Development Debacle: Malpass for World Bank President

♠ Posted by Emmanuel in , at 2/11/2019 09:38:00 AM
Alumni of long-gone Bear Stearns and global financial crisis denier circa 2007: Meet David Malpass.
The abrupt resignation of Jim Yong Kim as World Bank president has opened up a lot of old wounds, especially now in the Trump era. If you will recall, there was a big brouhaha over the United States still getting to nominate its president. In an arrangement that's a throwback to when Western countries dominated the global political economy, the US still gets the right to select the World Bank's leader, while the Europeans still do so for the IMF's leader. The Obama administration's choice of the departed Kim was meant to be a partial appeasement to developing countries wanting more say in a body whose activities do affect them. Sure, he was an American, but he was a Korean-American immigrant.

Let's just say that Trump is the least international and the most US-centric American leader in a long time. So, he's unsurprisingly scotched any attempts to appoint a non-white or non-American to lead the World Bank despite his suspicion of all multilateral institutions:
Kim’s abrupt resignation leaves Donald Trump with the opportunity to appoint a successor. He could turn to Bulgarian national Kristalina Georgieva, the bank’s chief executive, who will take over as interim president when Kim leaves. The much-respected official was a European commissioner and EU finance chief before moving to Washington.

Before Kim took over, the bank laid down criteria for appointing future presidents, which were designed to exclude officials with little experience of running large organisations or who lacked relevant experience, especially in the developing world. However, Trump is expected to use his effective power of veto to make sure a close adviser or a sympathetic political figure takes over.
So Trump is going ahead and contravening new World Bank presidential selection criteria by nominating someone, er, unfamiliar with running large international organizations and development work in David Malpass. This fellow is a proud America-firster like Trump:
Donald Trump confirmed his choice on Wednesday that the World Bank should be led by the US treasury official David Malpass, a Trump loyalist and critic of such multilateral institutions who has vowed to pursue “pro-growth” reforms at the global lender.

Trump’s nomination of Malpass, the treasury department’s top diplomat, is subject to a vote by the World Bank’s executive board and could draw challengers from some of the bank’s 188 other shareholding countries...

Malpass, treasury undersecretary for international affairs, has criticized the World Bank and other multilateral institutions for growing larger, and becoming more “intrusive” and “entrenched”, and targeted the bank for its continued lending to China, a country he sees as too wealthy for such aid.
Recall the last time an American president chose a controversial conservative figure to head the World Bank: George W. Bush selected the short-tenured Paul Wolfowitz, an architect of the ill-fated 2003 invasion of Iraq. Instead of blowing up other countries for no good reason, Malpass to his credit only failed to see how the Bush administration was blowing up the world economy. Malpass is a another conservative with extreme views, having been a chief economist at the ill-fated Bear Stearns who declared in so many words that there was no financial crisis brewing Stateside right before ti hit:
"Housing and debt markets are not that big a part of the US economy, or of job creation," Mr Malpass wrote before the impending economic crisis. "It's more likely the economy is sturdy and will grow solidly in coming months, and perhaps years."

The New York Times also criticised Mr Malpass for that and other Wall Street Journal articles, saying partisan bias towards Republican policy by economists had "unquestionably contributed to their forecast errors".
While it's true that other nominees may be put forward by other countries--especially developing ones--there is some doubt as to whether they would have meaningful chances at obtaining the World Bank's top job absent the support of the United States given its historical dominance of the institution. I also don't see much of a rallying cry to appoint a leader from the developing world this time. Perhaps we've become disenchanted with the whole process after what happened with Kim's victory under a far more progressive American president in Barack Obama.

Trump's worldview is prehistoric and his candidate is positively Neanderthal, but if everyone's fed up with the World Bank presidential selection process, it's going to be the same old story all over again.