There’s an urgent need to clean up the World Bank and IMF

Synopsis: Wrongdoings of WB and IMF, unsuitability of heads of these institutions, various steps that these institutions need to take to maintain their credibility and legitimacy 

Introduction 

Head of the World Bank and IMF are selected under the dual monopoly selection procedure wherein only an American can head the World Bank and only a European can head the IMF. This has been the result of a long-standing arrangement among the western powers.

It needs to change.

Why the dual monopoly system needs to change? 

The system requires change because of the selection of such heads whose personal integrity has often been called into question.

For instance: Manipulation of data by the WB wherein the bank manipulated the data of at least two major countries (China and Saudi Arabia) to make them look better than they would otherwise have been. This shows that its integrity is at stake and not the ideology.

Why qualities of honesty and decency are a must for heads of world institutions?  

The heads of these institutions often go around the developing world, preaching the virtues of good governance, from arguing against the corruption to improving data integrity. There are even World Bank indices to rank countries on those metrics. 

If they do not have the qualities of honesty, morality and decency, then it is for sure that they will not pass good message to others.  

How credible can such policy messages be if their carriers are themselves compromised? It is not just the charge of hypocrisy, but also the effect on the morale and motivation of the staff of these institutions. Many of them chose to work here because of a commitment to public service. How must they feel if their boss is a sexual predator or complicit in data manipulation?  

What have been the policies of developed countries in making appointments to International Organizations? 

Countries place their nationals to head International institutions, both for prestige and to pursue their national interests. Moreover, there is now a deliberate contest between the West (and especially the US) and China to shape the global order by placing their nationals as head of global international organizations.

– China is following the same strategy. It is evident from the fact that China attempts to place its own nationals in existing IOs as well as creating new ones. Its own nationals now head four of the 15 UN specialised agencies. China’s efforts, its success, and more broadly its influence in IOs should certainly raise deep concerns, most notably the suppression of the inquiry into the origins of the coronavirus.

– Equally, Western countries have been anything but an exemplar in their commitment to international organisations (the US neutering of the World Trade Organisation’s Appellate Body under both Trump and Biden administrations is another recent example).

What is the way forward?

Global political leaders must act with urgency and conviction to stem the rot.

They must open the selection of the heads of these institutions to the best candidate, regardless of nationality.

Source: This post is based on the article “ There’s an urgent need to clean up the World Bank and IMF ” published in The Indian Express on 9th October 2021.