Waiting for the next World Bank president

Bush alum Bob Zoellick announced today he was stepping down as president of the World Bank. Another American will get the job, likely Hillary Clinton. The IMF and World Bank are seen as twinned institutions by their shareholders. When Dominique Strauss-Kahn left the IMF in 2011 and was replaced by Christine Lagarde, another French citizen, …

Bush alum Bob Zoellick announced today he was stepping down as president of the World Bank. Another American will get the job, likely Hillary Clinton. The IMF and World Bank are seen as twinned institutions by their shareholders. When Dominique Strauss-Kahn left the IMF in 2011 and was replaced by Christine Lagarde, another French citizen, it was clear that a deal had been struck between the U.S. and Europe, and as part of that deal, the Europeans (read the French) got to “keep” the IMF and we got to “keep” the World Bank presidency.

The Euro currency is a political project as much or more so than an economic one, and the IMF is the last firewall for bailing out the Euro. There was no way the Europeans were going to give up their last line of defense during their current crisis.

The “competitive process” for determining the IMF chief last spring, for the most part, was a farce. While the U.S. will face complaints when we name an American to the World Bank, these will ultimately be muted because the U.S. will have the necessary votes; the Europeans and the Japanese will vote with us. If Obama names Hillary Clinton, the complaints will be muted at best.

Regardless of who the next World Bank president is, a new World Bank president would win bipartisan support if she (or he) built on Bob Zoellick’s accomplishments on the following issues: 1) Further strengthening the World Bank’s capabilities to work in conflict and post conflict zones (there are any number of places where the Bank Group may be called on to help where they are not equipped to do so today, such as Iran, Syria, North Korea or Cuba), 2) Fighting corruption, not just through Bank loans, but through loan conditionality and policy advice, and 3) Aggressively ramping up World Bank work to support trade and the private sector. Also, 4) Don’t call it the “Freedom Agenda,” but through its policy dialogue, loan conditionality, and its high standards and expertise, the Bank Group can be an exporter of greater human liberty. The Bank’s Doing Business program and its Investment Climate advisory work, a USAID creation exported to the Bank, are arguably the most important catalysts for openness and economic freedom in international development.

Finally, 5) the Bank Group does and should play a big role in the Middle East and North Africa. As a “neutral” actor, the Bank can help further an American supported agenda, and as it tends to take the very long view, the Bank can deliver messages that the U.S. wants to deliver but cannot. Certainly conditionality about governance is something that has been attached to loans to Tunisia and will likely be attached to loans in Egypt. As we look more ambivalently at what is going on in the region, let’s make sure we engage through the Bank Group and the IMF.

The U.S. owes Bob Zoellick a big debt of gratitude for his leadership at the Bank. Behind the scenes, he worked with the Congress to maintain U.S. leadership of the Bank through ensuring US participation in the General Capital Increase last year. Hopefully his time in public service is not over.

Article Published in foreignpolicy.com on Febuary 15, 2012.

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