IT HAS LONG been obvious that the boss of the World Bank should be chosen on merit, not by nationality. When President Harry Truman picked its first head in 1946, India was still a colony and the People’s Republic of China did not exist. America provided most of the institution’s capital and it was felt that its creditors on Wall Street needed the reassurance of an American at the helm. Today China is the second-biggest economy and America provides less than 17% of the bank’s capital. But America still picks the bank’s president as part of a deal with European governments who choose the head of the IMF.
True to this anachronistic tradition, President Donald Trump this week named David Malpass, a senior official at America’s Treasury, to fill the vacancy created by Jim Yong Kim’s early departure on February 1st. Uncomfortably, Mr Malpass has been a vocal critic of multilateral institutions such as the World Bank, IMF and World Trade Organisation, which he believes have tied America’s hands. Nonetheless, despite his views and his passport, it would be a mistake to oppose him.
Accepting him will not be easy for the bank’s staff or for its other shareholders (who in principle could veto the appointment). Mr Malpass does not hide his misgivings about the institution he aspires to lead. To him, it is part of a sprawl of international organisations, vulnerable to mission creep, which pamper their staff and put their own growth above the countries they serve. He believes the bank has also become too close to China, especially the country’s Belt and Road Initiative (BRI), which aims to build infrastructure and other links around the world (and in space). The bank, Mr Malpass fears, could be viewed as endorsing China’s geopolitical ambitions.
Nonetheless, the choice could be worse. Mr Malpass is one of the best-qualified members of Mr Trump’s government. He has served in three administrations and speaks four languages. He helped forge an unlikely agreement passed in April last year to increase the bank’s lending capacity. The reforms he has been urging on the bank during his time at America’s Treasury are mostly unobjectionable and reassuringly unoriginal (more transparency, better measurement of results). America’s allies can be relieved that Mr Trump’s administration cares enough about the World Bank to pick one of its few remaining grown-ups to lead it.
The bank’s shareholders must also know that, if they were to reject Mr Malpass, Mr Trump could turn violently against the institution. That would scupper the chances of America’s Congress ratifying the agreed capital increase. It would also jeopardise future American contributions to the World Bank’s fund for helping the neediest countries.
What of Mr Malpass’s hostility to China? He is right to fret about elements of its BRI, which is a mix of chequebook diplomacy, white elephantitis, export promotion and mutually beneficial investment. But that is no reason for the bank to steer clear of it altogether. In so far as China’s global initiatives are furthering the bank’s goal of eradicating poverty, the bank should offer whatever guidance and assistance it can. The bank’s shareholders will have to impress on Mr Malpass that the institution cannot abet American attempts to contain China’s economic rise.
Ultimately, the World Bank’s own bureaucratic habits will probably entangle Mr Malpass. Truman’s pick to lead the World Bank resigned after just six months, frustrated by rival voices in the organisation. “I could stay and fight these bastards…but I’m too old for that,” he complained. Institutional inertia remains a powerful force in a sprawling international body. Mr Malpass is right about that. Inertia, after all, is the chief reason why America’s president still gets to pick people like him to run one.