Settling the dust on the World Bank Presidential selection… for now.

This week we have a guest blog from the author David Shaman. David wrote “The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency“, an insider’s account of how the world’s largest international financial institution makes decisions. David was Communications Manager of the Bank’s Development Economics Research Group on the Environment from 1993 to 2000, where he co-authored “Greening Industry: New Roles for Communities, Markets, and Governments”, a major Bank policy report on industrial pollution in the developing world. He also developed and managed the New Ideas in Pollution Regulation (NIPR) website, which was ranked as the Bank’s best website in 2000. He has also served as a legislative aide to two members of Congress and as a press secretary to a member of the New York City Council.

Take a look at some more of David’s guest blogs.

On July 1^st, 2012, Jim Yong Kim will become the 12^th president in the history of the World Bank. For this health policy professional without a traditional background on finance, economics or managing large bureaucracies, it is an impressive personal achievement. Nevertheless, accompanying Kim’s appointment may be a sense of cynicism among institutional observers regarding the selection as a fait accompli and yet another example of the United States using its weighty leverage upon the rest of the Bank’s membership to install “their man.”

All this may be true, but I would also argue new and important shifts occurred during this selection process that signal changes in how future selections will be conducted. Consider the obvious. All eleven of Kim’s predecessors were white males with backgrounds in finance or were politically connected to sitting U.S. administrations. Kim, a global health specialist, is Korean-American.  Kim’s selection as the U.S. nominee signals a recognition by the Obama Administration that it was no longer business as usual. Its nominee’s background had to reflect broader criteria than previous choices. Given the political realities faced by Obama that losing control over the selection would have given Republicans ammunition for the November election and that the next Bank president had to please a large swath of the institution’s membership and numerous external stakeholders, Kim was a canny choice.

However, it would be difficult to argue the United States’ appointment was made unilaterally. For the first time, other countries nominated candidates – Dr. Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance and a former managing director at the Bank, and Jose Antonio Ocampo, a former UN undersecretary and development official with an extensive resume – and this provided the Bank’s Board with qualified and viable alternatives. This was a horse race, albeit one with a heavy favorite.

Other important changes indicated Obama’s choice was not made in a vacuum. Soon after current president Robert Zoellick announced he would not seek another term, the Administration floated Lawrence Summers name as a trial balloon. Summers has impressive credentials but he is also highly controversial and a lightning rod for both conservatives and liberals. The crescendo of opposition was deafening. In a previous era, opposition would have been irrelevant (i.e, the nomination of Paul Wolfowitz), but not this time. Obama’s withdrawal of Summers as a candidate signaled that for this nomination at least, the court of public opinion counted. Other candidates were mentioned, notably Hillary Clinton, but it was Summers as they say that ‘set the Twitter world afire.’

Something else unusual unfolded.  Jeff Sachs of the Earth Institute set orthodoxy on its head by launching his own candidacy and by any measure appeared quite successful. Though not nominated by any country, Sachs nominated himself and gained public support from a number of developing countries and numerous global development practitioners. Sachs withdrew when Kim was announced.  However, what are we to make of this? In the world where new social media tools enhance the power of one to rise above many, we should not be surprised to see other individuals empowered by conviction or perception to move to shape events once defined only by governments or monolithic entities.

With this as prologue, let us turn briefly to what occupied our attention when rumors began that Zoellick would retire from the Bank: Namely that the selection process for the next president be open and merit-based. Prior to Kim’s nomination, criticism leveled at the Bank was that the process for selecting its president was neither open and transparent or merit-based. In 2009, the G-20 issued a statement that the leadership of international financial institutions be selected in an open, transparent, merit-based process.  In 2010, the Joint Ministerial Committee of the Board of Governors of the World Bank reiterated its support for such a process. So, did the process selecting Kim meet this standard?

