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Following Robert Zoellick’s announcement that he will step down from the World Bank presidency at the end of June, the World Bank board has called for member countries to submit nominations for his successor, with a fast-approaching deadline of March 23rd. The board has said it will then narrow the nominations to a short list of three, with the goal of naming a new president before the World Bank/IMF spring meetings in April.
My guest on this week’s Wonkcast, CGD President Nancy Birdsall, discusses why it matters who leads the World Bank and how he or she will be selected—a topic she addressed in a recent blog post. In our interview, Nancy suggests two highly qualified non-U.S. candidates who could be included on the three-candidate short list, on the assumption that the United States will put forward a strong candidate. She then identifies two priorities for the next bank president, regardless of who is ultimately selected.
A former director of policy research at the World Bank, and former executive vice president at the Inter-American Development Bank, Nancy speaks from a basis of knowledge when it comes to multilateral development institutions. I ask her: why does it matter who runs the World Bank?
“The tone the president sets matters for the great machinery underneath,” she explains. “They determine in what direction it will grind along, and if it will do so in a way that makes sense. Will there be openness to a new direction and a readiness to admit problems and failures? All that is set at the level of the president.”
Since the World Bank’s creation in 1944, the United States has nominated each president and the bank’s board has endorsed the nomination. This tradition made sense when the U.S. was unquestionably the world’s pre-eminent power and accounted for a huge share of the global economy. The process now seems antiquated, Nancy says, as the big emerging powers wield increasing influence in the global political economy.
The lack of an open and competitive leadership selection process has narrowed the candidate pool and undermined the bank’s legitimacy. The bank board’s call for nominations is part of effort to address these problems, even as the very tight deadline makes is difficult for alternative candidates to emerge.
Nancy describes to me two highly qualified candidates that she and CGD senior fellow Arvind Subramanian proposed in a recent op-ed (blog post): Ngozi Okonjo-Iweala of Nigeria and Nandan Nilekani of India.
“Ngozi is very well known and liked across the developing and advanced country world because of what she accomplished as finance minister in Nigeria from 2003 to 2006,” explains Nancy. “She took the lead in a key set of major reforms which led to a $25 billion reduction in debt. She has a lot of charisma, is savvy politically, and is a good diplomat.”
Nancy also provides background on Nandan Nilekani -- the founder of Infosys Technologies, a global technology services company based in India. Sometimes called the “Bill Gates of India” for his commitment to philanthropy, he is now leading the Indian government’s efforts to establish a national identification system using new biometric technologies, a complex effort with potentially huge benefits for India’s poor.
Regardless of who is selected as the next president of the World Bank, Nancy says, the new president will face steep challenges. This is why Nancy advocates for a president who “is able and willing to corral the board members onto a new agenda,” Nancy also tells me the new president should have an agenda that is institutionally grounded and fundamentally about development.
The top challenge facing a new president is how the bank can become more effective in addressing problems of global public goods– issues such as climate change, natural resource scarcity, fisheries collapse, and drug resistance, which no one country can sort out on its own. The bank currently tackles these issues in an ad hoc manner; it lacks a clear mandate and an appropriate financial instrument, Nancy says.
A second issue is whether and how the bank should continue to lend to large middle income countries (MICs) such as China and India that have huge foreign reserves and growing clout. While Nancy says these countries should continue to receive loans (after all, the bank is a credit co-operative, and if members want to borrow, they should have the right), the World Bank should recognize that the big MICS have the capability to use the funds they borrow without the bank looking over their shoulder at every step. The bank should be less of a “nanny” when it comes to the MICs, she says, and thereby cut the administrative costs associated with these loans, perhaps saving resources that could be used in other ways, such as to address global public goods problems.
With less than a month remaining until the March 23rd nomination deadline, there is little time for developing countries to nominate and get behind a candidate.
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I’d like to thank Alexandra Gordon for serving as producer and recording engineer, and for helping to draft this post.