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Does Kim Signal World Bank Changes?

Authors: Oliver Stuenkel, Assistant Professor of International Relations at the Getulio Vargas Foundation in Sao Paulo, Brazil Sook Jong Lee, President of East Asia Institute Daniel Bradlow, SARCHI Professor of International Development Law and African Economic Relations at the University of Pretoria, South Africa Stewart M. Patrick, Senior Fellow and Director of the International Institutions and Global Governance Program
Interviewer(s): Jonathan Masters, Deputy Editor
April 18, 2012

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Editor's note: This roundup is a new monthly feature of the Council of Councils initiative, gathering opinions from global experts on major international developments.

The selection of Jim Yong Kim, the U.S. candidate, as the next president of the World Bank has stimulated debate over reform of the institution's governance. Four experts size up the succession process, some judging it a missed opportunity for meaningful change while others seeing a crucial injection of new expertise at the sixty-eight-year-old development body.

CFR's Stewart Patrick notes a flawed process that still marks a turning point for the Bank. Oliver Stuenkel of the Getúlio Vargas Foundation in Brazil laments the failure of the emerging powers to rally around Nigeria's Ngozi Okonjo-Iweala. Both Stuenkel and Daniel Bradlow of the University of Pretoria in South Africa warn that without reform at the World Bank, some of its largest borrowers could seek alternatives, such as the proposed BRICS bank. But the East Asia Institute's Sook Jong Lee welcomes Kim's selection, saying his public health background bodes well for tackling the complex problems of development work.

Oliver Stuenkel, Assistant Professor of International Relations at the Getulio Vargas Foundation in Sao Paulo, Brazil

Given the voting structure in the World Bank, Jim Yong Kim's selection had been widely expected. Despite receiving endorsements from a series of leading World Bank officials, Western and non-Western newspapers, and leading academics, Ngozi Okonjo-Iweala never came close to weakening the developed world's support for the U.S. candidate. Still, from Brazil's point of view, seeing Kim easily beat Okonjo-Iweala was a disappointment as it underscores the emerging powers' continued inability to find a common denominator--something many regard as a necessary step toward challenging the West's control over global discourse.

"[The BRICS] missed a unique opportunity to show unity and respond to critics who argue that they are too disparate to speak with a common voice."

"We will take a position together with the BRICS, making a common choice," Brazil's Minister of Finance Guido Mantega announced last week, raising hopes that the Nigerian candidate would win broad support among developing countries and emerging powers. Such a move could have, in theory, convinced some European countries that it was time to honor Western rhetoric about an "open and merit-based selection process" and end the anachronistic gentleman's agreement where only U.S. citizens can lead the Bank.

Yet only a bit later, the Russian government declared its support for Kim, a decision uncoordinated with the other BRICS. Given that the Nigerian candidate was widely seen as better qualified, the BRICS--a grouping high on the Brazilian government's agenda--thus missed a unique opportunity to show unity and respond to critics who argue that they are too disparate to speak with a common voice.

By imposing its candidate, the United States missed a chance to boost the World Bank's legitimacy among emerging powers, like Brazil, who believe the Bank's governance no longer reflects today's global distribution of power. The decision is therefore likely to strengthen those who seek to create alternative institutions such as the BRICS Development Bank, a much-debated topic during the most recent BRICS summit in New Delhi.

The West's control of the World Bank presidency, however, is unlikely to last. Kim is likely to be the last World Bank president pushed through by the United States, as voting power within both the Bank and the IMF slowly but inevitably shifts toward emerging powers. Okonjo-Iweala may still become the first person from the developing world to head the institution, but it seems she'll at least have to wait until 2017.

Sook Jong Lee, President of East Asia Institute

The selection of Dr. Jim Yong Kim as the twelfth President of the World Bank Group has been enthusiastically welcomed in South Korea as a symbol of the increasing visibility of Korean descendants in international society. It is also a good compromise for both the United States and developing countries, as he is the Bank's first president of non-European descent.

This decision should be appreciated by a diverse set of World Bank clients, donors, and other stakeholders as well. He is a man of great achievement with a distinguished career, including professorships at Harvard Medical School, a directorship at the Department of HIV/AIDS at the World Health Organization (WHO), and, most recently, presidency of Dartmouth College. Throughout most of his career, he has demonstrated his leadership in the fields of health and medicine.

However, some critics held this expertise against him, arguing that the World Bank would be better served by a candidate with a background in economics. This argument is misleading when considering the complex nature of development. If economists were best-suited to develop poor countries, the Bank would have reduced poverty a lot faster and more substantially than the present suggests.

"Eradicating poverty requires a holistic approach that includes health, the environment, psychology, and governance, in addition to the conventional solutions of supplementing income and building infrastructure."