According to the Bretton Woods Project, a UK-based NGO that monitors the Bank and IMF, in 2011 the Board approved a process that “is closed to any kind of external input and leaves many details to be decided by the board during each selection round.” In essence, the Board itself declared its process for selecting presidents would remain unpublicized. This alludes to another conflict of interest which is particular to the Bank: It is the president of the Bank who chairs the Board. In an open letter to the World Bank’s governors in February 2012, a coalition of international civil society organizations outlined three conditions that would ensure an “open, merit-based, transparent process.” First, since the Bank only operates in developing countries, a nominee must receive support from the majority of middle-income and low-income countries as well as the majority of voting shares of member countries. This double-majority would ensure that the nominee would be seen as a legitimate choice among the membership as opposed to an appointment from a pivotal member country. Second, the process should be open to anyone, interviews should be held in public and with open voting procedures. And, finally, a clear position description and required qualifications should be spelled out and candidates should meet those requirements.

The final criteria set out by the coalition may be open to interpretation depending upon one’s view of the candidates. However, the first two criteria provide little room for interpretation and if one analyzed the process that selected Kim objectively it would lead one to logically conclude it failed to meet the first two criteria as defined by the coalition. The current process of candidate securing the nomination remains akin to how cardinals inside the Vatican select Popes – vague and opaque like white smoke. Following Kim’s selection, both Okonjo-Iweala, the first woman to contest for the position, and Ocampo suggested internal politics rather than merit was the deciding criteria. Translation: The U.S. and Europe, majority stakeholders of the Bank, and IMF, continued to enforce the informal quid pro quo of appointing the heads of those institutions.

Moreover, when candidates presented their credentials to the Board, it was not open to the public.  In fact, the Obama Administration’s strategy for securing Kim’s nomination was to keep his views away from the public. Kim launched a global “listening tour.” Translation: Kim would make no public statements and conduct his candidacy essentially behind closed doors. How can we know what a candidate’s vision for the institution and its role to promote sustainable development and poverty reduction in the world’s poorest regions is if those views were not made public prior to the selection? Two candidates understood this:  Okonjo-Iweala and Ocampo presented themselves and took questions in open forums hosted by the Center for Global Development (CGD), a Washington-based think tank on international development, prior to the Board’s vote.  Okonjo-Iweala even suggested a televised debate of all three candidates. In the aftermath of the Bank’s process, the European Bank for Reconstruction and Development also selected a new president. Owen Barder, a senior fellow at CGD, interviewed four of the five candidates seeking the presidency of the European Bank for Reconstruction and Development. As Barder noted,

It is much harder for shareholders to appoint a manifestly unsuitable candidate if they have all been subjected to public scrutiny.

Keeping the doors closed is also an issue for the Bank’s Board. The public does not know how their governments voted. This suggests the process itself remains far removed from the standard defined by the coalition. The work conducted by CGD is an excellent initiative, but it is not a substitute for having the Board’s process open to the public. If we harken back just a few years, the view of the Bank as a monolithic empire making critical economic decisions behind closed doors was central to its image for millions of observers. To mitigate this image, the Bank has worked actively in the past few years to open its documents and datasets and promote itself as a more transparent organization. This is good progress but further steps are necessary. One step would be to open up the Board’s deliberations on selecting Bank presidents for public viewing. Whenever a U.S. president makes a nomination for a Cabinet position, the nominee goes before the U.S. Senate for confirmation. The confirmation process is open to anyone who wishes to attend and is broadcast live to millions via C-SPAN. There is good reason to do this, because to keep confirmations behind closed doors would diminish the legitimacy of these nominations and reduce the effectiveness of a sitting administration. Any nominee to the post of World Bank president or International Monetary Fund managing director will likely have an enormous impact on the global economy.  Should not those nominees be as publicly scrutinized as any Cabinet selection?

Those who have read my previous writings will note that I have long advocated for the Bank to resurrect its defunct webcasting activities as a means for openly and transparently sharing development knowledge to its shareholders and stakeholders. Here, again, is another opportunity and an immensely important reason for the Bank to re-engage webcasting as a means of sharing critical information with global stakeholders. To enhance the legitimacy of the candidates, the ultimate selection, the nomination process and the institution itself, I would encourage webcasts of Board deliberations of future Bank presidents be available to the public via webcasts. Finally, some have argued that selections be made via secret ballots so as to eliminate countries enforcing backroom deals about supporting one candidate over another. The rationale is legitimate, but a weakness in the position is accountability for a selection will be absent if a nominee performs poorly. From my perspective, it would be better to follow the example set by the U.S. Senate by mandating votes cast by Board members be made public as well.