World Bank needs to be better managed

This week sees the lobbying and deal-making ahead of the election of the President of the World Bank reach its peak.

But for all the rhetoric and campaigning, the outcome remains sadly predetermined.

It is high time the US foregoes its sense of entitlement at the World Bank and allows a merit-based and transparent contest for the presidency to allow non-American candidates a genuine chance of winning. But what we are drifting towards is a continuation of the status quo.

The world is changing. For more than a decade now, since the Asian financial crisis, developing nations and emerging powers have sought to reflect the evolution of the global economy and geo-strategic concerns in the structure and leadership of international institutions. It is an anachronism for the leadership of the World Bank, and its sister institution the International Monetary Fund, to remain the sole preserve of established powers. However, established powers seem determined to cling on desperately to these last bastions of twentieth century geopolitics.

The aftershocks of a global financial crisis brought about by the failure of governments and corporate boards to execute their governance responsibilities still reverberate. Yet so soon afterwards, it is becoming clear that the appropriate lessons have not been learnt.

The World Bank is an institution of critical importance for the global economy. It is vital that the President of the World Bank be the most competent and experienced candidate for the task. For the first time, this year, there are two credible candidates from the developing world.

Many of my US and European friends, people who are outspoken on issues of development, governance and democracy, are conspicuously silent now. Some of my American friends cite the US election as a reason not to rock the boat. Others feel embarrassed about appearing disloyal. But these are not credible justifications.

No candidate for the Presidency of the United States will win or lose the forthcoming US election on the basis of how strongly Washington maintains its grip on the World Bank.

Moreover, while France's quid pro quo support for the US can be taken for granted in the light of Christine Lagarde's unchallenged ascendancy to IMF Director-General, the rest of Europe has little to gain from preserving the existing arrangement. Nations such as the UK and Germany have a chance to show the kind of leadership on this issue that they displayed during the last round of climate negotiations in Durban.

This is an issue of livelihoods for hundreds of millions of the world’s citizens. On this issue, the interests of US citizens are aligned with those of the citizens of all other nations – a properly-managed, efficient World Bank that promotes sustainable and equitable growth is to the benefit of everyone in our interdependent world.

While citizens across the world fight against cronyism, electoral malpractice and bad governance, we must ensure that our global public institutions set the right example. No-one can lecture developing countries on how to manage their processes, public and private sector, if they so brazenly do not conform to the same standards. Moreover, if this election process is not an open contest, it undermines the principle of fair competition that the US and the World Bank have traditionally exported to the rest of the world.

Having a transparent, open and merit-based process is of course the morally right thing to do. What is more important is that it is the smart thing to do. As the Bank engages in the delicate act of advising governments on best practice, its own leadership must have legitimacy. The Bank’s at times heavy handed approach in the developing world has created a well of bad feeling which already undermines its relevance. This election is a chance to restore the confidence of the Bank’s partners, and even its staff, in the institution.

When the Bank was created in 1944, the world looked very different. Today China is the second largest economy in the world, Brazil the sixth. European economies are struggling with austerity measures while African economies are growing faster than ever.

At this time of global political and economic upheaval, as developed countries watch new powers emerge, the Bank must move away from its post-Second World War origins and reposition itself for the new century. While 20th Century powers drag their feet over UN Security Council reform, here is a comparatively easy step along the path of reframing our global governance architecture.

There would be no better way to begin this process than by a merit-based election for World Bank President. This is a wonderful opportunity. The world is watching to see if it will be taken.

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