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CGD in the News

World Bank President to Step Down (New York Times)

February 21, 2012
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CGD President Nancy Birdsall was quoted in a New York Times piece on the World Bank.

From the article:

Robert B. Zoellick will step down as president of the World Bank when his five-year term expires on June 30, the Washington-based institution announced on Wednesday.

In an interview, Mr. Zoellick said that he had no immediate plans for his next career move. He said that he felt most proud of his work to modernize the bank, which focuses on fighting poverty and financing development in emerging countries.

When he first took office in 2007, “there were questions about whether people wanted to be engaged with the bank,” he said. “Now, we find that whether on regular development issues, postconflict states, or climate issues, there is a very strong interest in working with us.”

Mr. Zoellick’s departure seems likely to set off another clash between the advanced economies that traditionally appoint the leaders of the major international financial institutions and the emerging economies that tend to benefit from — and bear the consequences of — those institutions’ policies.

For the last seven decades, since the World Bank’s establishment, the United States has in practice appointed its leader, while Europe picks the head of the International Monetary Fund, the bank’s sister institution.

Recently, countries like Brazil, India and China — with their rapid economic growth and growing political clout on the global stage — have pushed for a more open, transparent and inclusive selection process. Aid and international development organizations have also railed against the old guard’s outsize influence.

“Whoever becomes the president needs to be seen as legitimate around the world,” said Nancy Birdsall, the president of the Center for Global Development in Washington. “The emerging markets — we need to bring them into the multilateral fold, to have them engaged not as victims or recipients or problems, but as real actors whose decisions matter.”

The World Bank’s leadership has committed to opening up the presidential selection process, and the Group of 20 countries has stated its commitment to “support new open, transparent and merit-based selection processes for the heads and senior leadership” of the funds and banks that support financial stability and development in communiqués.

But in practice, that has not yet resulted in a big change at the top. In 2007, European leaders supported former President George W. Bush’s nomination of Mr. Zoellick to head the World Bank. And Washington supported the candidacy of Christine Lagarde, the former French finance minister, for managing director of the International Monetary Fund last year. But notably Mr. Zoellick and Ms. Lagarde visited major emerging market nations to drum up support for their candidacies.

Thomas E. Donilon, the White House national security adviser; Jacob J. Lew, the chief of staff; and Timothy F. Geithner, the Treasury secretary, are consulting with President Obama in choosing a nominee. The White House expects to make an announcement in the next few weeks.

Hillary Rodham Clinton, the secretary of state, is an often-mentioned candidate for the position, though the State Department has denied rumors that she is moving to the bank. Lawrence H. Summers, a former Treasury secretary in the Clinton administration and Obama economic adviser, is another possibility. Mr. Geithner is also mentioned, though his role in helping select the next president may suggest he is not a candidate.

In a statement, Mr. Geithner praised Mr. Zoellick’s contributions to the bank, calling him a “remarkably effective leader.”

“It is very important that we continue to have strong, effective leadership of this important institution, and in the coming weeks, we plan to put forward a candidate with the experience and requisite qualities to take this institution forward,” he said.

Mr. Zoellick said he had made democratizing development one of his major goals at the helm of the institution. “We wanted to move away from an elite model, and instead say, ‘There’s a lot of interesting experimentation and innovation across developing countries.’ ”

“The world is changing and changing quite fast, and the bank has to change with it,” he added.

Mr. Zoellick presided over the first increase in the bank’s general financial resources in two decades. He also helped to raise $90 billion for the bank’s fund for the world’s poorest, the International Development Association.

Mr. Zoellick has also pushed the bank to open not just its coffers, but its data archives, giving public access to its much-prized store of information on the world economy. “I’m very proud of that,” Mr. Zoellick said, describing the policy as a “freedom of information act” for the bank. It is also “important because it makes public institutions more accountable, and it helps us focus on results,” he said.

There is considerable speculation over where Mr. Zoellick, who is 58, might be headed as well. A longtime member of the Republican foreign and economic policy elite, his name has been mentioned as a possible candidate to become Treasury secretary if President Obama does not win a second term. Mr. Zoellick said that he had no plans, and did not plan to decide his next career move until after he left the bank.

Mr. Zoellick said that the World Bank supported an open application process to replace him as president. But, he added, “I’ve spent 30 years, both in government and outside government, trying to help and support and rebuild the multilateral system.” He said, “I think there’s a benefit for this system if the United States has a sense of responsibility to and ownership of those institutions.”

Read it here.