When World Bank President Jim Yong Kim resigned on January 7, 2019 and announced that we would step down on February 1, 2019, he surprised the institution’s staff and board members setting off a global conversation about who would be the next president of World Bank and the World Bank Group. With people such as Indra Nooyi rumoured to be in consideration, Qrius takes a closer look at the institution and how its president is selected.
World Bank: A neoliberal institution?
Founded in 1944, the International Bank for Reconstruction and Development — soon called the World Bank — has expanded to a closely associated group of five development institutions. It was founded at the Bretton Woods conference, the same conference wherein the International Monetary Fund (IMF) was also established.
The Bretton Woods conference was held in New Hampshire, United States, to regulate the international monetary and financial order in the wake of the Second World War.
Despite participation of 44 allied nations, USA and UK dominated the conversation and since then, it has been a tradition that the president of the World Bank would be an American, and the managing director of IMF would a European. The lack of representation from the developing, and non-American and non-Western European nations has emerged as a bone of contention in recent years.
President’s selection
Since United States is the largest shareholder in the bank, it has been a tradition that the nominee that US puts up would be approved by the Bank’s board of executive directors. Once the nominee is confirmed by the board, s/he serves for a five-year, renewable term.
However, after calls for a more open, merit-based, and transparent selection process, with nominations open from all board members, the board established a new process in 2011, which governed Kim’s selection. In the lead up to Kim’s 2012 appointment, he became the first US nominee to face official challengers, one each from Nigeria and Colombia.
According to this new process, executive directors can nominate candidates for the post — candidates must be citizens of one of the bank’s member countries and cannot be a bank governor, executive director or alternate. Executive directors are expected to clearly communicate and define the nomination period.
The process begins when the board decides to announce that a nomination process is open, indicating the timeline for submitting nominations. According to a press release by the World Bank, nominations will be accepted from 9 am EST February 7 to 9 pm EST March 14. The nominations can be made by executive directors, or by governors through their executive director. Candidates must be nationals of the Bank’s member countries.
After the nomination period, the executive directors will create a shortlist of up to three candidates and publish their names. These candidates will then be interviewed, and the new president will be selected before the Spring Meetings of 2019.
Jim Yong Kim’s resignation
Kim’s resignation surprised the institution because he still had three years left in his second term. He had initially been elected by the board in 2012, and then re-elected in 2017. Kim is leaving to join an investment firm, Global Infrastructure Partners, with a “focus on increasing infrastructure investments in developing countries”.
Kim had been appointed by the Obama administration in 2012, at the recommendation of Hillary Clinton, and was reappointed by President Obama in 2016.
Well, what about the interim period?
Since Kim will step down on February 1, and the nomination process will begin on February 7, World Bank has said that CEO of World Bank, Kristalina Georgieva, will be the interim president.
The last time a World Bank president left in the middle of his term, there was no interim president. However, Paul Wolfowitz, the 10th president, resigned two years into his term over ethics violations. Despite a controversial stay at the top, Kim’s resignation, on the other hand, is reportedly absolutely voluntary.
Who’s next?
While there has been debate about whether the next person will be American or not, Daniel Runde, a senior vice president and director of the Project on Prosperity and Development at the Centre for Strategic and International Studies, saidthat there was no reason to have a discussion about other candidates if the United States puts forward a strong, qualified candidate.
If US loses the World Bank presidency, it will presumably not have enough incentive to continue supporting the institution. Furthermore, with President Trump’s repeated attacks on multilateral institutions and treaties, it is not outside the realm of possibility that US could withdraw its support for World Bank should the next president not be American.
So, how is Ivanka Trump involved?
Contradicting initial reports that Ivanka Trump was being considered as the American nominee, a White House official clarifiedon January 14 that she would help manage the Trump administration’s selection of an American candidate for the position of World Bank Group president.
As the selection process is not public, the official spoke to Reuters on the condition of anonymity, and said that Treasury Secretary Steven Mnuchin and White House Chief of Staff Mick Mulvaney “have asked Ivanka Trump to help manage the U.S. nomination process as she’s worked closely with the World Bank’s leadership for the past two years”.
Ivanka Trump has worked with the World Bank and departing President Jim Yong Kim over the past two years, jointly launching a $ 1.6 billion women’s entrepreneurship fund with 13 other donor countries to raise capital for female entrepreneurs in developing countries.
Okay. But what about Indra Nooyi? Will we finally see the first woman World Bank president?
According to people familiar with the process, the former CEO of PepsiCo, is being considered by the White House for the position of World Bank president.
Despite her ambiguity viz. the Trump administration, Nooyi has been courted as an administration ally by Ivanka Trump. When Nooyi stepped down as the Pepsi CEO after 12 years in August 2018, Ivanka Trump called her a “mentor + inspiration”.
However, it is necessary to keep in mind the fact that in this initial selection process, a lot of names will be volleyed back and forth, many of whom will either withdraw or fall off the radar. Given the lack of loyalists for both President Trump and his daughter to choose from for the position, this selection process will be unprecedented.
Aditi Agrawal is a senior sub editor at Qrius
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