Tuesday, March 21, 2023

Biden’s World Bank President Pick Can’t Solve Crisis


The World Bank was established with the mission of eradicating extreme poverty and promoting shared, sustainable prosperity. However, many people believe that the bank has actually done more harm than good, especially through the conditionalities it imposes on poor nations that need its loans. One of the reasons for the World Bank’s failure is its outdated governance structure, which was established after World War II when most African and Asian nations had not achieved independence and therefore had no sovereign voice. Another reason is that its leadership is not recruited through an open global process but rather by a patriarchal “gentleman’s agreement” that allows the president of the United States to unilaterally appoint the bank’s president.

ActionAid, a global federation supporting more than 15 million people in nearly 40 countries to live a dignified life free from poverty and oppression, has been challenging this illegitimate arrangement for over a decade. The recruitment process for ActionAid’s new secretary-general was transparent and rigorous, resulting in the appointment of the first Ugandan and first African to serve in this role. In contrast, the recruitment of a new president for the World Bank is opaque and effectively restricted to American citizens.

US President Joe Biden has nominated former Mastercard CEO Ajay Banga for the post of the bank’s next president. However, this nomination is deeply inappropriate given the huge significance of this role in the world. Banga’s credibility to make the changes that are needed at the World Bank is fatally compromised by the lack of legitimacy in his appointment. He is a private equity executive with no experience in public service, and his corporate background reflects the kind of inequality-driving, climate-destroying hyper-capitalism that is everything the World Bank should be standing against if it wants to genuinely aim for ending global poverty.

The World Bank urgently needs new thinking if it is to get on track with its supposed mission. To start, we need a World Bank president who will definitively move away from the climate denialism of the present president, David Malpass. But at a time when we need the World Bank to stand up to the fossil fuel industry, the institution is still busy funding fossil fuels. We also need someone who will recognize that the climate debt of the Global North cannot be paid to countries profoundly affected by the climate crisis in the form of loans that will lead to further indebtedness.

It is time for the World Bank to recognize the scale of the global debt crisis – and to acknowledge that debt is an accelerator of the climate crisis. Indebted countries have to raise dollars – and the easiest way to do that is through extracting fossil fuels and national resources and through export-oriented industrial farming serving the global supply chain. If debt exacerbates the climate crisis, how can more debt be the answer?

We need a president who will chart a new path, away from 40 years of structural adjustment and austerity. Together with the International Monetary Fund, the Word Bank continues to champion cuts and freezes to public sector wage bills. It fails to support the obvious alternative of helping countries to expand their tax revenues in progressive ways in order to sustainably finance front-line public sector workers who are key for achieving the Sustainable Development Goals.

The new president will need to lead the development of a new gender strategy for the World Bank, one that confronts the contradictions between the narrowly targeted work of its gender team and the wider gendered impact of its work enforcing austerity. When public spending is cut, women are triply disadvantaged: they are the first to lose access to public services, front-line jobs, and they are also the first to assume unpaid care work. The present gender strategy, which runs out this year, is instrumentalist, narrow and largely ineffective. Any new one must be transformative.

In conclusion, it is time for the World Bank to recognize its failures and take action towards achieving its mission. This includes appointing a president through an open global process and ensuring that they have experience in public service and a commitment to ending global poverty. The new president must lead a shift away from fossil fuels, recognize the impact of debt on climate change, support sustainable financing for public sector workers, and develop a transformative gender strategy. If reform is not possible, abolition may be necessary.

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