Development

Will Donald Trump get to pick the next president of the World Bank? Maybe not.

Jan 10 '19
Jim Yong Kim, president of the World Bank, speaks May 1 at the Milken Institute Global Conference in Beverly Hills, Calif. (Mike Blake/Reuters)

On Monday, Jim Yong Kim shocked both World Bank staff and the international development community when he announced he would be stepping down as president of the institution at the end of the month, some three years before the scheduled end of his term. His resignation will kick off a scramble to select a new leader for the bank. Shifting international politics will make the process more complicated than it has been in the past.

U.S. influence at the World Bank

Historically, the process has been straightforward, if not without controversy: The U.S. government has always chosen the president of the World Bank. But there’s no official reason this should be the case. Indeed, according to the formal rules of the World Bank’s Articles of Agreement, the president is selected by a vote of the institution’s executive directors, the 25-person board that oversees the bank. These directors represent the interests of national governments and, in principle, could choose to select a president who has been nominated by any government.

In practice, however, informal rules and influence play an important role in shaping the activities of the World Bank and other international organizations. One of the strongest informal rules at the bank is that the executive directors will endorse whatever candidate the U.S. government nominates. Throughout its 75-year history, every World Bank president has been an American.

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How has the U.S. maintained its grip on the World Bank presidency, despite frequent calls for an open and meritocratic process?

Three factors allowed the United States to preserve this prerogative.

First, and perhaps most obviously, the United States has had the power and leverage to coerce other countries to go along with its choice. As the world’s hegemon and the bank’s largest individual shareholder, the United States is used to getting its way, and any country that opposed the U.S. pick could face an international political price for doing so.

Second, and just as important, the United States has had the soft power to convince other countries that American leadership was in the global interest. While such claims were frequently contested, the U.S. government could at least make a quasi-credible claim that, though it was a hegemon, dominating world events, it used that power benignly, so there was no need for other countries to band together to counter U.S. influence.

Third, the United States has been able to rely on European support during World Bank president selection processes due to a long-standing tacit bargain between the United States and the European powers: The Europeans will back American picks to run the World Bank, while the United States will back European picks to run its sister organization, the International Monetary Fund. With this transatlantic bargain in place, neither the United States nor the European powers have sought to shake up the leader selection processes of these two institutions.

Donald Trump and the erosion of U.S. global influence

Today, however, all three sources of support are eroding. The United States’ position as the sole global hegemon has been declining for years, and emerging markets have been demanding a greater voice in international institutions to reflect their growing power in the world economy. Indeed, during the last open presidential search — held in 2012 — there were already signs of waning U.S. influence. Two alternative (and highly qualified) candidates ran against Kim, the U.S. nominee: Ngozi Okonjo-Iweala of Nigeria and José Antonio Ocampo of Colombia. (One or both may throw their hats in again this time.) Kim won, but it was a more competitive process than ever before.

Moreover, the Donald Trump presidency has probably accelerated the erosion of American influence at the World Bank, by undermining U.S. soft power and the tacit bargain with Europe. Trump’s aggressive “America First” approach to international diplomacy has alienated other countries. Foreign governments no longer trust the United States to adopt positions that are in the global interest. Whoever the Trump administration nominates for the position is likely to face more skepticism than prior U.S. nominees.

Meanwhile, given Trump’s predilection for breaking existing norms in international politics, Europeans have reason to worry whether he would uphold the bank-IMF leadership bargain the next time an IMF leader is selected. (The current head, Christine Lagarde, was appointed to a five-year term in 2016, meaning such a debate could potentially take place during Trump’s second term.) It is not difficult to imagine that, told that the United States should support the European candidate for the IMF because “that’s the way things are done,” Trump might nevertheless go another direction. If the Europeans think this outcome is likely, they might want to oppose Trump’s choice for the World Bank now.

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Toward an open and meritocratic process?

International organizations are more effective when they have effective leadership. For this reason, many academics and others have long called for the World Bank to move to a more open, transparent and merit-based selection process. (Kim’s surprise announcement has already spawned another round of such commentary.)

But while we are likely to see a more competitive and unpredictable leadership selection process this time around, that doesn’t necessarily mean it will also be more open and meritocratic. Whatever happens, the selection process will be highly political. The Trump administration will need to decide whether it wants to nominate an “America First”-type candidate or a more moderate candidate who would be palatable to other governments.

Emerging markets, meanwhile, will probably need to coalesce around one clear non-American challenger candidate — a complex task in itself — and then convince the Europeans to support him or her. The Europeans, for their part, will probably be trying to weigh the downside of a Trump appointee running the bank against the risk of infuriating the Americans so much that they decrease their support for the institution or even withdraw altogether. All of this will be against the backdrop of a sea change in international development finance, driven by China’s Belt and Road Initiative and the Asian Infrastructure Investment Bank.

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At each turn, these decisions will be based on intricate political calculations, rather than an open, dispassionate analysis of who is the best man or woman for the job.

Geoffrey Gertz (@geoffreygertz) is a fellow in the Global Economy and Development program at the Brookings Institution. From 2012 to 2013, he worked as a speechwriter for Jim Yong Kim at the World Bank.