The Board of Executive Directors of the World Bank meets in Washington D.C. Monday to elect a new president — the 12th — to succeed incumbent Robert Zoellick. In office since 2007, Zoellick is leaving the bank in June. The election, however, appears to be different this time, although in reality it is almost certain that US President Barack Obama's nominee, Dr. Jim Yong Kim, an American of Korean descent and head of the World Health Organization (WHO), will carry the day. For the election, politics of the World Bank Group is all about mathematics — the mathematics of share subscription to the World Bank and IMF; the mathematics of the resultant voting power and its weighted extras; the mathematics of political and cultural alliances; and the mathematics of preserving influence in the global financial system, based albeit, on a post-colonial anachronism. And there is a potentially important supporting role for Saudi Arabia, the joint sixth largest shareholder of the World Bank together with India, Italy, Russia and Canada. Of the five, only India may vote against the US candidate. Moscow has already gone public indicating that its support for Jim Yong Kim's candidacy. Traditionally the US, by far the largest shareholder in the Bank with 264,969 shares valued at $31.965 billion at the end 2011, and the European Union, of which Germany (72,399 shares valued at $8.734 billion), France (69,397 shares valued at $8.372 billion) and the United Kingdom (69,397 shares valued at $8.372 billion) are the third and joint fourth largest shareholders respectively, have the top positions at the World Bank and its sister organization the International Monetary Fund (IMF) stitched up through their sheer voting alliances on the board. The Americans get the top job at the World Bank while a European heads the IMF. Because of the hegemony of Western subscription to the equity of the World Bank and the IMF, and supported by their allies such as Japan, the second largest shareholder after the US, this convention has stood the time since the two multilaterals were established. Thus Christine Lagarde, the former French finance minister, last year replaced her disgraced compatriot, Dominic Strauss-Khan, as the new IMF president. Convention would dictate that an American would automatically succeed Zoellick. Earlier this month, the Board of Executive Directors of the World Bank conducted interviews with the three nominated candidates at its headquarters, namely, Ms Ngozi Okonjo-Iweala, Finance minister of Nigeria; José Antonio Ocampo, former finance minister of Colombia and Jim Yong Kim of the US. Ocampo withdrew from the race last Friday and declared his support for Okonjo-Iweala, the candidate representing the emerging countries and who it is hoped will break the Western domination of the multilateral development of the world. Okonjo-Iweala, an MIT and Harvard-educated economist is a World Bank insider who first worked for the institution in 1982. She already has a working relationship with the Board of Executive Directors and is highly regarded as a development expert. Her performance (or lack of tenure) as Nigeria's finance minister however may impact her candidacy, although she has been in her position for only about a year. Kim is a highly regarded health expert credited with steering the WHO in a new direction. He is not an insider and is untainted by the organizational politics of the World Bank. This could be a double-edged sword for some of his predecessors especially James Wolfenshon and Paul Wolfowitz who had legendary policy battles with their Boards. On the other hand, Kim could use the same tactics and his experience at the WHO to steer the World Bank into a much-needed new direction especially in the wake of the global financial crisis and the eurozone sovereign debt crisis which has decimated the economies (rich or poor) of the overwhelming majority of the Bank's 187 member countries – a direction which moves away from the fiscal and market orthodoxy of the “structural adjustment at any cost” mindset to one where development finance, aid and the financial system in general connects much more with the real economy to create jobs; to provide basic education, healthcare and affordable housing; to promote private sector development from microfinance, SMEs and larger corporates; to root out economic inefficiencies and corruption; and to promote sustainable good economic and political governance. This as opposed to using development finance as yet another monetary policy management tool to supposedly rein in government spending and to do away with subsidizing the prices even of basic commodities. The mathematics of the voting rights of the World Bank are revealing. Of the 11 top shareholders and members of the Board of Executive Directors of the World Bank, nine of them, the US (16.05%), Japan (9.6%), Germany (4.4%), UK (4.21%), France (4.21%), Saudi Arabia (2.73%), Italy (2.73%), Russia (2.73%) and Canada (2.73%) are bound to support Kim's candidacy. Their combined percentage of votes already make up a whopping 39.39 percent. Only China and India with a combined 7.47 percent of the votes may support the candidacy of Okonjo-Iweala, who also has the support of Brazil and South Africa. But if one adds the support of only eight other European and industrialized countries such as South Korea and Australia, then the US candidate will easily carry the day with 50.87 percent. This is an uphill struggle that Okonjo-Iweala or for that matter any candidate from the emerging world is up against. Unless there is a seismic shift in the minds and self-interest of the major shareholders of the Bank, the status quo election process is bound to remain intact and it would be “business as usual”. Failing this seismic shift, the best Okonjo-Iweala and her supporters can hope for with a strong support from developing countries, is for some of her policy views and ideas to be incorporated in the new vision for the Bank. That in itself would be sort of vindication of her candidacy. Outside the development agenda, other supporters of Okonjo-Iweala argue that it is high time that the World Bank has a woman as its head. After all, the IMF has opted for Madame Lagarde. That would be a unique double – for women to run the two most influential global financial and development finance multilateral institutions – on merit to boot. Not that women already play a major role in the Bank. Its managing director is Sri Mulyani Indrawati, the highly regarded former finance minister of Indonesia. __
