By Alessandro Fiorotto.
In a parallel world, this article would be celebrating the progressive and inspiring steps taken by the international community in selecting the first ever World Bank president from a developing country. It would proudly proclaim how far the world has come and what a great sign this is, not only for development and the millions of people suffering from severe poverty, but the world as a whole… Alas, on the 16th of April, Korean-born, America-backed, Dr. Jim Yon Kim was voted in as the Bank’s 12th president.
The failure of the Bank to ensure a fair election could be the beginning of the end of its position as a moral authority. Importantly, its failure is not that of the developing world, but rather that of the developed world, whose refusal to share positions of power and to allow a fair electoral process has left the Bank in a precarious position.
For the first time in its history there was a degree of competition for the presidency. In the end it was a race between the US-nominee Dr. Kim and the developing world’s champion, Ms. Okonjo-Iweala. Dr. Kim holds an M.D and a PhD in anthropology from Harvard. His previous positions include director of the World Health Organisation’s HIV/AIDS department and president of Dartmouth University. Ms. Okonjo-Iweala has a no less impressive CV. She graduated with an A.B from Harvard and a PhD in regional economic development from MIT, and her previous positions include vice-president of the World Bank Group and Nigeria’s Minister of Finance. As such, the academic and professional accolades of both candidates are readily apparent; both candidates were amply qualified and Ms. Okonjo-Iweala’s failed bid could not have hinged on a lack of relevant experience.
The World Bank claims to strive for transparency, reject cronyism, and base promotion on meritocracy. These are supposed cornerstones of the Bank’s development programmes. Did the Bank uphold these principles in its own elections? Consider, for one, the scheduled public debate that was cancelled between Dr. Kim and Ms. Okonjo-Iweala. ‘Practice what you preach’ is one of the oldest prescriptions for good governance, and yet, time and again global organisations are failing to respect it.
So how do they choose the president? The Bank’s board of 25 directors selects the president and the election process is supposedly merit-based, accessible and transparent. This means that in theory any suitably qualified citizen of its 188 member countries is eligible for the position. We must compare theory with practice; scepticism surfaces when one considers the composition and voting structure of the board. In a form of proportional representation, the largest financial contributors to the fund have the greatest voting power. Currently, the USA has the largest share with nearly 16% of the vote and together with the EU their votes combine to a crucial 40%. This is especially significant thanks to their tacit agreement, namely that the International Monetary Fund should be headed by a European and the World Bank by an American. Consequently, is it surprising that every World Bank president since its creation in 1944 has been the American nominee?
In short, Ms. Okonjo-Iweala did not lose this election because she was not the right person for the job. She lost the election because she was not American-backed. While Ms. Okonjo-Iweala will perhaps recover quickly, it is less certain whether the developing world will.
The belief (or perhaps more accurately ‘the dream’) that the Bank is an independent international organisation, rather than an extended arm of Western foreign policy, may have finally been crushed. For the past decade there has been an increasingly prevalent rhetoric that the Bank is not an American-European organisation and that the days of unfair, opaque elections are over – evidently this is not the case. This election will not affect the Bank’s ability to fulfil its aims in the short term, as it still yields a well-established network, a purse of well over 30 billion dollars, and thousands of qualified, hard-working, selfless employees. The tragedy of this election is what the loss of faith could mean for the future.
The developing world could not have asked for a better set of pre-election circumstances. They had an ideal candidate who ticked all the boxes, a world economy that has pledged to incorporate the periphery into decision making, and a ‘visionary’ American president. The fact that he was brave enough to openly support gay marriage but not Ms.Okonjo-Iweala is a topic for discussion in itself. The concern is that if Ms.Okonjo-Iweala could not pose a strong enough challenge, then what hope is there for any of the developing world’s future candidates.
This latest defeat will add to an already growing frustration that the developing world is still being marginalised at the negotiations table. Recently, the BRICS (Brazil, Russia, India, China, and South Africa) met to discuss, amongst other things, ways of strengthening their bargaining power. One suggestion was that they look at setting up their own development bank, something unimaginable a decade ago. As Ms. Okonjo-Iweala rightly asserted in a recent interview, “Emerging and developing countries are contributing more than 50 percent of global growth! If it were not for the growth in developing countries, developed countries would be much, much worse off. So why are developing countries left out of the governance equation?”
