Chilean candidate best positioned to lead the Inter-American Development Bank

Last Friday, the field of candidates for the president of the Inter-American Development Bank (IDB) was set.

Argentina, Brazil, Chile, Mexico and Trinidad & Tobago have put forward candidates. If Chile puts forward a strong diplomatic campaign, the Chilean candidate is best positioned to win the election.

The winner must garner votes from more than 50 percent of the shares. The U.S. holds 30 percent of the shares. The U.S. will have a veto over who wins but does not have the ability to impose its views. The winner also has to win 14 plus 1 of the 28 western hemisphere member states of the IDB. This means that the U.S. is only one of several votes, and smaller countries in the Caribbean and Central America will have their say. The vote will happen early next week. Voting likely will be “secret,” however, in most cases one can guess the country voting based on the shares voted. The election will likely go several rounds of votes. 

The compressed election is being held in the wake of the removal of the former IDB presidentMauricio Claver-Carone, an American, in September. The role had been seen as a “Latin America” billet until the Trump administration’s candidate controversially won in 2020. 

The U.S. executive branch will make the final decision for the United States; Congress can weigh in, generally to “veto” as in the case of Ambassador Alicia Barcena, who withdrew after members of Congress objected to her views on Cuba and Venezuela. The U.S. Treasury has the lead, but the White House will make its views known.

The region has changed in the last five years. There are many left-leaning governments. The Biden administration will want someone who is acceptable to a large enough number of left-leaning governments and will want someone who is “qualified” — an amorphous term but “PhD economist preferred.” The administration also will want to support a candidate from a country and a current administration that is not giving the U.S. too many “headaches.”

If we look at each candidate:

Argentina has put forward, Cecilia Todesca, secretary of international relations in the country’s ministry of foreign affairs. Todesca, the only female candidate, has a master’s degree from Columbia University, but does not seem to have sufficient experience outside Argentina for a job that requires a keen understanding of the large differences across countries in the region. Unfortunately for Todesca, Argentina is broadly seen as a net source of “headaches” in the international system. Given this reality, her chances are slim. The only way the U.S. should support her candidacy is in return for closing down the Chinese spy facility in Patagonia and cancelling the purchase of Chinese-designed fighter jets from Pakistan.

Brazil’s former central bank president Ilan Goldfajn is technically the most qualified and widely respected, but is — sadly — not going to win — because the current Brazilian government is leaving, and the incoming government is not vocal in its support of him. Golfajn is currently the director of the western hemisphere at the IMF, one of the top technocratic jobs at the fund. If Team Lula immediately began to support his candidacy, Goldfajn could win.   

Mexico has put forward Gerardo Esquivel, a member of the board of the central bank, technically qualified, but his experience seems to be mostly in Mexico. Withdrawing Ambassador Alicia Barcena and putting Esquivel forward implies that Mexico wants to win. One unknown is what deal Mexico could make with the U.S. on some other topic (e.g. migration or economic policy) in return for the IDB presidency. That might swing it towards Esquivel. 

Trinidad & Tobago have put forward Gerard Johnson, a former manager (a senior level position) at the IDB and an advisor to the ministry of finance in Jamaica. The six or so Caribbean countries in the IDB will likely vote as a block in the first round in favor of Johnson.

Given the above, the strongest candidate is Chile’s former finance and education minister, Nicolas Eyzaguirre. Like Goldfajn, he once held the top technocrat job for the western hemisphere at the IMF. The Gabriel Boric administration, to its great credit, came out and criticized the Nicaraguan government for being an authoritarian regime. Clearly Chile, under President Boric, is a responsible (enough) stakeholder, and its government is in sync with the region’s center-left tendency.

There are two X factors: first, a remote scenario where none of the above candidates garners enough votes and the vote is delayed until after Lula assumes office in Brazil; second, given the removal of the president of the IDB, Organization of American States (OAS) Secretary General Luis Almagro may have to step down given similar allegations against him, creating the opportunity for “horse trades.”  

Chile’s Eyzaguirre should be the odds-on favorite to win the IDB election, assuming that he and the Chilean government mount a credible campaign.

Originally published on on November 14, 2022.

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