Financial Times – US challenged to open up World Bank job

Krishna Guha in Washington MAY 22, 2007

Brazil’s representative at the World Bank on Tuesday challenged the tradition by which the US decides who will be the bank’s president.

In a note to colleagues, Brazil argued that the board be allowed to chose between more than one candidate, based on merit.

Otaviano Canuto’s proposal comes sharp on the heels of a board battle that culminated in the resignation of Paul Wolfowitz, the bank’s president, who will leave on June 30. Mr Wolfowitz has given up almost all executive functions, and the day-to-day running of the bank was transferred on Monday to its six most senior remaining managers.

Many countries had wanted Graeme Wheeler, one of the two managing directors, to take over running the bank but the US insisted there would be no designated interim leader.

The board meets on Wednesday to discuss the selection process for the next president – a formality in the past, according to a tradition that sees the US nominate one of its citizens to be president, in return for a European heading the International Monetary Fund.

The big emerging market countries have long been unhappy with the arrangement and the crisis over Mr Wolfowitz has given fresh impetus to calls from development experts, non-governmental organisations and the bank’s staff for a more open competitive process.

In a memorandum to the bank’s 24-member board, Mr Canuto, who represents Brazil, the Philippines, Colombia and five other Latin American and Caribbean states, said: “I believe that in the current juncture it is of utmost importance that we proceed with an open, democratic and transparent process.” This should be “based on the merits of a plurality of candidates regardless of nationality”, he said.

Such a process would help the bank to “regain and enhance legitimacy amongst all members and other stakeholders”.

In principle, this could be reconciled with the traditional US prerogative to nominate the bank president, as the US could put forward a short-list of candidates from which the board could chose.

Many members of the bank’s board feel there should not be a return to business as usual and do not want to be forced to accept a White House nominee.

Hank Paulson, the US Treasury secretary, has promised to consult the other shareholders before the US puts forward anyone for the job. However, the White House, which fought to keep Mr Wolfowitz in his job, has given every indication it in-tends to reassert its customary rights at the bank in full.

President George W. Bush, told Reuters he wanted a US citizen in the job and played down speculation that he might turn to Tony Blair, the departing British prime minister. Koji Omi, Japan’s finance minister, said he fully supported Washington’s drive to have an American.

Nancy Birdsall, the president of the Center for Global Development, has told the FT she thinks there should be Senate-style confirmation hearings to approve or reject the candidate the US administration proposes.

Meanwhile, the bank’s management team said it was essential to get its fundraising back on track and press ahead with agreed strategies, including the governance and anti-corruption drive championed by Mr Wolfowitz.