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Saturday, March 31, 2012

Don't dance to U.S. tune on World Bank presidency


Special to The Japan Times

HONG KONG — There is an old English expression condemning people who rush in where angels fear to tread. So very sad — Jun Azumi, Japan's finance minister, pushed past the angels in declaring that "it is quite possible to consider" supporting Jim Yong Kim, President Barack Obama's nominee for president of the World Bank, "if the United States requests us to recommend him." He claimed that he had not made up his mind, perhaps waiting for Washington's request.

Japan deserves better than this pale imitation of a puppet from its finance minister. More to the point, so does the World Bank and the billions of people it supports.

Azumi should be especially ashamed because Japan was one of the first beneficiaries of World Bank money — remember the Shinkansen, built with World Bank loans — was its brightest graduate and is today the second biggest of the 187 shareholder governments. At a time when there is soul-searching about the World Bank's role, Japan should be contributing with new thoughts, not puppet-dancing to Washington's tune.

For the first time there is competition between three candidates — Kim, a medical doctor with a PhD in anthropology, and president of Ivy League Dartmouth College; Jose Antonio Ocampo, nominated by Brazil, former finance minister of Colombia now a professor at Columbia University; and Ngozi Okonjo-Iweala, nominated by South Africa and supported by the African Union, finance minister of Nigeria and a longtime former World Bank senior official.

Candidate Kim, who was born in South Korea and migrated to the U.S. at the age of five, has already set off on a world trip. He is in Japan this weekend and will also visit China, India, Brazil, South Korea, Mexico and Ethiopia on a "listening tour" (according to the U.S. Treasury) to talk about the World Bank and its priorities. The treasury did not say who was paying for the trip. It remains to be seen whether the other candidates have the wherewithal or luxury of time off from their day jobs to make similar tours.

Washington has hitherto chosen the World Bank president under a cozy deal agreed in the mid-1940s when the Allied powers set up the International Monetary Fund and World Bank to restore peace and prosperity to a world shattered by war and destruction. In the very different world of the 21st century, the development committee, the key bank committee promised that the new president would be chosen by merit-based, open, fair and transparent competition.

If Azumi had any idea of Japan's place in the world he would be more closely defining openness and transparency, to prevent slithering away to cut back-door deals. He should insist that candidates be offered the opportunity to present their manifestoes — and make them public — detailing how they would run the World Bank, what they see as the priorities and challenges, what changes they would make, what they would leave the same.

Candidates should then face interview and questioning by the bank executive directors. The sessions should be public, but if the board insists that it operates behind closed doors, at least a transcript should be provided of the relevant questions and answers. Finally, countries should vote individually and their votes should be recorded to make the whole process, fair, open and transparent in accordance with the promises.

This choice of president is critical because many critics contend that the World Bank is no longer relevant or has long passed its sell-by date. In the dark days after World War II, the bank was a vital source of finance for infrastructure and other development projects. Japan and Europe after the war, Eastern and Central Europe after the fall of communism, and the Balkans more recently benefited from World Bank assistance.

China's economic reform program was shaped and boosted with World Bank help, and India stayed on its economic feet thanks to World Bank aid before it began its economic reforms. Meanwhile, the bank has lent billions of dollars in Africa, Asia and the Pacific and Latin America in the continuing battle to eradicate hunger and poverty and promote education, investment and prosperity.

Is it time now to consign the World Bank to history and acknowledge that private enterprise can do a better job? After all, global capital flows amount to trillions of dollars, but the World Bank in a good year can put together a small pot of about $50 billion. Marxist Martin Jacques noted triumphantly that China these days lends billions more to developing countries than the World Bank.

Even so, the World Bank can go places where private money cannot — and more to the point will not — go. Its money can act as a catalyst to attract other funding. Its 10,000 staff are probably the world's brightest collection of Ph.D.s in economics and every professional specialty under the sun. This gives the bank a priceless platform as the world's "knowledge bank."

This gives the bank a potentially important role as an advisor. Its recent joint report on China 2030 is an example, though one that also illustrates the key weakness of the bank — that it is not well-attuned politically, only partly because it is the servant of the governments that are its shareholders. In many of the very poorest parts of the world that are failed and failing states, the bank has made little headway.

In addition, the World Bank should have an increasingly important role to play in reporting, advising and lending to protect the global commons, the water, food, energy supplies and environment of this overcrowded, deteriorating and fragile planet.

Running an international institution tackling this wide range of topics, as well as dealing with prickly member governments, demands leadership of the highest order. This time round, not only is there a choice, but there are big differences between the candidates.

There was widespread surprise when Obama named Kim, a university president with no obvious hands-on experience of finance, economics or government and a narrow specialization in health and particularly HIV/AIDS. Kim wins mixed reviews from Dartmouth about the way he runs the university, though he has been good at self-promotion.

Jim Kim has already achieved his 15 minutes of fame as a rapper at the Dartmouth Idol contest, wearing out-of-this-world shades and dancing spiritedly if woodenly. His supporters say that his lack of patience with political correctness and his experience of poverty and sickness at the grassroots level will lead him to try to turn the World Bank upside down. That would be interesting, if he has a plan, or disastrous.

In the introduction to a book published in 2000, "Dying for growth" Kim and his co-editors assert: "The studies in this book present evidence that the quest for growth and corporate profits has in fact worsened the lives of millions of women and men." At the very least, Kim should be invited to explain this statement and its implications for how he would run the World Bank.

Similarly, Kim's supporters deride Okonji-Iweala as too wedded to the status-quo, though they evidently have not talked face-to-face with this capable and feisty woman about how to tackle entrenched corruption or the curses of an oil-rich country. She has faced the tasks of development both through the bureaucratic maze of the World Bank and the dark politics of Nigeria, as Ocampo has done in Colombia.

For their sakes and for the World Bank and the future of the planet, it is essential that the candidates are heard first. Azumi should have the guts to speak up for Japan and the world, and tell Obama and Kim that the contest must be open and transparent.

Kevin Rafferty was managing editor at the World Bank, 1997-1999.


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