The political calculus of the World Bank contest
Mohamed El-Erian comes out in favor of Ngozi Okonjo-Iweala today, while at the same time explaining the fraught international political calculus involved in working out who is going to vote for whom.
Here’s how it works: Europe is looking to the IMF to beef up the amount of money that it’s going to make available to the continent. In order for that to happen, the US is going to have to support the increase in IMF funding. And so the outlines of a quid pro quo begin to emerge: the US votes for greater IMF funding for Europe, and in return Europe votes to elect the US candidate as president of the World Bank.
El-Erian is absolutely right about this:
When judged by the Bank’s own criteria for the job, the highly respected Okonjo-Iweala dominates the other two candidates. On that basis, she has already gained the endorsement of influential observers and opinion-forming media outlets. Moreover, her appointment would speak to other important initiatives with which Obama has aligned himself, including efforts to fight corruption, strengthen meritocracy, and support gender equality.
I suspect that, in their hearts, US officials know that Kim, while an inspired nominee, is not the best candidate. Yet their historical attachment to a harmful nationality-based entitlement stops them from opting for the best.
All of which mitigates in favor of Kim getting the job. But El-Erian hasn’t given up hope entirely: if the world’s emerging countries unite behind Ngozi, he says, with Jose Antonio Ocampo being persuaded to step aside, then it will be much harder for the developed world to force Kim onto the Bank. What’s more, they can themselves threaten to oppose the IMF funding increase unless they have a real voice at the table.
Such a move would involve going up, quite explicitly, against the expressed wishes of the US — a move that many countries are understandably reluctant to make. Here, for instance, is Bob Hormats, the US Undersecretary of State, telling Chrystia Freeland that although Ngozi would be “terrific” in the job, Kim is also “very good”, and that “we think he will get support from a lot of countries”. He says that emerging economies should have “a big voice” in the World Bank, just not necessarily when it comes to filling its presidency.
Notably, even Hormats, representing the US, falls short of asserting that Kim is a superior candidate to Ngozi.
And it’s worth noting that, at least so far, support for Kim from anybody who isn’t a serving member of the US government is conspicuous by its absence.*
When Christine Lagarde was elected the head of the IMF, there was a credible case to be made that she was the best candidate for the job. And of course all previous “elections” to the World Bank presidency have been uncontested. So if Kim gets the World Bank job, it will be the first time that it has gone to someone who was clearly not the best candidate. Is that really what Obama wants?
*Update: It’s not true that Kim has failed to get endorsements from outside the US government. Treasury has helpfully compiled a list of people who say that Kim is great for the job, which includes the presidents of Rwanda and South Korea; Amartya Sen; and the Washington Post’s editorial board. It also includes Bill Clinton and Paul Farmer, but their conflicts are a bit too obvious. On the other hand, the list does not include link to the endorsements when the endorsements are online, which makes it hard to double-check them. And the FT is included in the list, even though it has actually endorsed Ngozi. So it’s not at all obvious how many of these people really think that Kim is a better choice than Ngozi.