Devesh Kapur, Arvind Subramanian write: Global political leaders convening next week must open up selection of heads of these institutions to the best candidates, regardless of nationality.
China too is following this strategy: Its own nationals now head four of the 15 UN specialised agencies (it suffered a rare setback to head the World Intellectual Property Organisation last year). (Illustration: C R Sasikumar)
Something is rotten on 19th Street in Washington DC. And on both its sides, occupied by the Bretton Woods institutions, the World Bank (Bank) and International Monetary Fund (IMF), respectively. As evidence, consider the following roll-call of individuals and ask what is common to them: Paul Wolfowitz, Jim-Kim, David Malpass, Rodrigo Rato, Dominique-Strauss Kahn, Christine Lagarde, and Kristalina Georgieva.
The obvious one is that they are seven of the eight most recent heads of the Bank and IMF. The second commonality is that they have all become heads via a dual monopoly selection procedure: Only an American can head the Bank and only a European can head the IMF. That is the result of a long-standing arrangement among the western powers to share the spoils.
The third commonality is that the personal integrity of each of them has been called into question, the most recent being the revelations of malfeasance at the World Bank where data was apparently massaged to make at least two major countries — China and Saudi Arabia— look better than they would otherwise have been. Liberals and conservatives are converting this into a battle of political interests, cherry-picking the evidence, when in fact what is at stake is integrity, not ideology, as Justin Sandefur of the Center for Global Development has carefully documented recently. Indeed, both Democrat and Republican administrations in the US and their counterparts in Europe have been complicit in that roll-call.https://images.indianexpress.com/2020/08/1×1.png
To be clear and fair: Not all of the individuals on that list have necessarily been incompetent at their jobs (though some have); not all of them were formally indicted (some were); not all of them can be charged with misdemeanours while occupying their Bretton Woods office (some can); and not all of them committed egregious crimes (some did). Equally, though, none of them passes the George Orwell test for occupants of public office: “Oh, what a clean smell he/she left behind!” A less-than-fragrant odour trails them all.
Does the effectiveness and legitimacy of these individuals and indeed of the international institutions they head require personal qualities of probity? Perhaps, at least for some of them, we might just shrug, exitus acta probat — the outcome justifies the deed. But consider one simple example. These heads often go around the developing world, preaching the virtues of good governance, from arguing against the scourge of corruption to improving data integrity. There are even World Bank indices to rank countries on those metrics.
How credible can such policy messages be if their carriers are themselves compromised? It is not just the charge of hypocrisy, but also the effect on the morale and motivation of the staff of these institutions. Many of them chose to work here because of a commitment to public service. How must they feel if their boss is a sexual predator or complicit in data manipulation? The recent letter by more than 300 former World Bank staff, expressing their anguish at the recent revelations on the Doing Business index, captures this sentiment. They care.
Within countries, we expect reasonable standards of integrity from heads of important institutions, and democratic political accountability mechanisms exist to ensure that. International institutions operate in a grey zone of neither clearly being in or outside the realm of formal politics and hence have weaker mechanisms of accountability. It is then even more important to be right ex ante, in other words, to get right the selection of the heads of these institutions. But perhaps countries nominate such compromised individuals, not despite but because of these flaws. Compromised heads are potentially more malleable.
Consequently, the choice of leadership in the Bretton Woods Institutions is becoming a clearer marker of the West’s commitment to international organisations (IOs). The selection procedure for choosing heads of the Bank and the Fund has been a dismal failure. Not one or two rotten apples, but an entire basket of them.
Contrast this with the growing alarm and anxiety that characterises the rise of China and its attempts to place its own nationals in existing IOs as well as creating new ones. The backroom deals that characterise the process of selecting leaders to IOs has been long-standing. That is one reason why most continue to hobble along as countries place their nationals to head these institutions, both for prestige and to pursue their national interests.
And China too is following this strategy: Its own nationals now head four of the 15 UN specialised agencies (it suffered a rare setback to head the World Intellectual Property Organisation last year). The contest between the West (and especially the US) and China to shape the global order is becoming manifest.
China’s efforts, its success, and more broadly its influence in IOs should certainly raise deep concerns, most notably the suppression of the inquiry into the origins of the coronavirus. Equally, though, Western countries have been anything but an exemplar in their commitment to international organisations (the US neutering of the World Trade Organisation’s Appellate Body under both Trump and Biden administrations is another recent example).
Looking ahead, if the US and Europe do not hold themselves to the standards they exhort to the rest of the world, their credibility and legitimacy will continue to ebb, ceding ground and soft power to geopolitical rivals.
So, global political leaders convening next week for the annual meetings of the Bank and Fund must act with urgency and conviction to stem the rot. They must open the selection of the heads of these institutions to the best candidate, regardless of nationality. And to pave the way for that as well as to clear up the current mess, David Malpass and Kristalina Georgieva, the current heads of the Bretton Woods institutions, both with a lot to answer for in the Doing Business saga, must go, now.
This column first appeared in the print edition on October 9, 2021 under the title ‘The rot at Bretton Woods’. Kapur, professor at Johns Hopkins University, is co-author of a history of the World Bank; and Subramanian, Senior Fellow at Brown University, was former Chief Economic Adviser, Government of India.