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Change in World Bank Leadership |
| Published On: 03-01-2005 |
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James Wolfensohn announced he will be leaving his post as President of the World Bank Group at the end of May 2005 after serving in the post for two five-year terms. Wolfensohn’s upcoming departure has sparked debate over the manner in which a successor should be chosen. The World Bank is the largest and most powerful development institution in the world, giving out roughly $20 billion in loans, subsidized credits and grants each year, and employing 10,000 people worldwide.1
In the past, the U.S. traditionally had the decisive role in choosing the head of the World Bank, while the EU has chosen the head of the IMF. The U.S. is the largest contributor to the Bank owning roughly 16 percent of its shares. The Bush administration, like its predecessors, wants to appoint a new Bank President, and the US Treasury Department has been exploring candidates
But the opening of this position has highlighted the importance to many developing countries of both the nationality and ideology of possible candidates. Developing countries constitute 168 of the Bank’s 184 member countries, but they control less than 46 percent of the votes.
Furthermore, some have voiced the opinion that developing countries should have a greater say in the World Bank since they are the most affected by the Bank’s policies. But challenging the U.S. prerogative of choosing a Bank President—who has always been an American—might have the undesirable effect of diminishing Congressional interest in funding the Bank.
The UN has criticized the World Bank and the IMF for failing to give developing countries a greater voice in the decision-making processes.2 The UN has taken initiative of its own, inviting all member countries to nominate candidates to head the UN Development Program (UNDP).3
At the same time, the four candidates who are competing to become Director General of the World Trade Organization (WTO) for the six-year term beginning in September 2005 have been nominated by the EU, Brazil, Uruguay and Mauritius.
Some argue that the WTO post should be filled by someone from a developing country to balance the U.S. and EU control over the World Bank and IMF.4 During the selection of the Managing Director of the IMF in 2004, several developing and developed countries, including the UK and Italy, called for more transparency in selecting candidates to head the IMF.
However, voiced criticism from developing countries concerning the selection of the World Bank head is not likely to be heard this year, as they fear provoking the U.S., the Bank’s biggest lender.5
Recent comment on World Bank leadership has included criticisms concerning the qualifications and effectiveness of previous US appointees. In the past, the White House has installed individuals with little experience or interest in development and World Bank affairs, such as ex-congressman Barber Conable Jr, who had to review his own voting record to verify his stance on funding the Bank.6
Similarly, major US bank CEO’s Lewis Preston and Tom Claussen had little knowledge about development assistance prior to their appointment. This has led many to question the tradition of selecting an American to head the Bank; they have argued for the availability of highly qualified, non-American candidates.
Martin Wolf of the Financial Times argued that the choice of nationality is irrelevant, as the “head of an international institution will always respond to the desires of its more powerful members.”7 High-ranking former Bank staff members such as Tim Cullen, former chief spokesman for the World Bank, and Peter Woicke, outgoing head of the International Finance Corporation, have suggested setting up a search committee to ensure Wolfensohn’s successor has an appropriate background and credibility.
Wolfensohn, previously an investment banker from Australia who became a naturalized US citizen, was appointed by President Clinton to head the World Bank in 1995. He has driven a series of reforms in his two 5-year terms, such as decentralization of the Bank’s leadership into more field operations. However, he has differed with the Bush Administration’s view on development—most notably he disagreed with the Administration’s stance on increasing the number of grants given out to poor countries in place of loans.8
Speculation about possible nominations for the Bank’s presidency has grown. One of the most frequently mentioned names is John Taylor, Under Secretary of Treasury for International Affairs. He has had extensive international exposure and has made approximately 110 trips abroad as the senior Treasury official for the planning and implementation of economic and financial reforms.9
Randall Tobias, US Global AIDS Coordinator and former CEO of Eli Lilly, is another potential candidate. But Tobias received heavy criticism from AIDS organizations in 2003 when President George Bush appointed him AIDS coordinator because of his ties with the pharmaceutical industry and his donations to the Republican Party.
Elaine Chao, US Secretary of Labor and former Director of the Peace Corps, has also been mentioned as a suspected candidate.
The Financial Times proposed in its lead editorial the selection of a highly qualified non-American—Ernesto Zedillo, Mexico’s former President and currently the director of Yale University’s Center of the Study of Globalization—for the Bush Administration to “demonstrate concern for the Bank, the cause of development and the sensitivities of developing countries.” The editorial suggested that the “ideal candidate would be someone from a developing country committed to market-led development, democracy and the rule of law.” Zedillo overcame a huge financial crisis in Mexico during his presidency and played an important role in steering Mexico towards democracy.10 Despite ideas percolating on various non-US possibilities at this writing, the United States appears intent on naming a US candidate to run the Bank.
1 Washington Post, Jan 23 2005: A Boss for the World Bank.
2 IPS-Inter Press Service, Jan 25 2005.
3 Financial Times, Feb 4 2005: UN Takes Revolutionary Approach to Recruiting New Development Chief.
4 Financial Times, Jan 27 2005: Race for Leadership of WTO Heats Up.
5 http://worldbankpresident.org/archives/000063.php.
6 Washington Post, Jan 23 2005: A Boss for the World Bank.
7 Martin Wolf, Financial Times, Jan 26 2005: We Should All Care About who Heads the World Bank.
8 UPI, Jan 24 2005
9 http://www.ustreas.gov/organization/bios/taylor-e.html
10 Financial Times, Feb 21 2005: Zedillo for the World Bank
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