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Friday, April 27, 2012

U.S. again imposes its pick for World Bank president

Special to The Japan Times

HONG KONG — To no one's surprise, Dartmouth College President and anthropologist Jim Yong Kim, Ph.D., was overwhelmingly elected to succeed Robert Zoellick as president of the World Bank in midyear.

He — and more importantly the World Bank and the world — may come to regret the fact that he was chosen not because he was the best candidate but because President Barack Obama exercised the bully's choice. It is a betrayal of the hopes of the world and of Obama's "Yes, we can" promises to make a difference.

An expert from the leading think tank the Council on Foreign Relations claimed that in this U.S. election year, it would be unthinkable for Obama to forgo the right to choose the president of the World Bank. Is this the best excuse the CFR and Obama can offer — that the American voters would have hung him out to dry if he had not bullied for an American perk? Oh, the corrosive corruption of power.

The betrayal is even more important than commentators have made out. As a key part of its operations, the World Bank insists — on the demands by the United States and its Western allies — that countries receiving its money practice good governance. This is quite right. There is little point in lending money if it is going to be looted by bad governments or corruption. Among the oldest and most pernicious forms of corruption are nepotism and putting favored friends into top jobs. Is Kim's selection any different?

The hoodwinked commentariat, including the BBC, CNN and the great newspapers of the world, all claimed that this was an unprecedented election because there were three candidates. True, only if there is a proper contest, the candidates get a chance to put out their platforms, to debate each other, to be questioned and to see their votes counted and certified. This was the promise — an open, merit-based, fair and transparent choice — that was betrayed.

The opposing candidates, both from developing countries, correctly made this point, as did South Africa's finance minister, Pravin Gordhan, who said there was a need to "look beyond the verbiage of democracy and the claims to democratic process and ask whether in substantive terms the institution has met the democratic test."

Another leading light from a top think tank, Eswar Prasad of the Brookings Institution and Cornell University, claimed in the New York Times, that Obama chose Kim, who then stood on his merits: "There has been no statement by any U.S. administration official that Doctor Kim should get the job simply because he is American." I sometimes wonder about the capacity of learned professors for self-delusion. There was no such statement of superiority because the cloaks and daggers were wielded behind the scenes.

Kim was chosen by the U.S., which then pressured the old boys who have traditionally run the international financial institutions to fall in line. They did. Kim's campaign was run from inside the U.S. Treasury, which organized, promoted and presumably paid for his world "listening" tour, an advantage that the other candidates did not have. Kim's statement to the World Bank's board was published by the U.S. Treasury. He was shielded from encounters with the other candidates. The election was less open and more secretive than a conclave of cardinals electing a pope.

Who knows who supported Kim? Japan at least admitted to dancing to Washington's tune. But what about British Prime Minister David Cameron, German Chancellor Angela Merkel and French President Nicolas Sarkozy, who all insist that aid money will be wasted without good governance: How did they instruct their executive directors to vote, and why?

And what about brave Beijing and Delhi? Both are remarkably silent. Whom did they support? Did they cut a deal and support Kim to get more of the top jobs?

This would also be potentially dangerous corruption. This is supposed to be the World Bank, not the U.S. bank or Europe's or China's. At lower levels there is intense competition for bank jobs (though with a weakness for Ph.D.s rather than mere MBAs), but nationality is not a barrier.

At higher levels of vice president and managing director, the bank has been corrupted by political appointments. Japan started the trend by insisting that a Japanese run the bank's Multilateral Investment Guarantee Agency, but China has been quick to follow, as it also has in the International Monetary Fund.

Obama had a great chance to open the World Bank to the world by saying I am not backing anyone, and then invite the suitably qualified to apply: those who have run a big organization with a brilliant but temperamental multicultural multinational staff; have dealt with a $250 billion loan book and understand banking and finance; have wrestled with the pernicious problems of politics and corruption in developing countries; understand the minefield of economic development at the poor grassroots level where all too often there is no grass; and have a brave heart, a strong mind and a lively imagination to build on the World Bank's excellent foundation in tackling the dangerous intractable global problems of the 21st century, such as food, water, energy, unemployment and helping cities to grow without sprawling into slums.

Washington could have overseen an open competition. Instead, as John Cassidy wrote in New Yorker: "This was an election in the style of New York or Chicago 100 years ago, with the U.S. government playing the role of Tammany Hall."

Jim Yong Kim, now has to make the transition from running a small Ivy League college with a bad frat boy reputation, 6,000 students, a $100 million hole in its budget and falling endowments to a global institution with a $250 billion portfolio, a few billion clients and all the developing problems of the world.

I wonder how many executive board members read the detailed article in Rolling Stone about hazing at Dartmouth, along with the comment about Kim that he "is a strong supporter of the Greek (fraternity) system; he has suggested on several occasions that fraternity membership may have health benefits, citing studies that show that people with long-standing friendships suffer fewer heart attacks."

Distinguished economists have praised Kim's achievements in health care, specifically HIV/AIDS, and in promoting change from the poor grassroots upward. But health is only a small, though important, part of his new job. He won't be able to whizz down to villages to give money or treatment to distressed families. He has to deal with governments.

The 187 member governments are the shareholders of the World Bank. They sign off on everything. Most loans are made to governments. They don't like criticism of any kind. The best that the bank can do in the face of rampant corruption or gross incompetence is to stop lending money to a country. In these days of multitrillion dollar capital markets, the sums that the World Bank can lend are the proverbial drops in the ocean. But what the bank can offer is a wealth of knowledge and understanding on a myriad of aspects relating to development issues —from poverty and malnutrition to health and welfare, climate change, economics, education, environment and infrastructure, plus the utmost independent integrity in analysis and judgment.

The new president should be looking at how the World Bank can bring more flexible aid to global-pressing problems and seek solutions that are simultaneously highly localized and yet work across countries and continents.

Instead, in choosing and getting Kim chosen, Obama has given in to the tyranny of nationality, thus encouraging other countries with which Washington cuts deals to demand a greater "say."

But we don't want a more Chinese or Indian or American or Japanese or European bank: we want a World Bank.

Kevin Rafferty has reported on the World Bank for 35 years and was managing editor at the bank in 1997-99.

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