the air is thick with rumours, speculation and calculation.
No sooner did Robert Zoellick announce that he would
step down as president of the World Bank at the end
of June than the jockeying for his position began.
US treasury secretary Timothy Geithner quickly announced
that the US government would put forward a candidate
in the coming weeks. This haste is to establish the
US's claim to this post, through the so-called "gentlemen's
agreement" of the global elite whereby Europe
could put one of its own in the IMF and the US controlled
the leadership of the World Bank.
The arrangement was already called into question last
year, when Dominique Strauss-Kahn was forced to leave
the IMF. Despite tentative moves to have someone from
the emerging world head the fund, France quickly put
forward its own candidate. Christine Lagarde then
received the backing not just of other European countries,
but also of several developing countries, through
skilful diplomacy (including dividing the opposition)
combined with global fears about the impact of the
European financial crisis.
Now, once again, the same game has started. Since
mid-2010 there has been speculation that Hillary Clinton
is eyeing the job, with Larry Summers breathing down
her neck. When it comes to the crunch, the US will
probably do its best to ensure that it remains in
control at the World Bank for as long as possible,
and chooses who runs the institution.
It is increasingly hard to justify this. In the early
decades of the Bretton Woodsinstitutions, when G7
ran the world, it could be taken for granted, but
not as other economies grow in size, international
reach and significance.
In the case of the international financial institutions,
it has been argued that since developing and emerging
markets are more likely to approach them for funds
(indeed, the World Bank can only lend to developing
countries) it is better to avoid conflicts of interest
that may arise if the head of the institutions also
comes from that country or region. That particular
argument made by developed countries was blown apart
last year, when Europeans insisted on having Lagarde
at the IMF precisely because Europe was in such a
huge economic mess that the services of the IMF would
be required. Suddenly conflict of interest was no
longer a problem; instead it even became a virtue,
that of close knowledge and first-hand experience
of the issue.
This will make it harder to provide any logical or
minimally ethical reason for pushing to have an American
at the head of the World Bank. But then logic or ethics
have never determined how these things happen. An
open letter to the World Bank's board of governors
by a group of international NGOs has made the plea
that its members "push for the selection of the
best candidate through an open, merit-based, transparent
process, and to ensure that developing countries play
a central role in the selection process". The
letter notes that since the bank only operates in
developing countries, and has most impact in low-income
countries, any candidate who is not supported by these
countries will seriously lack legitimacy. And of course
it makes most sense if the candidate is from a developing
country, since that person is more likely to understand
at first hand at least some of the difficulties that
policy-makers in such countries face.
Of course, having a person with a different nationality
is nowhere near enough. But since it is so clear that
the World Bank needs serious and substantial reform,
this is one place to start. But does this even matter?
It could seem that the world economy is very different
today, when European leaders go cap-in-hand to China
requesting money for bailouts which they are unwilling
to provide themselves. But the sad truth is that institutions
such as the World Bank and the IMF remain very powerful
despite this, not just in providing resources to poor
countries, but also in setting the development agenda
and determining policies.
Increasingly, this happens not because of open or
direct conditionalities imposed on countries that
borrow from the World Bank (though that still happens
too), but because it has sought to centralise control
over research and policy analysis and put its own
imprint on what is considered "good" economic
strategy. The fact it has most often got things wrong
has rarely been a problem, since it has never been
constrained by either accountability or shame.
So the World Bank, despite some hesitant and inconsistent
occasional moves to the contrary, remains fervently
in favour of large private capital. It continues to
push countries down development trajectories that
have seriously negative medium- and long-term implications.
It continues to oppose or undermine genuinely progressive
alternatives that are slowly being built in different
parts of the developing world. And it seeks to justify
this with paid research that is sometimes only slightly
better than the "paid news" that afflicts
a lot of private media.
These are Augean stables to clean up, and it may be
too much to expect any one new incumbent to be able
to tackle this. But one thing is for sure: with a
nominee from the US administration at the helm, such
a clean-up is unlikely even to start.
This article was originally published in the Guardian