World Bank race heats up as US makes pick
Washington - US President Barack Obama on Friday nominated a Korean-American known for work fighting HIV/AIDS in impoverished countries to lead the World Bank, a job emerging economies are contesting for the first time.
Jim Yong Kim, Obama’s surprise choice for the job, is president of Dartmouth College, an Ivy League school in New Hampshire, and former director of the Department of HIV/AIDS at the World Health Organisation.
“It is time for a development professional to lead the world’s largest development agency,” Obama said, flanked by Kim, Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton, in the White House Rose Garden.
Despite the challenge from emerging nations - with Angola, Nigeria and South Africa endorsing the nomination of Nigerian Finance Minister Ngozi Okonjo-Iweala - the United States is expected to continue to lead the World Bank when Robert Zoellick steps down in June.
Washington retains the largest single voting share and could expect the support of European nations and Japan, the bank’s second-largest voting member.
Angola, Nigeria and South Africa said their support for Okonjo-Iweala, a respected economist and diplomat, reflected their views on leadership of global organizations.
“The endorsement is in line with the belief that the appointment of the leadership of the World Bank and its sister institution, the International Monetary Fund, should be merit-based, open and transparent,” the three African countries said in a statement.
It was a rare example of unity among countries often at loggerheads as they seek to up-end the tradition of always having an American lead the World Bank and a European at the helm of the International Monetary Fund.
US economist Jeffrey Sachs, who had been put forward for the World Bank job by a group of small countries, withdrew and threw his support to Kim.
Kim is well known in health circles, but less so in the political circles from which former World Bank presidents have often been drawn, and his nomination came as a surprise. His name had not surfaced in a series of media reports on potential candidates.
“The good news is that we have two credible candidates,” said Homi Kharas, former chief economist of the Asia division at the World Bank. “Ngozi would focus on growth, focus on Africa, focus on jobs. Kim would focus on the provision of health and basic public services.”
“I think it is appropriate to have the choice,” he said.
Rounding up support
Kim’s nomination also drew support from his native South Korea. “If confirmed we believe he will be an ideal figure to lead the World Bank,” a senior South Korean financial official said.
The rise of emerging economies such as China, India and Brazil has put pressure on the United States and Europe to throw open the selection process for both the bank and the IMF.
Last year, all of the bank’s 187 member countries agreed on a transparent, merit-based process to select a president.
The deadline is 6pm Washington time. The World Bank board of member countries will then shortlist no more than three candidates and finalize its choice by the time of the IMF and World Bank semi-annual meetings on April 21.
Brazil had planned to nominate former Colombian Finance Minister Jose Antonio Ocampo, but said it could not do so without Colombia’s support, which now looks unlikely.
While Ocampo had agreed to stand, Colombian Finance Minister Juan Carlos Echeverry said on Thursday his country was instead focusing on a bid for the presidency of the International Labor Organization. He said that effort had a greater chance of success than going for the World Bank job because Colombia already held the top post at the Inter-American Development Bank.
Russia, a member of the Brics caucus of large emerging market economies - also including Brazil, India, China and South Africa - has refrained from publicly backing a non-US candidate and instead called for a greater role for them in top management at international financial institutions.
The new head of the bank will take over at a time when the euro zone debt crisis is slowing the global economic recovery, undercutting demand in emerging and developing markets.
The new head will have to decide how best to deploy resources in a budget-cutting environment in which large shareholders of the World Bank such as the United States are demanding results-based development, more transparency and greater efforts to tackle corruption.
Nancy Birdsall, president of the Center for Global Development in Washington, said the nomination of a credible candidate like Okonjo-Iweala had “upped the ante for the US to have a really strong candidate.”
“It is a sign that we’re living in a world where the geopolitical landscape is shifting and the U.S. can’t do things by itself,” she said.