Alex Thier :
The abrupt resignation of World Bank President Jim Kim with three years left in his term raises important questions about the institution and its leadership in the age of fraying multilateralism and growing climate and humanitarian crises.
Despite a nearly $400 billion balance sheet and the ear of world leaders, Kim left saying he felt he could get more done in the private sector than at the anchor institution of international public finance. So is this a moment to stay the course or shake the place up? Should the United States demand that an American get the job, or should it be opened up to the best candidate?
“Not having an American U.N. secretary-general or head of the International Monetary Fund has served U.S. interests even when we are the largest stakeholder.”
At a time when the international system looks more like a battle royale than synchronized swimming, these decisions will be fraught. Even those not enamored with Kim’s leadership over the last seven years are looking at the prospect of a Trump appointment to the bank with unease, if not downright despair. And in an era of China’s Asian Infrastructure Investment Bank and grand Belt and Road visions, widespread access to commercial credit for middle-income countries, and rejection of the globalist Washington Consensus – questions about the relevance of the bank loom.
What should we be looking for in a new World Bank president and what should her priorities be?
First, the bank needs a leader who is a political thinker, not a technocrat. This is important not only for the management of a complex institution such as the bank, but also for its mission to end extreme poverty and reduce inequality around the world.
To accomplish this, the bank will have to work more in the least comfortable, riskiest environments. We estimate that up to 85 percent of people living in extreme poverty will be in fragile states by 2030.
But like the wise fool looking for his keys under a lamppost because the light is better there, the bank makes too many loans to countries that have access to other resources, because it’s easier. The primary focus of the World Bank must be development, increasingly in difficult places, not returns. What most of the countries requiring World Bank support need today is less “the science of delivery” – Kim’s catchphrase – than “the art of making progress” in challenging environments.
This need for a political – not a partisan – leader is equally true for the second half of the bank’s mission – increasing incomes for the poorest in every society. Global inequality and what causes it – corruption, greed, discrimination, tax avoidance – is not a natural state of being and doesn’t happen by accident. It is the result of policy decisions that are born from and changed by – you guessed it – politics. The World Bank is owned by its shareholders, but even as the very tenets of capitalism need to be revitalized, the bank must be willing to address these issues if it is to have any meaningful impact.
Second, the bank needs someone who can double down on the unofficial third part of their mission: climate change. This is a critical new priority for the bank, which needs to help governments design and build climate-friendly economies to achieve both growth and transition.
Progress on climate action is not only too slow to meet the Paris commitments to stall global warming, but some things are still going backward. Global CO2 emissions have risen for the first time in four years, and new evidence suggests that oceans are warming faster than previously thought. The impacts on the poorest from hotter temperatures and drought, increased storm intensity, and lost agricultural productivity are already profound.
Addressing this will be expensive but worth it, and the bank has committed to going from billions – their balance sheet – to trillions – the actual financing gap to achieve these goals. What keeps trillions of dollars of savings sitting in zero-interest bonds rather than invested in potentially high-yielding infrastructure investments? Risk. Or at least the perception of risk.
The best deals require a lot of hand-holding, or finance diplomacy. World Bankers will need relentless focus, lots of flexible tools to solve problems, and strong backing if they are going to be innovative and break through the barriers that keep so many economies on an unsustainable course.
Third, pick someone who knows the bank and its mission and will get things done, rather than a polarizing figure. Remember Paul Wolfowitz? His short, unproductive tenure was not only bad for the bank, but for those who appointed him.
The bank doesn’t need someone who will radically upend the staff and leadership after almost continuous reform under Kim. The bank has finally begun transitioning to dealing with the most important issues of the day – such as addressing crises and climate change. A new leader risks disrupting all that just when the bank needs to knuckle down and get things done. The Trump administration surprised the world by agreeing to a capital increase last year, so it must like something about what’s going on there.
Fourth, it’s fine to pick the best man for the job, as long as it’s a woman. The World Bank has never had a female president. Having failed to appoint a woman as United Nations secretary-general, it is time for the World Bank. There’s simply no statistical argument not awash in latent sexism that having thirteen male presidents in a row is justified. It’s important for policy too – key issues that the bank needs to deal with – creating inclusive economic growth, equal access to education and justice, addressing migration – need particular focus on women.
Finally, don’t insist on an American. All the Trump talk of burden sharing in the U.N. and multilateral system rings hollow when the U.S. insists on having U.S. leaders for international institutions. Failure to let others co-own these institutions leads to behaviors such as the Chinese setting up their own development banks.
Not having an American U.N. secretary-general or head of the International Monetary Fund has served U.S. interests even when we are the largest stakeholder. There’s no reason to think the World Bank should be different.
One possible solution that would satisfy most of the above criteria is to avoid the question altogether and appoint the current CEO, Kristalina Georgieva, to serve out the rest of Kim’s term. The Bulgarian national with deep experience in the World Bank and European Commission is well-liked, had the support of key members states to get the CEO job in the first place, and has already been a force behind pushing the bank to do more in unstable environments and addressing the global crisis of forcibly displaced persons.
A second excellent candidate would be Ngozi Okonjo-Iweala, the former Nigerian finance minister and World Bank managing director. She has been a powerful force for change, has fought corruption on the front lines, and would transform the approach to Africa, which will be at the center of the Bank’s work for the next several decades.
As the campaign for the next president gets underway, there are many terrific choices from around the world, and equally likely, some terrible ones. That process will also distract the institution from action, and will roil the top leadership for months to come.
Still, if it gets this critical global institution on the right track to addressing our biggest challenges, it could be worth it. But we need to know what we’re looking for.
(Alex Thier is executive director of the Overseas Development Institute in London, currently on sabbatical).
