-scenes legwork. But there’s clearly real risk being closely associated with the Board of Peace, especially if it becomes enmeshed in dubious undertakings.” “The World Bank will be closely involved in its investment undertakings in Gaza as part of its role as the limited financial trustee for the Board of Peace's Gaza Reconstruction Trust Fund,” she added, “meaning the World Bank will be exposed to the political and financial interests behind the endeavor. The reputational risks for the Bank are enormous.” The question of transparency Alongside Banga’s role on the executive board, the World Bank is acting as a “limited trustee” for the Gaza Reconstruction and Development Fund, or GRAD Fund, a financing vehicle designed to channel pooled donor contributions to the Board of Peace. The bank already serves as trustee for 27 financial intermediary funds, or FIFs, including The Global Fund to Fight AIDS, Tuberculosis and Malaria and the Green Climate Fund. Speaking during the Board of Peace meeting in D.C., Banga said the bank would help ensure transparency about how donor money in the GRAD Fund was spent and had seconded a “financial controller” to the BoP to ensure “best standards” were followed. But insiders say the GRAD Fund’s governance structure differs from standard FIF arrangements. “Other World Bank FIFs are governed by multi-stakeholder boards that strive for consensus or operate on a no-objection basis. However, with the GRAD Fund, it remains unclear who holds decision-making authority, how these conclusions are reached, or what the Board’s governance rules entail. How will affected communities, civil society, and the private sector be included in the decision-making process?” Christine Guetin, a former World Bank staffer who has worked for the Global Partnership for Education and the Global Fund, told Devex. “There’s a lack of transparency. The Bank needs to share more information — particularly regarding potential conflicts of interest and reputational risks — to provide greater clarity,” Guetin added. Under its limited trustee role, the bank has no oversight over how funds are ultimately spent once transferred. Because the Board of Peace charter makes no reference to environmental and social safeguards, anti-corruption measures, or independent evaluation, some staff say the arrangement exposes the institution to heightened reputational risk. “[Banga] could have said the Bank would serve as trustee while maintaining personal distance from a politically controlled governing body,” one staff member said. “He could have pushed for independent accountability mechanisms or downstream safeguards.”