The Hindu Business Line : Banking by decree

With the US President, Mr George W. Bush, naming Mr Robert Zoellick as Mr Paul Wolfowitz' successor at the World Bank, an opportunity to rekindle the debate on democratic reforms in the selection of chiefs for the two Bretton Woods Institutions has taken a backseat. Last weekend, South Africa endorsed Brazil's stand urging the US to broaden the choices for the World Bank chief to non-Americans in an open and transparent process; Australia also backed the idea of a wider selection mechanism. Mr Bush, however, lost little time in naming his candidate for the top post without lending a sympathetic ear to the Brazil-led initiative. The World Bank board has to ratify the selection but given the dominance of the European Union members and the US itself, that should be a mere formality.

Which is a pity because for more than 60 years, the US and Europe have selected the chiefs of the World Bank and the IMF respectively on the basis of a convention never written into the charters of either institution. A purely informal arrangement between the largest donors based on economic power was unquestioned both by the smaller donors and developing economies that were the recipients of grants and relief packages from the two institutions. Over time, as the principles of sound governance and financial transactions based on transparent and open systems advocated by the two spread and led to economic growth across the globe, the calls for similar management procedures within the World Bank and the IMF began to be heard. In 2006, the Group of Twenty (G-20), formed in 2003 by Asian, African and Latin American nations to steer through the Doha Round of trade agreements, issued a communiqué for reforms in the institutions. The signatories included India, China, Brazil and South Africa — all newly emerging economies. The G-20 focus has been part of a global clamour for change in the two agencies. With Mr Paul Wolfowitz's exit, the US could have led the way to a more democratic system of selection, based on open and transparent process that it has ardently advocated for decades.

Mr Zoellick has wide experience and is known in the global finance arena as a skilful negotiator. That is not the issue however; the selection process is. As a past President of the G-20, India must support the initiative to throw open the top jobs to merit from wherever it may come — as with the selection for the United Nations' top post. But this should be the start of reforms in the distribution of voting powers and quota shares among member-countries whose capacity for aid-giving has grown immensely. Both the US and the EU must treat the World Bank and the IMF as global agencies and not as their governments.

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