NEW YORK – US
President Barack Obama’s nomination of Jim Yong Kim for the presidency of the
World Bank has been well received – and rightly so, especially given some of the
other names that were bandied about. In Kim, a public-health professor who is
now President of Dartmouth University and previously led the World Health
Organization’s HIV/AIDS department, the United
States has put forward a good candidate. But
the candidate’s nationality, and the nominating country – whether small and
poor or large and rich – should play no role in determining who gets the job.
The World Bank’s 11 executive directors from emerging and developing
countries have put forward two excellent candidates, Ngozi Okonjo-Iweala of Nigeria
and Jose Antonio Ocampo of Colombia.
I have worked closely with both of them. Both are first-rate, have served as
ministers with multiple portfolios, have performed admirably in top positions
in multilateral organizations, and have the diplomatic skills and professional
competence to do an outstanding job. They understand finance and economics, the
bread and butter of the World Bank, and have a network of connections to
leverage the Bank’s effectiveness.
Okonjo-Iweala brings an insider’s
knowledge of the institution. Ocampo, like Kim, brings the advantages and
disadvantages of being an outsider; but Ocampo, a distinguished professor at Columbia
University, is thoroughly acquainted with the
World Bank. He previously served not only as minister of economics and finance,
but also of agriculture – a critically important qualification, given that the
vast majority of the developing countries’ poor depend on farming. He also
brings impressive environmental credentials, addressing another of the Bank's
central concerns.
Both Okonjo-Iweala and Ocampo
understand the role of international financial institutions in providing global
public goods. Throughout their careers, their hearts and minds have been
devoted to development, and to fulfilling the World Bank’s mission of
eliminating poverty. They have set a high bar for any American candidate.
Much is at stake. Almost two billion
people remain in poverty in the developing world, and, while the World Bank
cannot solve the problem on its own, it plays a leading role. Despite its name,
the Bank is primarily an international development institution. Kim’s
specialty, public health, is critical, and the Bank has long supported
innovative initiatives in this field. But health is only a small part of the
Bank’s “portfolio,” and it typically works in this area with partners who bring
to the table expertise in medicine.
Rumors suggest that the US is likely
to insist on maintaining the perverse selection process in which it gets to
pick the World Bank’s president, simply because, in this election year, Obama’s
opponents would trumpet loss of control over the choice as a sign of weakness. And it is more important for the US
to retain that control than it is for emerging and developing countries to
obtain it.
Indeed, the more powerful of the
emerging markets know how to live within the current system, and they may use
it to their advantage. They will, in effect, obtain an IOU, to be cashed in for
something that is more important. The Realpolitik of the moment makes
fighting over the presidency unlikely; America
may well prevail. But at what cost?
Should America
continue to insist on controlling the selection process, it is the Bank itself
that would suffer. For years, the Bank’s effectiveness was compromised because
it was seen, in part, as a tool of Western governments and their countries’
financial and corporate sectors. Ironically, even America’s
long-term interests would be best served by a commitment – not just in words,
but also in deeds – to a merit-based system and good governance.
One supposed achievement of the G-20 was
an agreement to reform the governance of the international financial
institutions – most importantly, how their leaders are selected. Since
expertise on development by and large lies within the emerging and developing
countries – after all, they live development – it seems natural that the
World Bank’s head would come from one of those countries. To maintain a cabal
among developed countries, whereby the US
appoints the World Bank president and Europe picks the
International Monetary Fund’s head, seems particularly anachronistic and
perplexing today, when the Bank and the Fund are turning to emerging-market
countries as a source of funds.
While the US,
the international community, and the Bank itself repeatedly emphasize the
importance of good governance, a selection procedure that de facto
leaves the appointment to the US
president makes a mockery of it.
Okonjo-Iweala put the matter
forcefully in an interview with the Financial Times: what is at stake is
a matter of hypocrisy. The integrity of the advanced industrial countries,
which have a majority of the votes at the World Bank, is being put to the test.
Joseph E. Stiglitz, a Nobel laureate in economics, has pioneered pathbreaking
theories in the fields of economic information, taxation, development, trade,
and technical change. As a policymaker, he served on and later chaired
President Bill Clinton’s Council of Economic Advisers, and was Senior Vice
President and Chief Economist of the World Bank. He is currently a professor at
Columbia University, and
has taught at Stanford, Yale, Princeton, and Oxford.
