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Mohamed A. El-Erian Headshot

World Bank Should Heed Obama's Statement

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On Friday in the Rose Garden, President Obama rightly stated, "It is time for a development professional to lead the world's largest development agency." Both the importance and shelf life of this statement go well beyond the immediate expression of public support for Jim Yong Kim, the American nominee for the head of the World Bank.

Mr. Kim joins two other candidates for a position that will be vacated in June by Robert Zoellick, the current president of one of the most important multilateral institutions in the world. Through what it decides to do, and how it does it, the Bank has an outsized impact (good and bad) on the wellbeing of millions, if not billions of people in developing countries. And reflecting the ever-increasing role of these countries in the global economy, it also influences the prospects for others, including the United States.

It is therefore encouraging that Mr. Kim joins two other nominees who are also "development professionals" in their own right: Jose Antonio Ocampo, a professor at Columbia University who previously impressed as minister of finance of his native Colombia; and Ngozi Okonjo-Iweala, the highly-respected Nigerian minister of finance who, in her prior position, excelled in the number two position at the Bank.

These three qualified candidates offer a different mix of expertise. For example, Mr. Kim is deeply knowledgeable on global health but has had less exposure to the range of development issues that the Bank deals with. The mix for Mr. Ocampo and Ms. Okonjo-Iweala is tilted much more in favor of top-down expertise, with much less in-depth command of global health.

This range of top-down versus bottom-up balance is an important consideration for the Bank's Executive Board, the body that is now charged with evaluating each candidate and making the appointment -- at least, it should be. You see, for almost 70 years, the Board has abided by a "tradition" that it always appoints a U.S. citizen to the presidency of the institution, regardless of his (and only men have occupied the post) qualifications and experience.

The U.S. is again in a position to insist that nationality prevail. With a weighted voting structure which reflects the world of yesterday rather than today, all it takes is for Europe to join the U.S. in retaining a nationality-based approach. And Europe has a huge incentive to do so given its eagerness to protect the other "tradition," whereby a European always heads the IMF (commonly called the Bank's "sister organization").

The world has an interest in seeing the Bank's Executive Board translate President Obama's statement into a thorough merit-based assessment of the three candidates. It can, and should do so by evaluating comprehensively each candidate, conducting proper background checks, and linking all this to the broader strategic goals of the institution -- a commonsensical approach that is essential to good governance and yet has been largely absent in prior selections of Bank and IMF heads.

This failure relates to another way in which President Obama's statement can be interpreted, and should. By noting that "it is time" to map a "development professional" to "the world's largest development agency," President Obama may also be suggesting that this was not done in the past. And he would be right.

Past American administrations have placed a lot less, if any emphasis on development qualifications. Their choices were governed by internal politics and bureaucratic largess. Indeed, in many cases, newly appointed leaders of the Bank (and IMF) embarked on a steep learning curve after finding themselves in the corner office, rather than before.

This reality should also be taken seriously by the Executive Board. Once it concludes its deliberations on the three candidates, it should discuss seriously how to hard wire a proper merit-based selection process that emphasizes qualifications and not nationality. And what the Bank does will influence the IMF's selection process, which remains outdated and feudalistic.

On Friday, President Obama took two important steps with respect to the world's premier development agency: He chose a "development professional" as America's nominee, and he stressed that the Bank's leader should have a deep understanding of "the role development plays in the world." Let us hope that this is reflected not just in the ultimate selection, but also in how the process breaks away from the old and harmful approach based on nationality and political favors.