Robert Zoellick’s decision to step down as head of the World Bank has rekindled a simmering argument over whether the United States should automatically command one of the globe’s premier economic institutions.
The Obama administration moved quickly to signal that it expects the top job at the World Bank to stay in American hands, as it has been since the institution was created after the Second World War. That expectation was widely criticized in emerging markets, where officials declared the time has come to choose the leader of the World Bank on merit, not nationality.
“It is not so much the identity of Mr. Zoellick’s replacement that concerns us, but rather the process in which his successor is selected,” Philippines Finance Secretary Cesar Purisima said, according to a report by Reuters. “We are confident given the increasing importance of emerging markets in the global economy [that]outdated practices of the past will be revisited.”
In Ottawa, Finance Minister Jim Flaherty issued a statement Thursday commending Mr. Zoellick for “steady leadership” and said the next World Bank chief should be selected in an “open, transparent and merit-based” manner.
Within hours of Mr. Zoellick’s announcement on Wednesday that he would quit when his term ends in June, Treasury Secretary Timothy Geithner said the U.S. soon would nominate a successor.
White House reporters, citing unnamed sources, circulated Secretary of State Hillary Clinton and Lawrence Summers, the Harvard University professor who led President Barack Obama’s National Economic Council, as leading candidates.
Technically, the decision will be made by the World Bank’s 13-member executive board. But for observers of the Bank, the U.S.’s rush to get out ahead of the competition was an unwelcome reminder of last year’s successful effort by European countries to retain their hold on the leadership of the International Monetary Fund.
The U.S. historically has backed a European to head the IMF in a gentleman’s agreement that has been repaid with European support for the White House’s choice to lead the World Bank.
Within days of Dominique Strauss-Kahn’s resignation as IMF managing director last spring, European officials used their institutional ties to quickly nominate Christine Lagarde, the popular French finance minister.
“We are going through the same kabuki we go through every time,” said Moises Naim, a senior associate at the Carnegie Endowment for International Peace in Washington. With an election in November, “the political incentives for Mr. Obama to do the right thing aren’t there and the power of the others to veto the U.S. choice is not there,” Mr. Naim said.
However, emerging market countries in the past have been as much a part of this theatre as the U.S. and Europe. Ms. Lagarde’s ascent to IMF chief showed the only thing that united such countries as China, Brazil and India was their status as upstarts, as they failed to coalesce around a candidate of their own.
That appears likely to happen again.
A spokesman for China’s foreign ministry said the next World Bank president should be chosen “on the principles of openness, competitiveness and merit,” which is all Beijing had to say during Ms. Lagarde’s campaign. Mexico’s central bank Governor Agustin Carstens, who ran against Ms. Lagarde for the IMF post, called for an open and merit-based process, but said he would not run. Brazil’s Finance Minister, Guido Mantega, said the World Bank job shouldn’t be linked to nationality, but conceded an American likely would get it.
The U.S. controls about 16 per cent of the voting shares at the World Bank, more than the combined total of China, India and Brazil. However, collectively, developing nations hold more votes than the U.S. and Europe. So hypothetically, a candidate with broad support among poorer nations could mount a serious challenge to the White House’s choice.
“If they allow this to go through this time, the IMF and World Bank will perpetually be in U.S. hands,” said Bessma Momani, a senior fellow at the Centre for International Governance Innovation in Waterloo, Ont. “Developing countries can block this … It would be hard, but it can be done if they care.”