International Democracy Watch

 

Controversy over the selection of Robert Zoellick’s successor as World Bank President reflects both an undemocratic appointment process and increasing demands from BRICS and other countries for a greater share of power in global governance. China has called for the selection process to be competitive and merit-based[1] while the senior Bank management suggests the U.S. is likely to “insist on getting its way”[2]. Nancy Birdsall identifies two compelling reasons for why this matters: the president is powerful and the “world has big problems the Bank can help to address”.[3] Presidents can and have shaped the Bank’s agenda to achieve its mandates of reconstruction and development, directly affecting its relationships with less developed and emerging countries.

 

In practice, the selection process deviates from the formal procedure delineated in the Bank’s Articles of Agreement. Officially, Executive Directors of the Bank have the power to select, approve, and remove a president. A Bretton Woods-era gentleman’s agreement has resulting in deferring the selection of the World Bank president to the U.S., whose own president in turn selects an American for the position, while the IMF Managing Director is traditionally selected from a European state. This bargain reflected the realities of the immediate post-WWII order, yet remains in place today. And while the board has the official authority to appoint, approve, and remove the president, in their history, they have always approved the U.S. selection. This informal process may finally be in jeopardy.

The debacle with the tenure and eventual resignation of Paul Wolfowitz (2005-2007) was a potential triggering event for genuine examination of the informal selection process of the Bank’s president[4], however initial confidence in his successor, Robert Zoellick (2007- present), quieted critics and dashed hopes for reform[5] And the European selection of Christine Lagarde to replace Strauss-Kahn as Managing Director of the IMF in 2011 raised similar protests by developing countries, in particular in light of extensive domestic economic problems in wealthy states leading up to and during the ongoing financial and economic crisis.

The U.S. is given an opportunity in the coming weeks to engage in strategic restraint[6] in order to preserve what credibility it currently has with the rest of the world and potentially strengthen it in the future. Opening up the selection process to directors for input to follow the formal procedure or selecting a non-American for the post would both appease BRICS demands as well as signal its own willingness to commit to improving transparency and participation in the Bank. In fact, there is no shortage of suggestions for non-American contenders, including Ngozi Okonjo-Iweala from Nigeria and Nandan Nilekani from India[7], in addition to Lula da Silva from Brazil, Fernando Henrique Cardoso from Brazil, Trevor Maneul of South Africa, among others[8]. Though American Jeffrey Sachs is publicly campaigning to be the U.S. choice[9], providing folly for former Bank economist William Easterly.[10]

If the U.S. makes the process more competitive, adhering more closely to formal Bank guidelines, it could improve the legitimacy of the Bank as well as global governance more generally, should any changes in the process that occur be meaningful and extended to other issue areas and/or organizations. It also allows the U.S. to engage emerging countries in shaping a key Bank position, the presidency, while retaining greater relative power through weighted voting in the board. There is some risk, likely the argument of those in favor of retaining U.S. power to appoint Zoellick’s successor, that doing so would amount to a formal signal of U.S. decline, potentially threatening its ability to effectively lead the world system. Though if the U.S. does not open up the selection process, the potential backlash from BRICS and other countries is likely to pose a greater risk for both America’s hegemony and the stability of the current world system.

 

Tina Zappile (Auburn University). 19 March 2012.