Summers is one name being bandied about for the top job at the World Bank.
Everyone is focused on the U.S. presidential elections this year, but there’s another presidential race that’s heating up – the race to be president of the World Bank. It’s a process that’s just as political, but much less transparent, since the choice ultimately rests with the White House, which tends to pick an American with clout, regardless of whether he (they’ve all been male) is the best person for the job.
It’s an interesting time for the Bank, because in the post-financial crisis world, it’s suffering from a bit of mission drift. It doesn’t really have enough money to be a major player in lending, and the emerging nations that it has typically worked with (Turkey, China, and the like) are now high growth agenda setters with their own ideas about how to run the global economy, rather than beleaguered third world countries looking for a helping hand and a Western seal of approval.
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At the same time, development is a huge issue – inequality is growing everywhere, environmental sustainability is becoming more pressing, and the poorest of the poor still have inadequate access to everything from credit to clean water. All this is right in the sweet spot of the Bank, which means that the next president has a high-profile opportunity — either to lead on the key economic issues of the day or to fail spectacularly and finish off the reputation of the institution, which has for years been under attack for offering up Anglo-American advice on economic reform that its funders may or may not be taking themselves. For more on this, read former World Bank chief economist Joe Stiglitz’s seminal book, “Globalization and Its Discontents.”
So, who’s up for the challenge (or, the booby prize)? Hillary Clinton’s name has been bandied about, but she’s made it clear she’s not interested. Indra Nooyi, the head of PepsiCo, has also been talked about, but it’s hard to see why she’d leave a $15 million a year job for a $750,000 one. Development economist and Africa expert Jeffrey Sachs is making an aggressive push on his own behalf, winning support from nations like Kenya, Malaysia and Namibia. But he may have a hard time convincing other major developing nations like China, where his advocacy of “shock therapy” economic liberalization in many emerging markets in the 1990s isn’t popular.
Indeed, the names being tossed around in Beijing include Nigerian finance minister Ngozi Okonjo-Iweala, former UN under-secretary for economic and social affairs Jose Antonio Ocampo, and South African politician Trevor Manuel. The Chinese would also undoubtedly support Stiglitz himself, who is treated like a rock star there for his support of country particular reform, rather than a one-size fits all approach.
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But World Bankers themselves (at least the ones this reporter has spoken with) are putting their bets on either Susan Rice, a diplomat and US Ambassador to the U.N., or economist and former U.S. Treasury secretary Larry Summers, who was actually chief economist of the World Bank from 1991 to 1993. Summers is most likely, though his reputation in developing nations is uneven to put it gently, and he’s lost some intellectual clout post-financial crisis, thanks to his role as the intellectual mastermind of much of the economic deregulation that helped precipitate the financial crisis.
Summers is a bright guy, no doubt. But if he gets the job (and my bet is that he will) it will be interesting to see how his infamous lack of emotional intelligence and team-building ability plays in an institution with a bureaucracy as entrenched as the World Bank. As one former high-level insider puts it, “[The Bank] doesn’t like arrogant people coming in from the outside to tell them what to do. Going around the bureaucracy by appointing your own people is also difficult so you need to be diplomatic. For these reasons, the job has to go to someone who can really get along with people.” Maybe Summers can get his former boss, Bill Clinton, to give him some lessons on that front.
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