Eradicating poverty requires a holistic approach that includes health, the environment, psychology, and governance, in addition to the conventional solutions of supplementing income and building infrastructure. Dr. Kim's unique perspective as a Ph.D. in anthropology, his passion to create new organizations such as the community-focused Partners in Health, and his innovative treatment strategy at WHO are all positive signs that the World Bank will better fulfill its poverty reduction objectives.

Over the decades, the Bank has continued to reform its programs and institutional principles to sustain growth by empowering the poor and pragmatically focusing on results. President Jim Yong Kim's leadership philosophy fits well with this reform strategy. In his statement regarding his selection as president, Dr. Kim promised the Bank would respond more effectively to the needs of its diverse constituencies, deliver more powerful results, prioritize evidence-based solutions, and amplify the voices of developing countries. Under his leadership, we anticipate the Bank will provide more effective global governance in combating the developing world's poverty and foster sustainable growth.

Daniel Bradlow, SARCHI Professor of International Development Law and African Economic Relations at the University of Pretoria, South Africa

The selection of Dr. Jim Yong Kim as the next World Bank president offers Africans two lessons in diplomacy related to international economic governance, and highlights the need for the Bank's much-needed reform.

First, Africa can be an effective player in global economic governance. In uniting behind one candidate, Africa forced the Bank into a precedent-setting competitive selection process with a result that was not unanimous. Ngozi Okonjo-Iweala's candidacy exposed the hollowness of the current process by demonstrating that the most qualified contender was an African and that the U.S. candidate, despite his impressive public health credentials, could not win the presidency on the basis of merit. In addition, it showed how the United States treated the selection like a coronation, where it could ignore the views of those member states which actually use the Bank's financial and advisory services. If Africa can build on this common approach, it can become a more effective actor in other aspects of international economic governance.

"If the Bank does not start becoming more responsive to its borrowers and their citizens, they could take their business elsewhere."

Second, the process highlighted the limits in the redistribution of power in global economic governance. The G7 can still impose their views on issues of most interest to them, while developing counties can still only exercise negative power. They do not yet have the ability to convince the world to adopt their positions. This suggests that Africa needs to think more creatively about forming tactical alliances with a broader range of state and non-state actors in such negotiations.

The World Bank urgently needs reform. The powers that control the Bank have been reluctant to truly reform its governance. They are also only willing to accept policy and operational changes that suit their needs, rather than those that are more responsive to the needs of the Bank's borrowers. The resulting disaffection in Africa suggests that if the Bank does not start becoming more responsive to its borrowers and their citizens, they could take their business elsewhere. Alternatives do exist, and, as the discussions about the possible creation of a BRICS bank indicate, more options could arise. This suggests that unless it changes, the Bank may slowly lose its relevance.

Stewart M. Patrick, Senior Fellow and Director of the International Institutions and Global Governance Program

The U.S. diplomatic push to install Jim Yong Kim as the next World Bank president squandered a golden opportunity to promote a new era of global governance founded on contemporary economic realities, and not outdated Western prerogatives. The Obama administration could have thrown its weight behind either of the two outstanding alternatives--Ngozi Okonjo-Iweala of Nigeria or José Antonio Ocampo of Colombia--and in doing so, would have signaled that global institutional reform requires integrating the dynamic developing world. Nevertheless, the first multi-candidate competition is a historic turning point.

"[Kim's] anthropological background may be most handy at the Bank, making him more attuned than professional economists to the context-dependent nature of development."

To be sure, the unbalanced and opaque competition fell short of the "open, transparent and merit-based" process the Bank promised in 2010. The United States called in its IOU for backing Christine Lagarde for IMF managing director--suggesting the gentleman's agreement from 1944 survives--and applied heavy pressure on Japan and other shareholders. This naked display of power was consistent with the history of the Bretton Woods Institutions, which the United States, after all, insisted be based in Washington rather than a global financial center (even New York), to assure maximum susceptibility to its own political interests. Nevertheless, the days of hegemonic privilege are waning. In the next competition, all bets are off.

This time, good arguments can be (and were) made for all three candidates. Okonjo-Iweala, the Nigerian finance minister and World Bank insider, and Ocampo, the former Colombian finance minister and senior UN official, had impeccable macroeconomic credentials. But it is Kim--a physician and anthropologist--who was the wild card. While some lamented his lack of economic or banking expertise, his pioneering, iconoclastic work at Partners in Health and the WHO achieved impressive results. But his anthropological background may be most handy at the Bank, making him more attuned than professional economists to the context-dependent nature of development.

The incremental shift toward open competition for the Bank presidency is a positive development overall. But it carries some risk given historic U.S. ambivalence toward multilateral cooperation. As outgoing Bank president Robert Zoellick recently told a CFR audience, the United States needs to take responsibility for one part of the international system, in part to reassure the U.S. public and Congress it is in good hands. When a non-American takes the reins at the Bank, will the United States continue to support it politically and financially?

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