What happened at the top of the World Bank
And what will Donald Trump do now
Marco Orioles’s Point
The sudden, but not unexpected, resignation of Jim Yong Kim as head of the World Bank opens a new opportunity for Donald Trump’s agenda, whose hostility towards multilateral structures is now proverbial, but also a possible clash between Washington and the other member countries of the global financial institution, which could challenge that unwritten pact that it has seen, since the founding of the World Bank with pacts Bretton Woods of 1944, the United States appoint the summit.
Kim’s departure from the scene three and a half years earlier than the natural expiration of the mandate, set for January 30, 2022, is not, as we said, unexpected news. It would instead, as many commentators note in these hours, the consequence of an agreement between Kim and the Trump administration, which in exchange for the increase in the Bank’s budget and some reforms, can now select a man more sensitive to his priorities. .
Priorities that didn’t match Kim’s at all. 59-year-old, Seoul-born but raised in Iowa, an infectious disease physician with subsequent training as an anthropologist, the outgoing head of the World Bank was chosen in 2012 by Barack Obama and his first Secretary of State Hillary Clinton – with a mandate subsequently renewed in 2017 for a further five years – to pursue objectives that are the polar opposite of the issues that characterize the Trump White House agenda. Just think of the monstrous allocation, decided last year for the next five years, of two hundred billion dollars to fight climate change, about which the skepticism of Trump and his associates is well known. Or the Bank’s commitment to the refugee emergency from the Middle East, another issue that certainly did not find favor with the tenant of the White House. Not to mention the decision to stop funding for coal-based energy projects, a resource that the US government has decided to relaunch.
But it is on China that the clash between the Trump administration and Kim had become acute. Criticism of Pennsylvania Avenue and the Treasury Department led by Steven Mnuchin had pinned on the loans that the World Bank – whose formal mandate is to combat extreme poverty in the world with its financial leverage – insists on granting even to countries not exactly in poverty like, in fact, China. The tug-of-war undertaken by the administration with the institution led by Kim had seen, last April, a victory of the first, albeit in the form of an honorable compromise: the US government accepted the capital increase of 13 billion of the Bank in exchange for the 30% decrease in loans granted to Beijing, which fell to $ 1.8 billion last year.
And also for Kim’s complacency that The Donald never attacked either him or the Bank head-on. On the contrary, the tycoon has publicly called him “a friend” and “an extraordinary guy”. “I could have named him,” the head of the White House commented. But Trump’s sympathy for the banker also has reasons free from any ideologism: last year, the Bank financed a billion dollar project by Ivanka, the daughter and adviser of the US president, to grant loans to female entrepreneurs. . Faced with the accusation of conflict of interest, the American president was angry: “It is by no means an insignificant project”, I declare at the 2017 G20 in Hamburg. “This will be a strong stimulus to the economic growth of the future (…) and at the same time it will lead to greater gender equality”.
Kim announced that her resignation will take effect on February 1, when the Bank’s CEO, Bulgarian Kristalina Georgieva, takes over as interim president. From this moment, the battle for the appointment of a successor begins, which may not be a walk in the park for Donald Trump. In fact, if it is tradition that the president of the Bank is designated by Washington (as well as the director of the sister institution, the International Monetary Fund, it is up to a European candidate), with the board of governors merely ratifying the American decision, by over time, this rule is openly challenged by emerging countries, which wish to have a greater say in the management of a structure whose decisions have a direct impact on the global South.
Kim’s appointment, on the other hand, had to stand up to the challenge put forward by Nigeria and Colombia, who presented their alternative candidates. This year, developing countries will then have one more reason to hinder Washington’s maneuvers: the White House’s declared hostility towards multilateralism, of which the World Bank is a fundamental cog, as well as for policies from the most or less vague globalist flavor, such as the battle to promote clean energy.
The appointment of Kim’s successor must therefore be followed closely, if only to understand whether Donald Trump will have another location in which to pursue his goals, including contrasting Chinese development.
