The Hindu Business Line : Selection of World Bank's chief

WHEELS (within wheels) have begun moving in the industrial countries, especially the US, by way of setting the machinery in motion to install a person of their choice in the place of the current World Bank President, Mr James Wolfensohn, who will complete his second term in June 2005. Although there is no bar to his offering himself for a third term with a good chance of making it on the strength of his record, beating the convention limiting the period of office to two terms of five years each, he has reportedly opted out of the race.

From the very inception of the World Bank and the IMF, there is a tradition, whose legitimacy is questionable but has so far not been questioned, of appointing an American to the post of the World Bank's President, and a West European as IMF's Managing Director. Mr Wolfensohn was himself an Australian, and when his name was first sponsored by Robert McNamara 15 years ago, he hurriedly acquired American citizenship, but nevertheless lost out to Alden `Tom' Clausen, a Jimmy Carter favourite. Barring McNamara himself and, perhaps, Mr Wolfensohn, none else had been able to leave his mark on the institution. Most incumbents have been adjudged by observers in developed countries to be inadequately-equipped for their jobs in that they knew little about the problems of developing countries.

Speculation rife

Among industrial countries themselves, dissatisfaction has been mounting over the field of choice being confined to the US regardless of the fitness of the nominee. The US has often been at loggerheads with them, their wrangle on one occasion proceeding to the extent of the US vetoing the candidate of the West European countries for the post of IMF's Managing Director. This time too, as always, both within and outside the US establishment, interested parties have got busy pitchforking their candidates and speculation is at a feverish pitch.

In fact, surfing across the Internet, I was able to find write-ups debating the chances of as many as 12 names. Some (Messrs Bill Clinton and Colin Powell) were well-known, while some (Ms Elaine Chao, and Drs Ann Krueger, Jeffrey Sachs, and Stanley Fischer) were dark horses being trotted out all the same. As an editorial titled "The wrong kind of executive search" on January 11 in the Financial Times puts it, "Colin Powell aside, few of the US names mentioned thus far offer either global stature or knowledge of development. At a minimum, the world should refuse to accept a second rate American candidate".

Unsurprisingly, not one of the many names doing the rounds is from outside the US, perish the thought of developing countries getting into the game of fielding their own. The latter as a bloc are content to watch quietly from the sidelines so as not to cause any unpleasantness. There is a reason for their lack of enterprise.

In terms of both shareholdings and voting rights, they are in no position to stand up to the industrial countries. Out of the 184 members, the shareholdings of the 16 industrial countries total 54.51 per cent, with the US being the largest single shareholder entitled to 16.41 per cent of the votes, followed by Japan (7.87 per cent), Germany (4.49 per cent), the UK (4.31 per cent) and France (4.31 per cent). The rest of the shares are divided among 168 other member countries.

The five largest shareholders are eligible to have an Executive Director each on the Executive Board whereas all other 179 member countries put together are represented by 19 Executive Directors. It is the Executive Board which notionally selects the President of the Bank, and to arrive at what in effect is a foregone conclusion, it goes through the motions of an elaborate procedure. It is necessary to have an idea of the selection process in force now to discern whether it gives any scope for developing countries to have a foot at the door and if so, how and at what stage.

Advisory Group's role

To assist them in the task, the Executive Directors are required to set up, giving due consideration to geographical balance, an Advisory Group of persons of eminence in fields such as academia, diplomacy/international affairs, and international development, banking, or finance, who are also familiar with the goals of the institution. The Group submits to the Executive Directors its assessments, without any formal ranking, of the suitability of the potential candidates with reference to their academic performance, experience, professional/technical background and other qualifications relevant to their job. Assessments of "high potential" candidates are supplemented with interviews and/or additional background checks.

An essential condition for inclusion in the list of candidates to be appraised is that they should be nationals of a Member country, whether or not nominated by Member Governments. Candidates whose names are not formally submitted by Governments should have their Government's support (or non-objection) prior to being presented to Executive Directors for consideration. The Bank does not have any age limit for candidates.

The assessments of the Advisory Group are to be circulated to the Executive Directors on a strictly confidential basis to enable them to prepare an initial shortlist. Before doing so, they normally take instructions from the Governments they represent. In taking their final decision on the names to be included in the shortlist they can go by the informally ascertained sense of the meeting or resort to formal voting, if unavoidable. Once agreement is reached by Executive Directors on a final choice, they proceed with the formal selection. In the absence of consensus, they could decide to re-open the search process, drawing from the Advisory Group's list and/or inviting submissions of new candidates.

The choice for the top jobs in the World Bank and the IMF has so far been a matter of what the Financial Times has called "US-European carve-up". It is time the developing countries challenged this practice.

New orientation to economic order

India should take the lead in organising the developing member countries of the World Bank against the continuation of this "carve-up". It is in a pre-eminent position to do so because its shareholdings and voting rights (2.85 per cent) are not to be sneezed at: In respect of these, it is on a par with Canada, China, Italy, Russian Federation and Saudi Arabia, and well ahead of Australia, Belgium, Denmark, Ireland, Netherlands, Norway, Spain, Sweden and Switzerland. By evoking the synergy of the collective political will of developing countries, India can insist on their right to put up their nominee(s) as their candidate(s) for consideration by the Advisory Group.

For this effort to be successful, however, the nominee(s) should be person(s) of stature whose credentials will equal, if not excel, those of possible candidates from the US or elsewhere, and also command the respect of the developed nations themselves.

In my personal judgment, India does have in Messrs P. Chidambaram and Yashwant Sinha and Dr Bimal Jalan top notchers who can hold their own before the best in the world in terms of grasp of intricacies of financial management, awareness of the complexities and special needs of the developing world, professional competence and leadership abilities. The Government can set the ball rolling by instructing its Executive Director to formally nominate any one of them, or any other demonstrably impressive person who, in its opinion, has more than an even chance of securing the required number of votes.

If India, on behalf of the developing countries, accomplishes its mission of taking control of an impregnable fortress hitherto under the domination of a select few, it will be giving a new orientation to the world economic order in three important directions: First, the developing world concerns will be reflected in the policies of the Bank; next, it will break the spell of the unjustified "No Entry" sign denying the top slot of the IMF to developing countries; and it will pave the way for the long-overdue reforms of both the Bretton Woods institutions.

Prospect of pinpricks

Whether the storming of the citadel succeeds or fails, there may be a price to pay. We were witness to the bitterness and resentment caused in the US and the UK when France and Germany refused to toe their line in regard to the illegal invasion of Iraq. That is an indication of the knee-jerk reflex of the US whenever its hegemony is challenged. Only, in this case of the World Bank or the IMF, all the industrial countries may gang up against the challengers and subject them to a variety of pinpricks. But that is a prospect that has to be faced without flinching. In any case, in this rapidly changing world, such antagonisms cannot also last very long, just as the sanctions against India following Pokhran II did not.

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