Tags: Emerging | Nations | World | Bank

Emerging Nations Mount Challenge for World Bank Job

Wednesday, 21 Mar 2012 01:33 PM

Nigerian Finance Minister Ngozi Okonjo-Iweala and former Colombian Finance Minister Jose Antonio Ocampo are set to be nominated to lead the World Bank, according to sources with knowledge of emerging market efforts to find candidates.

The candidacies of Okonjo-Iweala and Ocampo, who have credentials as both economists and diplomats, and according to sources the respective backing of South Africa and Brazil, pose a challenge to the United States, whose hold on the top post has never been contested.

But with its majority of votes and the expected support of European countries, the United States is still likely to ensure that another American succeeds Robert Zoellick, who plans to step down when his term expires at the end of June.

Washington has held the presidency since the bank's founding after World War Two, while a European has always led its sister organization, the International Monetary Fund. The United States has yet to publicly identify a nominee to succeed Zoellick.

The deadline for submitting nominations is Friday, and the Obama administration has said it will name a candidate by then.

All of the World Bank's 187 member nations have committed to a transparent, merit-based process to select Zoellick's successor, a step adopted last year to give emerging economies a greater say in who heads the poverty-fighting institution.

Emerging and developing economies have long talked up their desire to break U.S. and European dominance of the two Bretton Woods institutions, but have until now failed to build a coalition large enough to change the status quo. The World Bank is the leading provider of development aid to poorer countries, and its president is one of the world's top policymakers.

Three sources said Ocampo, currently a professor at Columbia University in New York, would be formally nominated by Brazil.

Carlos Cozendey, the secretary of foreign affairs at Brazil's Finance Ministry, said both Ocampo and Okonjo-Iweala are "great" candidates and their candidacies signaled increased coordination among developing countries.

The BRICS nations — the emerging market power houses Brazil, Russia, India, China and South Africa — and other developing countries are "in close contact" about the nominations, he said.

"We continue to believe that the president should be chosen based on merit, and it is very positive to have an open competition process," Cozendey said in an e-mail response to questions.

Nominations will be submitted to the 25-member World Bank board, which has said it will decide on the next president within the next month. Any extension to the deadline would require the approval of the board.

Two sources said Okonjo-Iweala's candidacy had the blessing of Nigerian President Goodluck Jonathan, who convinced her to join his cabinet last year to lend more weight to his reform agenda.

"IMPRESSIVE CREDENTIALS"

The decision to nominate Okonjo-Iweala and Ocampo followed weeks of discussions among emerging and developing countries about finding credible nominees to step forward. World Bank board sources said China was participating in the search.

Two sources said South Africa's director at the World Bank board, Renosi Mokate, who also represents Nigeria and other English-speaking African countries, personally flew to Abuja to consult with Okonjo-Iweala's about her nomination.

"The impressive credentials of both Ocampo and Okonjo-Iweala puts tremendous pressure on the White House to come up with a candidate of at least equivalent standing," said Domenico Lombardi, a former World Bank board official now at the Brookings Institution in Washington.

"This signals a big shift and really reflects a game change," Lombardi added. "This is the first time in history we have a truly contested election."

Okonjo-Iweala, who left the World Bank as managing director last year to become Nigeria's finance minister, and Ocampo, a former U.N. under-secretary for economic and social affairs, will join American economist Jeffrey Sachs, who has the backing of a handful of small countries, on the nomination list.

Sources with knowledge of the Obama administration's thinking say Washington has focused on convincing a woman to enter the race, which could go some way to address calls by emerging market nations for change. A woman has never led the bank.

The State Department has repeatedly said U.S. Secretary of State Hillary Clinton will not be taking the job, although some in Washington still regard her as a viable candidate.

Susan Rice, the U.S. ambassador to the United Nations, is also a leading contender, though it is not clear she wants the job, sources said. Lawrence Summers, a former economics adviser to President Barack Obama, has also been short-listed, sources said. He has declined to comment.

U.S. Senator John Kerry and PepsiCo's Indian-born chief executive, Indra Nooyi, also made the Obama administration's short list, according to a source. Another sources said Kerry has publicly ruled out the job and Nooyi is no longer in contention.

Sachs has said his aim is to challenge what he sees as a history of political appointments by the White House, and he acknowledges he does not have Obama's support. He has been formally nominated by Bhutan and a grouping of developing countries including East Timor, Jordan, Kenya, Namibia and Malaysia, many of which he has advised.

Lombardi said the test was whether large emerging economies like China would support Ocampo and Okonjo-Iweala, or in the end side with the U.S. nominee.

FAILED RALLY AT IMF

Last year, Brazil and China failed to rally around Mexico's central bank chief, Agustin Carstens, for the top post at the IMF, instead favoring France's former finance minister, Christine Lagarde, who now heads the institution.

The United States has insisted that its retention of the World Bank's presidency was important to keep funding flowing from Congress to the institution.

It is unclear if big emerging nations such as China and India would support a fellow developing nation candidate. He Fan, deputy director of the institute of world economics and politics at the Chinese Academy of Social Sciences, a top government think-tank, said he thought Beijing would do so.

But Yi Xianrong, an economist at the same institute, said "the most important thing is to have a capable person with energy and expertise. ... It doesn't matter whether the candidate is from the United States, Germany or developing countries.

"We need to see whether the candidates' value standards and judgment are in line with the World Bank's goals. We can increase our influence in the World Bank through increases in our voting rights," Yi added.

A senior Indian government source said the country didn't "have any favorites, no probables." Asked whether India would support a developing world candidate, the source said, "If it comes up we will decide; let's see."

© 2017 Thomson/Reuters. All rights reserved.

 
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Wednesday, 21 Mar 2012 01:33 PM
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