The recent World Bank election may well have been a tipping point. For many years there has been a growing frustration amongst key actors in the developing world that these ‘international’ organisations do not afford them sufficient decision-making authority. Despite modifications being proposed and implemented, the voting structures of the World Bank in particular are desperately disproportionate given the composition of today’s modern global economy. The rest of the world’s patience is understandably wearing thin.
The tragedy of this ordeal is the symbolic opportunity lost. Western powers have squandered a golden opportunity to convert their rhetoric of fairness and meritocracy into action. By supporting the developing world in their bid to command tangible respect and influence, these powers could have legitimised the ‘international’ categorisation of the World Bank. Furthermore, because of Ms Okonjo-Iweala’s credentials, they could have accomplished all this with the smallest of risk.
The World Bank has evolved over many decades to its current state, and after learning from its many mistakes, it has the potential to continue making a significant difference. If, however, developing and emerging countries begin to doubt its honesty and legitimacy, it risks facing increasing resentment. The real danger here is that the developing world will not only start to become less cooperative with policies and programmes implemented in their countries, but they might soon get up and leave the discussion table altogether- perhaps to even set up their own development bank. And if that ever happens, good luck trying to get them back.
The article highlights very well a key point concerning current development institutions, which is: who do they really work for? This has always been questioned by the critics but as emerging countries are gaining economic robusticidy and rightfully claiming for more decision power, it becomes easyer to see who still has the last word. As pointed out, the voting process itself is a mechanism for maintaining the intitution’s status quo and preventing it of doing its own ideal role.
Nice article. Interesting perspective on the whole issue.
I do concur with a lot of what is said in this article, and would personally have preferred another outcome to this election.
But.
If there is something the WB has often been accused of, along with the IMF, is its use of one-size fits all policies; as a reaction, WB development over the last years has been towards a greater incorporation of non-economic considerations, such as environmental and social issues.
Could Kim’s nomination be the outcome of this evolution? Indeed his non-econ training and expertise in HIV/AIDS would help bring a more holistic approach to WB programs, especially when considering countries with high HIV levels, in which case some parts of the developing world could see this as a step towards the good direction, and indirectly the WB could bolster its legitimacy in the medium run.
But.
This will depend on Kim and the WB ¿can he and will he spin the WB towards the right direction? a couple of years down the road this nomination might prove to have been the one taken for the greater good, and not one based on cronyism. If, however, WB continues to operate in a ‘business as usual’ manner, then cronyism it is.
Only time will tell.
I loved your article and I would have wished to read such an article in The Foreign Policy. Although I usually am a staunch pro-American in matters of international affairs, I must admit that this is a very astute and convincing criticism backed by really eloquent arguments. In matters of style I would have probably tried to write in a less passionate or loaded manner in order to make it sound more objective.
It is really sad to see that the election of the heads of important international institutions like the World Bank is still down in such an anachronistic and clientelistic way and no serious effort is made to adapt to the demands of an ever changing global world. Even the Catholic church which is one of the oldest and most conservative human institution has demonstrated willingness to modernize and gain more legitimacy more than three decades ago by electing as pope Karol Wojtyla in 1978. He was the first non-Italian pope since Pope Adrian VI of the Netherlands that was elected in 1522. The current pope Benedict XVI, is also non-italian, a fact that shows that the Vatican has given up the Italian domination of the papacy. I reckon it would have actually been particularly important to have elected Okonjo-Iweala also in view of the revival of marxist economic thoughts and the renewed waves of attack on the Washington Consensus.
Although Obama has at times sounded brave and used to endorse multilateralism in his rhetoric, in reality he has not made any substantial change from his predecessor. For instance he has not even bothered to pay the UN arrears owed by the US. I especially liked the idea of the developing countries creating an alternative development bank which would be a bit of a deja vu of the other international initiatives like the Kyoto Protocol, the Ottawa Treaty or the Rome Statute of ICC in which cases the other countries decided to go without uncle Sam. I was really hoping to see Obama reverse the earlier tendency of the USA to corrode the same system that grants his country the legitimized and institutionalized leadership within an international order organized around multilateral institutions.