World Bank’s new head

May 02, 2012 Editorial

With all the dust flying in parliament during the budget debate, the appointment of a new head at the World Bank a month ago seems to have slipped under the radar of most Guyanese. We hope, however, that the policymakers – especially those in charge of our economic fortunes – took some notice. The World Bank has played, and continues to play, a not inconsiderable role in those economic fortunes. As a poor, developing country, the original name of the institution may offer a clue of that role: International Bank for Reconstruction and Development (IBRD).
Today, the World Bank Group with its affiliates, International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSD), offers a unique assortment of services to poor, economies like ours, with shaky or non-existent sovereign credit ratings. Its present missions include achievement of the Millennium Goals; building the capacity of governments; infrastructure creation; and research, consultancy and training.
The IBRD offers 15 to 20-year loans to developing countries for infrastructure and education building; the IDA offers 35 to 40-year loans with ten years interest-free and grants; the IFC offers corporate loans and local investment; MIGA – Insurance on non-investment and trade risks and ICSD – information support, analysis and data research. We have gone in detail into the mission and functions of the World Bank to demonstrate the crucial role it can play.
As with its Bretton Woods ‘sister’ the IMF, the World Bank has been criticised for being dominated by the US and to a lesser extent, Europe, and ideologically, to reflect the biases of those nations. The US maintains an effective veto on its activities by maintaining 16.41% of the votes (85% is needed for ratification) and nominating its head. With the rise of the ‘emergent economies’, especially the BRICS, during the still ongoing financial crisis in the US and Europe, there has been a tacit agreement that the former countries – especially China – must receive a larger voting share. Unfortunately this has not become reality as yet.
There was, therefore, much anticipation when the issue of replacing the previous head rose to the fore last year. The outcome would signal whether the changing economic world order would be translated into a changing political order. For the first time there was competition for the position: Ngozi Okonjo-Iweala of Nigeria and José Antonio Ocampo of Colombia – both individuals with impressive credentials. The Obama administration initially floated the name of Larry Summers, one of Obama’s economic advisers. He had previous experience at the World Bank, but vociferous protests from domestic critics (including feminists) forced the administration to back off and nominate a ‘dark horse’.
Jim Yong Kim is an American of South Korean heritage, an MD -anthropologist and most recently a university president (Ivy-league Dartmouth) who has devoted most of his career to finding better ways to deliver better health care to the world’s poor. He believes in the power of popular movements to overcome financial and behavioural obstacles to better health, regardless of poverty or hopeless politics in poor countries – as illustrated in the case of the work he led at WHO to extend treatment of HIV/AIDS to millions of people.
Given the voting structure in the World Bank, Jim Yong Kim’s selection had been widely expected, but many analysts felt that the BRICS lost a golden opportunity to assert themselves by testing the west’s oft-touted rhetoric about an “open and merit-based selection process”. There was a palpable lack of coordination among the group’s members. Despite receiving endorsements from a series of leading World Bank officials, Western and non-Western newspapers, and leading academics, the Harvard-trained Ngozi Okonjo-Iweala never came close to weakening the developed world’s support for the U.S. candidate.
The West’s control of the World Bank presidency, however, is unlikely to last. Kim is likely to be the last World Bank president pushed through by the US, as voting power within both the Bank and the IMF slowly but inevitably shifts toward emerging powers.

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