Maybe it’s relief that Donald Trump isn’t tapping his daughter to head the World Bank. Or perhaps countries are just tired of fighting the U.S. President at every turn.
But so far, Canada and other countries have been uncharacteristically quiet about Mr. Trump’s choice of an outspoken World Bank critic to head the Washington-based lender to needy economies.
A spokesman for federal Finance Minister Bill Morneau said Canada backs a “fair, inclusive, merit-based process” that leads to a candidate who enjoys “broad support” among the bank’s 189-member countries.
Last week’s nomination of U.S. Treasury undersecretary David Malpass dispelled fears that Mr. Trump would pick Ivanka Trump, a White House adviser and former fashion designer, model and reality TV personality. Mr. Trump took a more traditional path with Mr. Malpass, a former Wall Street economist and senior official in three Republican administrations.
That isn’t to say Mr. Trump’s choice isn’t controversial. Economist Eswar Prasad, a senior fellow at the Brookings Institution in Washington, says Mr. Malpass has shown “antagonism to the World Bank’s core objectives and hostility to multilateralism,” and as president might put at risk key bank priorities such as women’s rights, inequality and climate change.
Other critics have derisively pointed out that as chief economist of Bear Stearns in 2008, Mr. Malpass played down the housing crash and said the economy was poised for solid growth months before the investment bank collapsed in the global financial crisis.
At least one country is reportedly preparing to nominate a challenger to Mr. Malpass, but so far that hasn’t happened.
Beating out Mr. Malpass is a long shot. Officially, any member country can nominate a candidate, with the World Bank’s 25-member executive board making the final call. But under a controversial backroom deal, the U.S. has always selected the World Bank president as part of a quid pro quo for backing Europe’s pick to lead its sister organization, the International Monetary Fund. The bank is collectively owned by member countries, but the U.S. has the most votes, with 16 per cent.
There are plenty of good reasons to shake up the selection process and make it more inclusive. Unlike the IMF, which is headed by France’s Christine Lagarde, the World Bank hasn’t had a female president in its 75-year history. Nor has it had one from a developing country, even though its job is to lift up the world’s economic underclass.
For all his flaws, Mr. Malpass is not the worst thing that could happen to the World Bank. Yes, he’s a conservative ideologue who shares Mr. Trump’s unilateralist world view and hardline stance on China. But Trump administration officials insist his mandate won’t be to tear apart the bank or lay the groundwork for a U.S. withdrawal from the lender. At least Mr. Malpass, who speaks four languages and knows the global economy, is actually qualified for the job.
His nomination sends a message to China. Mr. Malpass, who is part of the Trump administration team negotiating a trade deal with Beijing, has complained repeatedly that the bank should stop lending to emerging countries such as China that no longer need its financial help.
“China has plenty of resources,” Mr. Malpass complained in 2017, soon after joining the Trump administration. “And it doesn’t make sense to have money borrowed in the U.S., using the U.S. government guarantee, going into lending in China for a country that’s got other resources and access to capital markets.”
Cutting off China could prove awkward for the World Bank, which has been a major supporter of the “One Belt, One Road” initiative, China’s sweeping plan to cement trade ties throughout central and Southeast Asia, and beyond, in part through massive infrastructure projects.
Mr. Malpass is right to question why China, which lends plenty of its own money to developing countries, needs the World Bank’s help. And yet China is the bank’s largest customer, with more than US$60-billion in loans outstanding to hundreds of projects. Since 2016, the bank has lent China nearly US$8-billion, even while tightening lending conditions under pressure from the U.S. The loans it makes to China mean more needy countries get less.
Other countries have until March 14 to offer up an alternative to Mr. Malpass, with a final decision expected in April. At the last go-round in 2012, U.S. pick Jim Yong Kim, a Korean-American physician who quit this month, faced challengers from Nigeria and Colombia. They eventually withdrew for lack of support.
Mr. Malpass’s candidacy is shaping up as a loyalty test. Countries may have to choose between what the U.S. wants and bowing to China’s economic ambitions.
It’s a contest the U.S. appears destined to win.