At Indian Express Devesh Kapur and Arvind Subramanian make a plea to “clean up” the World Bank and International Monetary Fund:
Something is rotten on 19th Street in Washington DC. And on both its sides, occupied by the Bretton Woods institutions, the World Bank (Bank) and International Monetary Fund (IMF), respectively. As evidence, consider the following roll-call of individuals and ask what is common to them: Paul Wolfowitz, Jim-Kim, David Malpass, Rodrigo Rato, Dominique-Strauss Kahn, Christine Lagarde, and Kristalina Georgieva.
The obvious one is that they are seven of the eight most recent heads of the Bank and IMF. The second commonality is that they have all become heads via a dual monopoly selection procedure: Only an American can head the Bank and only a European can head the IMF. That is the result of a long-standing arrangement among the western powers to share the spoils.
The third commonality is that the personal integrity of each of them has been called into question, the most recent being the revelations of malfeasance at the World Bank where data was apparently massaged to make at least two major countries — China and Saudi Arabia— look better than they would otherwise have been. Liberals and conservatives are converting this into a battle of political interests, cherry-picking the evidence, when in fact what is at stake is integrity, not ideology, as Justin Sandefur of the Center for Global Development has carefully documented recently. Indeed, both Democrat and Republican administrations in the US and their counterparts in Europe have been complicit in that roll-call.
There’s a question that neither author seems to consider. Why do the World Bank or IMF exist at all? Maybe both of those institutions have reached their “sell-by” date.
The World Bank and IMF were created after World War II and, not to put too fine a point on it, but circumstances were very different then than now. The Chinese have been doing a masterful job of exploiting the global financial system without fully being a participant in it. Given China’s position in the global economy, maybe the World Bank and IMF are obsolete.
I wonder how Mssrs. Kapur and Subramian think the heads of the institutions should be selected? Do they think it’s time for an Indian head of the World Bank? Just to place things in perspective, India’s GDP is roughly that of France.
What I think we’re seeing in the World Bank and IMF is that they largely exist to promote the interests of a narrow clique. Time to go.
