The World Bank needs deep reforms to reflect a changing world order

Source: https://theconversation.com/the-world-bank-needs-deep-reforms-to-reflect-a-changing-world-order-111366

The sudden resignation of World Bank President Jim Yong Kim has rekindled debate about leadership succession and the mission of the international financial institution.

US president Donald Trump has nominated his preferred candidate, David Malpass, who is known for his sharp criticisms of the World Bank during his tenure as under-Secretary for International Affairs at the Treasury Department. Malpass is also known for his hostile attitude towards China and for being an advocate of protectionist policies.

By nominating Malpass, Trump continues the tradition of having an American lead the multilateral body. This is an outmoded tradition that does not take into account significant changes in the global distribution of power.

In particular, there’s been the notable rise of emerging countries such as China. Given the substantial changes in the profiles of major economic actors, there is a need to rethink the purpose and focus of the World Bank and other multilateral institutions.

The World Bank has an important role to play in the developing world. It could do much more if the US relaxed its grip on the institution. The leadership succession debate should not be merely fixated on personalities. Instead, it should be used to create space for reflection on the purpose of the multilateral body, the substantive role it should play in the future, the need to strengthen inclusive multilateralism, and the actions needed to bolster the position of emerging economies and developing countries.

Deep reforms of the World Bank are necessary as part of rethinking the current world order, and giving rising powers and developing countries a meaningful voice in this institution.

The history
The World Bank was established in 1944. It was an initiative of the US, supported by other Western powers. It was created to lead post-World War II reconstruction and development in Europe, a role that it later played in developing countries.

Historically, the World Bank has been led by an American, while the International Monetary Fund has been headed by a European. This is the function of a “gentlemen’s agreement” forged by Western powers in the post-war period. Read more here