Obama’s World Bank Pick May Succeed, But Not for the Reasons Obama Thinks

| Foreign Policy | Lorianne Woodrow Moss
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On Friday, President Obama made a surprising pick to lead the World Bank, Jim Yong Kim.  Best known for co-founding Partners in Health, an international humanitarian non-profit organization, Kim currently serves as president of Dartmouth College.  He previously led the World Health Organization's HIV/AIDS efforts.  Kim holds a doctorate in anthropology and a medical degree from Harvard, and has been recognized in numerous venues for his contributions to international development and global health.

Kim’s selection has been greeted favorably by many liberals and conservatives alike.  There are reasons to be cautiously optimistic about Obama’s pick.  However, a read of Obama’s comments in introducing Kim reveals that Obama himself doesn’t necessarily understand them.

“It’s time for a development professional to lead the world’s largest development agency.”

As Elliott Abrams points out, World Bank presidents historically have come from a variety of backgrounds.  Some have experience in international finance.  Others have been political figures or diplomats, like outgoing president Robert Zoellick.  In Kim, Obama has chosen someone whose background in development indeed sets him apart from past Bank presidents.

Obama is right in recognizing the World Bank’s mission of fostering development.  Yet he ignores the fact that the World Bank is at its heart a financial institution, making loans and some grants to developing countries around the world at terms more favorable than they could obtain commercially.  The Bank is also an international organization composed of member states, with all the diplomatic and bureaucratic challenges that brings. 

Not wanting to upset his Occupy Wall Street backers, Obama unsurprisingly shied away from selecting a banker to lead the organization.  However, an understanding of international financing would be an asset for the Bank’s president.  Determining the right conditions for lending is fundamental to the Bank’s work, especially as it competes with China and other investing countries to provide loans.  The World Bank president may not make lending decisions on his own, but he will have to manage individuals who are experts in financial matters.  Kim’s views on economic policies are not well known, and a book he coauthored in 2000 worrisomely finds “evidence that the quest for growth in GDP and corporate profits has in fact worsened the lives of millions of women and men.”  Moreover, Kim does not run unopposed for the position, and his challengers unquestionably have stronger economic credentials than he does.  

Kim’s health care background dovetails with what Obama would consider to be his own signature accomplishment.  But the World Bank should not be turned into a global health organization – there are plenty of those already.  It should not become just another development organization either, as Jennifer Rubin notes.  Nor should it lose its identity as a financial organization.  If Obama’s plan in selecting Kim is to transition the organization away from its business model of concessional loans, he is misguided.

The best reason to endorse an unconventional candidate is not that he will transform the Bank into another development NGO, but rather that he may be able to look afresh at the organization and shake it up as needed.

“Jim has spent more than two decades working to improve conditions in developing countries around the world.”

Kim’s biography is impressive not simply because he has been involved in international development work.  It’s the way he has approached his work that makes him an appealing choice.  Partners in Health is not a status quo development organization, and Kim’s career is noteworthy for his challenging of accepted ideas about health care and development. 

Kim is results-oriented, and would bring with him to the job a great deal of grass roots experience.  As World Bank president, he likely would challenge the Bank’s prevailing ideas about how to gauge the development impact of its loans and grants.  

In fact, his willingness to challenge the status quo goes beyond Kim’s views about international development, in ways Obama and other liberals might find uncomfortable.  The Wall Street Journal praised Kim as “higher education’s Paul Ryan” for his budget cutting efforts at Dartmouth.  In an October interview with Charlie Rose, Kim criticized not only Obamacare’s failure to address health care costs, but also the President’s lack of leadership to that end.  Kim told author Tracy Kidder that political correctness gets in the way of efforts to help poor countries.

Kim is an outsider because he is neither a banker nor a diplomat.  He is even more of an outsider because of his inclination to defy conventional wisdom.  An outsider’s outsider may be just what the World Bank needs.

“Immigrating to this country from Korea at age five, Jim[’s] … personal story exemplifies the great diversity of our country …”  

During his introduction of Kim, Obama twice brought up his ethnicity.  Some analysts believe Obama deliberately chose a minority candidate in order to deflect criticism of the U.S. monopoly on the Bank presidency.  

Kim’s biography may be compelling, but the important thing is not that he isn’t white, or that he was born overseas.  The key is that Kim is American. 

By custom, the leader of the International Monetary Fund is a European and the head of the World Bank is an American.  Amid a growing sense that the U.S. alone should not decide the Bank’s leadership, the American pick will be challenged this year, for the first time, by nominees from Colombia and Nigeria.

Unlike many other international organizations, voting at the World Bank is proportional to a member-state’s financial contributions.  While the Bank’s Executive Board will judge the candidates against one another, the weighted votes of the U.S. and Europe (with support from South Korea) should be sufficient to ensure Kim emerges on top, unless additional vetting reveals serious problems.  

The U.S. is the top contributor to the World Bank, as we are to countless other international organizations.  Yet because voting is weighted at the Bank, we have more say in how it is managed, and consequently it is one of the few international organizations led by an American.  This is an important principle and should not be altered.  Rather, it should be expanded – beginning with the United Nation’s budget committee where we are routinely railroaded even though we have the most skin in the game.

Obama should make the case that not only is Jim Kim a good candidate for the job, but that Congressional support for the Bank will suffer if the job goes to a non-American.

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Jim Kim’s lack of diplomatic and economic experience may handicap him in dealing with World Bank diplomats and economists.  Conservatives may want to keep their enthusiasm in check until more is known about his attitude toward economic growth and the role of corporations.  However, Kim’s no-nonsense, outsider approach could be very healthy for the Bank, especially if he hews to his own instincts rather than liberal conventional wisdom.  

The bottom line is that American taxpayers are best served by having an American at the helm of this international organization.  So far, Kim appears to be a satisfactory candidate.  He may even exceed expectations, including Obama’s.