Foreign nations seek increased influence in World Bank

Iliyas El Arif, Staff Writer

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When you want to kill your dog, you accuse him of having rabies. When you want to weaken multilateralism, you appoint at the head of the World Bank one of its despisers. Donald Trump’s nomination of David Malpass as the White House’s official candidate for the presidency of the world’s leading anti-poverty financing institution sounds like a provocation, as his background, his past statements and his economic vision seem antinomies with the function.

For seventy-three years, the United States, as the largest shareholder of the institution, has the tacit privilege of choosing the president of the World Bank. The Europeans have always complied with this appointment mechanism, knowing that they benefit from the reciprocal presidency of the International Monetary Fund (IMF). This very dated sharing is increasingly challenged by emerging countries. Because of their weight in the growing global economy, they want to take their share of the governance of international institutions. But it is unlikely that any of them will have the audacity and the means to propose by March 14th an alternative candidacy to occupy the seat left vacant by Jim Yong Kim.

However, everything raises a question for Mr. Malpass: the past, the present and the future. In the past, the former chief economist at Bear Stearns did not show much foresight. In a forum published in the summer of 2007, he invited not to panic about the housing bubble, while it would cause the bankruptcy of the investment bank a few months later. New misjudgment when, in 2010, he felt that the liquidity injections of the Federal Reserve (Fed) to save the global economy would cause unbearable inflation. As early as 2011, he demanded a vigorous rise in US interest rates to raise the dollar at any price. Prices have not only been good, but the Fed’s intervention has allowed the US economy to experience one of its longest periods of growth, which the 45th is still enjoying.

Currently, Mr. Malpass is one of the proponents of the White House’s current creed, “America first.” He has multiplied statements against this multilateralism which, in his eyes, encroaches on national sovereignty and harms the power of the United States. He presents as his main accomplishment the fact of having played a decisive role in the recent capital increase of the World Bank. Without mentioning that Washington’s support had a counterpart that served primarily American interests. While Donald Trump was seeking diplomatic success with Pyongyang, he had the promise that the World Bank would help finance the reconstruction of North Korea.

David Malpass, Ronald Reagan’s former advisor, then George H. W. Bush’s, in a Financial Times column on February 7, calls for greater liberalization of the economy, with fewer taxes and less regulation. Not sure that ideological ready-to-think works everywhere, regardless of the level of development. Moreover, will climate change, which will be in the next few years at the heart of the fight against poverty, be the priority of the representative of an administration that does not make much of it in his own country? The World Bank to the Americans and the IMF to the Europeans is the product of a gentlemen’s agreement. Today, faced with Mr. Trump’s crucial choice, might be one more reason to say no once again to the narcissistic plutocrat of the White House. Will diplomats representing US-allied states have the courage to defy this choice? Even if precedent doesn’t change with this appointment, it’s hard to deny a possible change in the future. It will be some time before the World Bank requires a new head again, but even then European leaders will still be frustrated. I suspect this isn’ the end of the discussion.