Peripheries: The not-so-worldly bank

The World Bank’s mission includes the laudable aims of ending extreme poverty and promoting shared global prosperity. Yet no international institution, despite the rhetoric of being globally representative, is insulated from geopolitics. Both the World Bank and the International Monetary Fund (IMF) were founded as part of the post-World War II Bretton Woods system, which explicitly laid the foundations for an order based on American hegemony. During its seven decades of existence, the World Bank presidency has been reserved for a U.S. nominee. The U.S. wields enough voting power to maintain this policy, resulting in a continuous cycle of American dominance. Europeans have always chosen the managing director of the IMF, creating a totally Western monopoly over two major economic institutions.

In early January, then-World Bank Group President Jim Yong Kim gave a shocking announcement that he would quit three years early in order to join the private sector, feeling that this was a better mechanism to enact change. Calls for his successor will be open until March, allowing Donald Trump to nominate the next president. Trump nominated David Malpass, former senior economic adviser of his campaign, raising more than a couple of eyebrows. Aside from the dubious credentials of heading Bear Stearns in 2007, Malpass has been a vocal critic of the bank and multilateralism in general. Many are concerned that Trump’s nomination of such a cynic will finally tip shareholders over the edge in voting out the American nominee.

Regardless of who ends up being chosen for the next presidency, Kim and Malpass’ critiques raise much broader concerns regarding the World Bank, which has been criticized by the left and right alike for decades. Critics of conditional aid note that the constraints placed upon governments in developing countries replicate imperialism. Discomfort with America’s primacy has triggered the formation of many regional banks over the years, undermining U.S. influence. Malpass argues that China should no longer be the bank’s largest borrower, and instead that we should “reduce the lending there and allow more lending to countries that need it.” William Easterly, a famed ex-World Bank economist, has written multiple books on the pitfalls of foreign aid and the top-down approaches of large organizations. Interestingly, Malpass’ comments regarding the bloated bureaucracy of the bank don’t seem too distant from this take.

Thus, not only is the rest of the world rejecting American dominance within the World Bank but also Americans from across the political spectrum are advocating for substantial shifts in the bank’s practices. Proponents of liberalism and economic cooperation at the center are dismayed by Malpass’ open skepticism of the bank. If a non-American becomes president, it would be a long overdue outcome that would finally allow developing countries more power at the table, and could change the nature of some bank policies. However, regardless of this outcome, the world should be paying more attention to criticisms of the World Bank. Even if they come from Trump’s nominee, portions of Malpass’ concerns intersect with the complaints of World Bank veterans and advocates from developing countries alike.