June 15 - Issue 18 - World Bank to Vote on One Candidate for Presidency
New York, June 15, 2007- Today is the World Bank's official deadline for accepting presidency nominations. Currently, United States nominee Robert Zoellick is the only candidate.
The Board of Directors of the Bank has the power to approve or disapprove the nominee, a decision it will make at an election on June 30. Observers and Bank experts say that Zoellick is all but certain to be approved, given a long-standing tradition of approving the US nominee. Zoellick is a former US Trade Representative who currently works with the global investment bank Goldman Sachs. (Click here for more biographical information).
Background: Governance of the Bank
The World Bank is made up of a group of development institutions that provide loans and grants to developing countries, with the stated goal of alleviating poverty by creating the conditions for sustained development. As a group, the Bank is currently the largest source of development finance in the world. In 2004 it committed over US $25 billion to projects relating to health, education, and communications, among others.
The World Bank is led by a Board of Governors, comprised of a representative for each of the 185 shareholder countries of the Bank. The Board of Governors serves as the policy-making body for the Bank. Because it meets only annually, the Board of Governors elects a 24-person Board of Directors - also called the Executive Directors - which meets bi-weekly.
The President of the World Bank is responsible for the overall management of the Bank. The President also serves as the Chair of the Bank's Board of Directors. The president holds a five-year, renewable term.
Selection of the President
There is a long-standing, informal agreement dating from the establishment of the World Bank in 1944 that its president will be a United States national, while the managing director of the International Monetary Fund is a European national. (The Wall Street-related origin of this agreement is explained here.)
This prerogative was initially granted not only because the United States was the Bank's largest shareholder but also because it was the key guarantor and principal capital market for Bank bonds," Catherine Gwin notes. US control, it was reasoned, would instill confidence on Wall Street to invest in Bank securities - a principal source of Bank funds
For the selection of the President, the Board of Directors must approve the nominee by a supermajority of 85%. The voting power of each member is based on its share of contributions to the Bank, which is expressed as a percentage of the total of votes held by all of the shareholders. The US is the largest shareholder in the Bank with 16.41% of the votes. Because agreement on the presidential candidate requires an 85% majority, the voting weight of the US gives it the ability to block a decision.
Calls to End U.S. Control over Presidency
Following corruption charges against Wolfowitz, the World Bank announced on May 17 that he would resign, effective June 30.
In this context, the U.S. monopoly on choosing the president has come under increased scrutiny. It is criticized for prioritizing the candidate's nationality - and relationship with the U.S. administration - over his/her qualifications and competence for the position.
The Bank's Executive Directors - some of whom represent countries which oppose the current selection procedure - recently announced the Bank's written policy that any country can propose a candidate. Even after the U.S. had nominated Zoellick the Board stated that it would continue to accept nominations until June 15, 2007.
The Executives also issued a profile of fundamental qualities for the nominees meant to help guide the election process. On May 29, the Board said that essential qualifications for the next World Bank President would include:
- A proven track record of leadership;
- Experience managing large, international organizations, a familiarity with the public sector and a willingness to tackle governance reform
- A firm commitment to development;
- A commitment to and appreciation for multilateral cooperation, and
- Political objectivity and independence.
On Monday May 28, the Australian Prime Minister John Howard's office called for an "open, merit-based process" in the selection of the Bank's president. Brazil's Finance Minister made a similar demand to reform the World Banks selection process: "It is necessary that that election process can reflect the new reality of the world." European governments also made an attempt to push the World Bank towards reform by offering the Bank a large check, cashable only if the Bank was willing to change its policies immediately. In the U.S., the Democratic chairs of four legislative committees sent a letter to President Bush asking him to consider non-American candidates in order to send an "unambiguous signal of the commitment of the United States to the Bank's core anti-poverty mission" and to multilateral agencies.
In the context of such pressure, the U.S. administration promised to consult more widely as it selected a presidential nominee and hinted that it may accept a non-American candidate. It is unclear to what extent any wider consultations took place, but former practices of non-transparency (neither revealing criteria for the decision nor publicizing a shortlist with candidate qualifications) were upheld.
Today Norway expressed its view that in principle, "this should be an open competition where everyone should be able to run - Chinese, Argentinian, whatever, Norwegian for that matter," and "We will work with other governments to make such a procedure for future presidential appointments of the World Bank." He added that European control of the IMF appointment should end at the same time.
Civil Society Initiatives
The New Rules for Global Finance Coalition, the Brookings Institution, the Center for Global Development and the Peterson Institute for International Economics have collected 660 signatures (as of June 14) on a letter urging the World Bank to change the selection process for its presidential candidates to be more transparent, to select the leader without regard to national origin, and to incorporate requirements of competency. The signers of the letter believe that without reforming the selection procedures, the leadership crisis at the World Bank is unlikely to be fully resolved. Only a merit-based selection process can provide enough legitimacy and support for any World Bank president to be effective.
Civil society groups including the Bank Information Center have called for the implementation of reforms devised by a 2001 joint committee of the World Bank and International Monetary Fund. The Committee called for new procedures for a more open, competitive leadership selection process based on merit rather than national origin. They included:
- A transparent and accountable leadership selection process;
- A more equitable representation of member states on the Executive Board;
- Accountability of leadership and Executive Board; and
- More meaningful stakeholder participation.
The Brussels-based campaign Worldbankpresident.org has written that the "key questions" at this point are:
- Will another government dare to nominate a candidate for consideration by the Bank's board?
- What will the candidate or candidates say on the record about their plans for the Bank, on policies, on projects, and on cleaning up the Bank's internal governance?
- How quickly will Bank staff and board settle down under the new boss?
- Will the ‘gentleman's agreement' which has governed World Bank leadership selection for over 60 years be declared dead, following the very ungentlemanly public squabbles of recent weeks?
This campaign also has noted that the all ten presidents of the Bank have been male.
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