The U.S. Doesn’t Deserve the World Bank Presidency

Limiting the talent pool to Americans is unjustifiable—and Trump’s nomination of David Malpass only makes this clearer.

David Malpass
Jim Young / Reuters

About the author: Annie Lowrey is a staff writer at The Atlantic, where she covers economic policy.

During his time in office, President Donald Trump has named a climate-change skeptic and an energy lobbyist as the heads of the Environmental Protection Agency, a foreclosure profiteer to head Treasury, a low-wage employer to run the Labor Department, and a critic of public schools to manage the Department of Education. His energy secretary once argued that the department should be abolished, and his onetime leader of the Consumer Financial Protection Bureau has argued that the bureau should not exist.

It came as little surprise, then, that last week Trump put forward another potential fox in the henhouse, naming the Treasury official David Malpass to lead the World Bank. Malpass, a former Wall Street economist, once criticized institutions such as the bank as “intrusive” and argued that multilateralism “has gone substantially too far—to the point where it is hurting U.S. and global growth.” As of yet, there is little appetite from foreign countries or the bank’s board to fight the nomination. But it is a missed opportunity for the institution and its client countries. And this whole sorry episode makes it even clearer that the United States should lose, or relinquish, its leadership of the bank.

A gentleman’s agreement dating to just after World War II holds that the United States chooses the head of the World Bank, and chooses an American. (Europe chooses the head of its sister institution, the International Monetary Fund, and chooses a European.) This arrangement made good sense at first: Back in the Cold War era, the United States wanted to help spur capitalist development in poor countries and provided the bulk of the bank’s financing to make that happen.

But the gentleman’s agreement is no longer justifiable. Washington is a major funder of the bank, but not a dominant funder. And it damages the institution to limit the talent pool to Americans. Leaders from a number of lower- and middle-income countries have argued forcefully that the search process should be truly meritocratic by being truly open, that they deserve a bigger say at the institution, and that the current management structure is outdated and imperialistic.

Democrats and Republicans in Washington, however, are united in their desire to keep things as they are. For them, heading the institution is an important lever of global power and, as a practical matter, ensures that American dollars keep flowing to the bank. “The Americans need to keep the World Bank presidency. It’s powerful, it’s influential, and it’s meaningful,” said Daniel Runde of the Center for Strategic and International Studies. “It works within a larger global system of distributed power,” he added, pointing to European control of the IMF and Japanese control of the Asian Development Bank.

Perhaps, but that is no argument for Malpass. Contrast his résumé with that of, say, Ngozi Okonjo-Iweala, former finance minister of Nigeria and longtime World Bank executive, who lobbied for the job when it came up during the Obama administration. Unlike her—or any number of other reasonable candidates—Malpass is not a development expert, nor has he ever managed an international financial institution, nor does he have deep relationships with the governments of lower-income countries where the bank does much of its work. His main achievement is that he was the chief economist at Bear Stearns, the investment bank that failed in 2008 under the weight of its subprime lending.

Nor does Malpass represent a strong or reassuring policy vision for the world’s most important anti-poverty institution. “I care deeply about the mission and about breaking out of poverty and achieving growth, and I am sure the World Bank can succeed,” Malpass assured reporters last week, as reported by The Wall Street Journal. But in congressional testimony, he said institutions such as the bank are “not very efficient” and are “often corrupt in their lending practices, and they don’t get the benefit to the actual people in the countries.” He has argued that the institution should do less and be less, and he looks likely to nudge it to do less and be less.

As a result, development experts and global economists have broadly criticized the pick. “I frankly view him as a bad candidate,” said Scott Morris of the Center on Global Development, the influential Washington think tank. “He has a track record, both in views that he’s expressed and policy as [Treasury] undersecretary, which is pretty clearly hostile to ambition in the World Bank.”

Yet bank board members and foreign officials have mostly remained silent—and the Malpass nomination seems certain to go through. For that, thank realpolitik. The Europeans, the Japanese, the Chinese: All are engaged in trade negotiations with the United States and want to avoid provoking a backlash from Trump by wresting control of the bank away from the White House. “The folks sitting in finance ministries in Europe—they’re desperate not to have to oppose a pick here because all they really care about is the IMF,” said Morris. “They look at this guy and say, ‘Well, you know, I guess we’re comfortable with it.’”

Within the bank, there’s considerable anger not at the Trump administration, but at Jim Yong Kim, the Obama appointee who suddenly and unexpectedly stepped down this winter, leaving the vacancy for Trump to fill. Indeed, there was far more pressure on the Obama administration to consider foreign candidates or allow a non-American to run the bank, because there were higher policy expectations of that administration, and a sense that the Obama administration would not retaliate against other countries for pressing for the bank to change.

It should change. The United States is no longer the major donor to the bank, nor is the bank a more important priority for the United States than it is for the countries it offers loans and advice. American control over the bank is an unjustifiable tradition that harms the institution. Self-determination and a truly meritocratic process for choosing its leadership would be good for the bank, and for the world. It is not a case the Trump administration seems to have any interest in entertaining. But it is one the world should keep pressing, when Malpass’s years are up.