Two
years ago, I wrote a post suggesting that there were serious conversations
going on at a high level within the U.S. government about whether or not it
might someday support the candidacy of a non-U.S. citizen to be the head of the
World Bank. At the time, I heard from senior officials that there was a real
openness to do so. There was even speculation that Brazil's President Lula
might be a candidate.
Since
then several things have happened. Lula has handed over the presidency of
Brazil to his protégé, Dilma Rousseff. There was allegedly a conversation
between him and France's President Sarkozy at one point about the World Bank
job and Lula immediately demurred, expressing no interest in it.
And, at
the U.S. Treasury, there has been a reported change of heart. The current
inclination is to stick with tradition, in part because of a "campaign" by
World Bank President Robert Zoellick to persuade senior officials that the
Congress will not tolerate a non-U.S. president at the Bank and would stop
supporting the institution were such a change to take place.
The
reports of this shift in views come at the same time that Europeans are arguing
that a European must remain at the helm of the IMF due to the special demands
of the moment.
Of
course, the special demands of the moment they cite are that Europe is in precarious
financial shape thanks to widespread and extraordinary financial mismanagement
by the continent's elites -- either because they let their national deficits
balloon up or, in countries where the conditions are less dire, because they
didn't fully realize the degree to which their countries were on the hook for
the more feckless members of the Eurozone.
It's not
a pretty picture: Europe and America using the fact they are bleeding red ink to
argue that their continued leadership of the world's most important
international financial institutions is essential. It is the textbook
illustration of the definition of chutzpah: the child who murders both his
parents seeking mercy because he is an orphan.
The
current financial mess that Europeans and Americans have played such a central
role in manufacturing should actually, of course, disqualify them from
continuing in their familiar leadership roles -- if the rise of new powers did
not already make such a compelling case that the time for change has come.
Some
argue that the developed powers should hold onto the reins because only
representatives of those powers have the network of private financial contacts
necessary to do their jobs. Such a view ignores the reality of modern global
financial markets and the fact that many of the world's most well-connected and
prominent financial leaders are from outside the U.S. and Europe.
Others
argue that the developed powers should not pass the baton until the emerging
powers pay for the privilege of leadership by paying in more capital. Such an
argument would suggest that only the number one and two donors should rule the
roost (not the case) or that an outsider might not better serve the collective
interests of the donor countries (also not the case).
To pick
just two among many examples of great choices for these jobs from outside the
small group of countries that traditionally get them:
Singapore's
Finance Minister Tharman Shanmugaratnam would rank up with or outshine any of
the top candidates for the IMF job Europe could muster...even the much admired
and likely to get the job (despite her own little mini-controversy) Christine
Lagarde. Tharman, a brilliantly gifted
technocrat with advanced degrees from both Cambridge and Harvard, is already
the chairman of the policy steering committee of the IMF-where he was the first
Asian to hold the job.
And
Brazil's Luciano Coutinho, the head of that country's development bank, the
high-performing BNDES, may be better qualified than anyone else to run a major
development institution like the World Bank. (The bank lent about $70 billion
in 2010 outpacing both the World Bank and the Inter-American Development Bank. And
BNDES rank first among comparable financial institutions for return on assets
with a rate of delinquencies that is one-twentieth of the international
average.) For the record, China's two development banks lent more money in 2009
and 2010 than did the World Bank, as well.
In other
words, the world's leading development bankers actually now come from the
developing world. That such choices would also bring new perspectives and
greater sensitivity toward the needs of borrowers while better reflecting a
changing world power structure are only the icing on the cake. (Actually,
they're the cake itself...but the opponents of change won't acknowledge that.)
Any fair
study of the situation and the available candidates would suggest that not only
is now not the time for the status quo, it is a time such changes are urgently
needed. But then again, we must contend with Henry Kissinger's unassailable
observation that the most potent force in Washington and bureaucracies
everywhere is inertia. Add self-interest, timidity and short-sightedness to
that and you have precisely the formula for inaction and missteps that have
gotten us into the mess we are in in the first place.
I liked this article for a message it wants to deliver. At the same time, I think readers, who don't know background of these so-called 'banks', have to understand structural difference of these bureaucratic organizations financed by taxpayers' money compared private and public banks attracting capitals from free market economy. These two banks are well-know not only for their missions, but also they have questionable reputation working with corrupt dictatorship regimes, and financing humanitarian projects with kickbacks, bribes and basically doing money laundering backwards. Instead putting harsh terms for political and economic reforms for encouraging opening self-supporting small businesses, these banks try to get many projects through corrupt regimes to justify their existence and using funds allocated to them within fiscal year. Now, Obama wants these organizations in addition to the Congress approved foreign aid to boost past revolution economy of the Middle East countries. Using these banks as free money source will only jeopardize expected healthy changes coming from trials and errors. There will be many people in these countries trying to use their network connections to get a piece of pie. Corruption and bribery will be unavoidable due to conflict of interest among government officials sticking to their jobs as business opportunities. Pakistan's case has already shown us such a approach in financing 'ally' government branches and organizations will fire back since common people don't gain anything from such aids and many people build resentment toward not only their government and the western governments as well for sponsoring or wasting money on inefficiency of money hungry government officials.
Why not just do it by how much each country contributes to the World Bank?
And this may sound a bit old-fashioned and not new world orderish enough, but can we get some idea as to how much of our tax money has been funneled through the World Bank to prop up these European banks?
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