World Bank: US, Europe move against Okonjo-Iweala

Today, the World Bank is expected to announce its next president and the race for the post has been narrowed down to two individuals, the Nigerian Finance Minister, Dr. Ngozi Iweala, and the United States’ -backed candidate, Dr. Jim Yong Kim.

However, there are strong indications that the US and Europe have perfected plans to ensure that Kim emerges as the President of the Bretton Woods institution.

It was learnt that though a meeting was convened by the bank on Friday to discuss the issue of the competence of both candidates, the US and its allies ensured that it (issue) was eventually not touched at the meeting.

“We feel that the strategy is a political tool to ensure that the American candidate becomes the next World Bank President since they (US and Europe) have great influence,” a source close to Okonjo-Iweala told our correspondent on Sunday.

The source, who asked not to be named, said, “You are aware that Ocampo decided to withdraw his candidacy to lend support to Okonjo-Iweala but as events are turning out now, we strongly believe that the US candidate is going to win handsomely due to the political dimension to the whole scenario.

“For instance, the European Union is supporting the US candidate because they have been promised some money through the IMF (International Monetary Fund) to bring them out of recession.”

Ocampo, who was the third candidate, and former Colombian finance head, withdrew on Friday and declared his support for the Okonjo-Iweala’s candidacy.

Throughout the bank’s more-than-60-year history, it has been led by an American, which is part of a tacit agreement between the United States and its Western European allies. Europe, in turn, has maintained control of the top spot at the bank’s sister organisation, and another Brethon Woods institution, the IMF.

In 2010, the US and other World Bank shareholder-countries pledged support for an “open, merit-based and transparent” selection process for the next president. As part of this process, the bank’s board held interviews with Kim, Ocampo and Okonjo-Iweala last week.

But despite such declarations, most analysts believe there is little doubt that Kim will secure the presidency. That’s because of the bank’s voting structure, which has long allowed the US and Europe to impose their will in matters of leadership.

According to a report by the Cable News Network, the US and Europe together have roughly 50 per cent of voting shares, which are based on money paid into the bank. Along with Japan, which has already pledged support for Kim, they form an unbeatable voting bloc.

The emergence of strong candidates from the developing world — and Okonjo-Iweala in particular – has left observers questioning whether the current arrangement remains tenable.

Earlier this month, a group of 39 former senior officials at the World Bank issued an open letter endorsing Okonjo-Iweala and calling on the bank’s board to make good on its promises of reform.

“All of us agree that the World Bank and all international financial institutions would enjoy considerably greater legitimacy and stronger management if their leadership were selected in an open, transparent, merit-based, and competitive manner rather than simply appointed in line with understandings that no longer reflect the world as it is today,” the letter reads.

In addition to her experience in the Nigerian government, Okonjo-Iweala logged more than two decades at the World Bank, eventually rising to the second position.

Some have argued that Okonjo-Iweala, as an economist with degrees from Harvard and Massachusettes Institute of Technology, is better fit for the bank job than Kim. Kim is a doctor who built his reputation developing public health schemes for poor countries.

“Dr. Kim is an impressive guy, but the main concern I have about him is he’s a specialist — he’s very narrow,” Uri Dardush, a former World Bank economist who has endorsed Okonjo-Iweala, said.

He added that she had “a considerable edge” in qualifications over Ocampo and Kim.

“Health issues are very important, but they’re just one of maybe 20 sectors that the bank is engaged in, and the heart of what the bank is engaged in is economic growth,” Dardush said.

The World Bank was created along with the IMF in 1944 to help the Allied powers shape the post-World War II economic order. It now includes 187 shareholder states, offering loans and grants as well as technical expertise for projects around the world.

Its presidency became available when Robert Zoellick, a former deputy secretary of state who also served as the international vice- chairman at Goldman Sachs (GS, Fortune 500), announced that he would depart when his term ends in June.

Some in Washington have argued that an American World Bank head is important to ensure continued Congressional funding for the institution. Beyond the Beltway, Kim has also garnered support from leaders like Rwandan President Paul Kagame and American development economist Jeffrey Sachs.