Unexpected Nomination by Obama for World Bank Chief

  • by Jim Lobe* (washington)
  • Friday, March 23, 2012
  • Inter Press Service

'It's time for a development professional to lead the world's largest development agency,' Obama said as he introduced Korean-born Kim, a co-founder of Partners in Health who currently serves as president of Dartmouth College, in a brief appearance in the White House Rose Garden.

If approved by the bank's governing board, Kim, who immigrated to the United States with his family at the age of five and, among other posts, headed the World Health Organisation's HIV/AIDS department, will succeed Robert Zoellick as the head of the world's biggest multilateral development institution.

But for the first time in the bank's history, it appears that the U.S. nominee will face two strong challengers. The Nigerian Finance Minister, Ngozi Okonjo-Iweala, who served as the bank's managing director from 2007 to 2011, was formally nominated by South Africa earlier this week.

José Antonio Ocampo, who has served as U.N. Under-Secretary-General for Economic and Social Affairs and as Colombia's finance minister, was also nominated, after a period of much speculation.

Another candidate, Columbia University's Earth Institute president Jeffrey Sachs, withdrew from contention shortly after Kim's nomination was announced.

'I congratulate the administration for nominating a world-class development leader for this position,' Sachs, who was nominated by at least three poor countries — Bhutan, Haiti and Timor Leste — and who had openly campaigned for the job, said in a statement. 'I support his nomination 100 percent.'

No break with tradition

Kim will be the presumed favourite to get the post, despite his lack of experience in finance and in managing an organisation as large the World Bank, due to his status as the U.S. government's nominee.

Under an informal 'gentlemen's agreement' between the U.S. and Europe, a U.S. national has held the top bank position and a European the managing directorship of its sister institution, the International Monetary Fund (IMF), ever since the two agencies were created at the Bretton Woods conference in 1944.

Despite opposition by many non-governmental organisations and some developing countries, that agreement was maintained last year when French Finance Minister Christine Lagarde was elected to succeed IMF Managing Director Dominique Strauss-Kahn.

That election did, however, break precedent in that a developing country candidate, former Mexican central bank head Agustin Carstens, contested the race.

The World Bank succession is likely to play out in similar fashion, particularly in light of Europe's continued hold on the IMF.

Indeed, the bank's policy-making Development Committee noted last year, 'Given the historic parallelism between the selection process of the (World Bank Group) and IMF, the World Bank Group recognised that decisions of one institution likely will affect the other (and) also likely will have implications for other (International Financial Institutions).'

If the race came to an actual vote — and the bank clearly prefers a consensus decision — Kim would also enjoy a numerical advantage, as a majority of voting shares on the governing board are held by the U.S., EU countries, Canada and Japan, not to mention South Korea.

Moreover, Obama is likely to press hard for his candidate, if only because Kim's defeat would feed Republican charges in this year's election campaign that the president has sacrificed Washington's global leadership.

In addition, U.S. retention of the top bank post has made it much easier for the bank, and especially its soft-loan affiliate, the International Development Association, to pry continued funding from the U.S. Congress.

Nonetheless, members of the developing country caucus at the Bretton Woods sisters, the so-called Group of 24 (G-24), have co-ordinated their work in recruiting candidates more closely than a year ago, according to observers here.

'The developing countries have really tried to work together to put up credible candidates,' noted Jo Marie Griesgraber, director of New Rules for Global Finance, an independent group that promotes a greater voice for developing countries and civil society organisations (CSOs) at the Bank and the IMF. 'This is real progress.'

When Zoellick announced in February that he will step down when his term ends in June, both the G-24 and a host of CSOs called for an 'open and merit-based' process that would give borrowing countries a major say in selecting his successor and that, in any event, the post not go automatically to the U.S. candidate.

A politicised process

In nominating Kim, Obama passed over several far more prominent figures. While Secretary of State Hillary Clinton took herself out of consideration early on, U.N. Ambassador Susan Rice, Senate Foreign Relations Committee Chairman Senator John Kerry, and former Treasury Secretary Lawrence Summers, were all considered strong contenders.

Rice and Kerry, however, are both believed to be more interested in succeeding Clinton as secretary of state if Obama is re-elected, while Summersv alienated a lot of grassroots development and feminist groups during his tenures as the bank's chief economist in the early 1990's and subsequently as Harvard University President, respectively.

Besides his work in Partners in Health and at the WHO, Kim, who is also a medical doctor and an anthropologist, has chaired the Department of Global Health and Social Medicine at Harvard's Medical School and won a MacArthur Foundation 'Genius' Fellowship for his innovative work in international health.

In addition to Sachs's enthusiastic endorsement, he received praise from former President Bill Clinton and Paul Farmer, his co-founder at Partners in Health for his dedication to grassroots health work in poor U.S. urban communities, Haiti, Latin America and southern Africa.

Some critics of the bank's generally neo-liberal policies also praised the choice, noting that Kim's grassroots experience and pragmatic approach to health issues and development could be more desirable than Okonjo-Iweala's more orthodox views about the importance of free markets in promoting economic growth.

'She wouldn't represent much of a change in the bank's general worldview, although the fact that she's a third-world woman would in itself constitute a major advance for the institution,' said John Cavanagh, Global Economy director and former president of the Institute for Policy Studies.

Cavanagh said he preferred Ocampo as 'someone who has challenged the neo-liberal paradigm that has dominated the bank for the past 30 years'.

The bank's board will now take up the nominations in what is supposed to be an open and transparent process in which the candidates' qualifications will be rigourously examined.

'The key thing now is how transparent the process is going forward,' said Jesse Griffiths, co-ordinator of the London-based Bretton Woods Project, which has also been critical of the Bank's neo-liberal policies and their impact on the most vulnerable sectors in borrowing countries.

'Will we get a real debate about Bank policies? Will it involve the public? Will the candidates answer questions from the different kinds of stakeholders? This is what we're looking for.'

*Jim Lobe's blog on U.S. foreign policy can be read at http://www.lobelog.com.

© Inter Press Service (2012) — All Rights ReservedOriginal source: Inter Press Service

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