The U.S. is proposing Undersecretary of the U.S. Treasury, David Malpass, as its nominee for the World Bank presidency.
Malpass is a strong pick and meets the qualifications that the Board of Executive Directors of the World Bank put forward, which are quoted below:
- “a proven track record of leadership;
- experience of managing large organizations with international exposure, and a familiarity with the public sector;
- the ability to articulate a clear vision of the World Bank Group’s development mission;
- a firm commitment to and appreciation for multilateral cooperation; and,
- effective and diplomatic communication skills, impartiality and objectivity in the performance of the responsibilities of the position.”
Malpass meets these qualifications and there are a number of reasons why shareholders should support him.
First, Malpass has the management and leadership experience for the job. The Undersecretary of the U.S. Treasury is a big job in the American system of government, where he oversees hundreds of staff. Previously, he had a successful career on Wall Street even creating his own company, Encima Global, and served in senior leadership jobs in the Reagan and Bush ‘41 administrations. He has a clear vision of how countries create prosperity and in doing so, eliminate poverty.
Second, Malpass has a strong understanding of what the World Bank can do and believes in the World Bank’s mission. He was originally a skeptic of the recent World Bank capital increase, but ultimately his leadership was critical in getting the Trump administration to support the capital increase. He is well-regarded in Latin America for his time as a Deputy Assistant Secretary at the State Department at a tumultuous time and positive change for the region during Bush ’41.
Third, Malpass has a deep understanding of international affairs and the world. He speaks Spanish, French, and Russian and has served in high-level economic and foreign policy roles. Furthermore, he understands the power of markets and the role of governments. He understands that “America first” does not mean America alone. He believes in the potential of multilateral institutions.
Fourth, Malpass has been involved in public life — including politics — and that is a good thing. He is a Republican who ran unsuccessfully in the Republican primary for the U.S. Senate in 2010. It’s natural that a Republican administration would name a Republican to the role, just as President Obama named a Democrat, Jim Kim, and President Clinton named a Democrat, Jim Wolfensohn, to the World Bank’s top job. It’s natural for countries to name to important multilateral posts country nationals who are ‘simpatico’ with the administration putting their names forward. For example, Christine Lagarde was a member of the Republican party in France where she held several ministerial posts including Minister of Finance and Economy under Prime Minister Dominique de Villepin. She is a well-known lawyer and she is seen as a well-regarded leader of the IMF. Similarly, the Secretary General of the UN, António Guterres, was President of the Socialist International, was active in Portuguese politics for decades, and elected to the Portuguese parliament in 1976.
Being active in public life should be seen as a positive for Malpass.
Fifth, although the capital increase was approved, the World Bank still needs to collect on the U.S. commitment. David Malpass’ relationships with the Trump administration and with Republicans and Democrats in the U.S. Congress will be important. The estimated $1 billion the U.S. pledged to the World Bank will be over and above anything else the U.S. has contributed to the World Bank. Historically, the U.S. has paid new money to the World Bank in installments over 5-7 years.
Sixth, David Malpass broadly supports the vision of the World Bank including its environmental priorities. One of the unspoken worries of World Bank shareholders has been that the Trump Administration would put forward a so-called “climate denier.” The capital increase approved by shareholders, including the U.S., came with a strategy for how to use this new money and this strategy has a strong environmental component. As part of this strategy, the World Bank has set targets for environmental-related projects over the next few years.
Given that Malpass led the negotiations for the capital increase, one can assume that he is largely aware of and in agreement with the consensus vision of the shareholders. Of course, every strategy from time to time might need to be reviewed as circumstances change. The environmental and energy policies of the World Bank are fairly rigid and should be up for periodic review. However, it’s highly unlikely that Malpass would seek a radical adjustment given the preferences of many shareholders and the lengthy capital increase process that just happened.
As shareholders make a decision about Malpass they should keep in mind the job openings just over the horizon: Christine Lagarde’s term at the IMF comes due in 2021; at the European Bank for Reconstruction and Development (EBRD), President Suma Chakrabarti’s term ends in 2020; at the Inter-American Development Bank (IDB), President Luis Alberto Moreno’s term ends in 2020; and the President of the Asian Development Bank, Takehiko Nakao’s term ends in 2021. Similarly, the Secretary General of the UN, António Guterres has his term come due in 2022. Shareholders will seek support for their candidates in the near future.
The World Bank is an important institution and is often underappreciated and misunderstood in Washington D.C. It’s clear that David Malpass understands what the World Bank is and what it can do.
Given that the U.S. has put forward a strong candidate, now would be the time for Japan, Europe, and other allied countries of the United States to come forward and support candidate Malpass.