[Peace-discuss] With Larry Summers' World Bank Bid in Trouble, Mexico Insists on Open Process

[Robert Naiman]

http://www.huffingtonpost.com/robert-naiman/larry-summers-world-bank_b_1362716.html


Early last week the *New York Times*
reported<http://www.nytimes.com/2012/03/14/business/global/despite-calls-for-alternatives-another-american-is-expected-to-lead-world-bank.html>
that
despite all the previous fine rhetoric about the G20 and consultation and
open process, the U.S. Treasury Department had decided to rule by decree
and impose its own candidate for the next president of the World Bank, the
G20 be damned. U.S. officials informed G20 officials that the U.S. intended
to "retain control of the bank," as the *Times* put it. According to the *
Times*, the G20 countries grumbled but showed no sign of being willing to
fight Treasury. The U.S. candidate would be a "lock," the *Times* said,
"since Europe will almost certainly support whomever Washington picks."

Since the International Monetary and the World Bank were created, the U.S.
and Europe -- which control around half of the voting shares of these
institutions -- have colluded behind closed doors to determine the
institutions' top leaders, with Europe selecting the head of the IMF with
U.S. support and the U.S. selecting the head of the World Bank with
European support. In recent years, developing countries have complained
loudly about this practice -- a practice which would be illegal if the
World Bank were subject to the Illinois Open Meetings Act -- and under
pressure the World Bank has adopted governance reforms that are supposed to
guarantee an "open, merit-based process" in selecting the president. But
Treasury was claiming that there wasn't going to be any open process, it
was going to be Treasury diktat.

But over the course of the last few days, the world has changed.

First, development expert Jeffrey Sachs' public candidacy, and Treasury's
rude dismissal of his candidacy -- not even putting Sachs on its "short
list," although countries in Africa, Latin America, and Asia have publicly
endorsed Sachs' candidacy -- planted the seed of hope that there might be a
real race after all. Then 27 Members of Congress, led by Michigan Democrat
John Conyers and, sent a
letter<http://thehill.com/blogs/congress-blog/politics/216343-rep-john-conyers-jr-d-mich>
to
President Obama, urging Obama to nominate Jeff Sachs.

[Signers of the letter supporting the U.S. nomination of Sachs, which
included leaders of the Congressional Progressive Caucus and the
Congressional Black Caucus who have been most vocal in pushing for reform
of the World Bank, were: Rep. John Conyers, Jr. (D-Mich.), Rep. Hansen
Clarke (D-Mich.), Rep. Jesse L. Jackson, Jr. (D-Ill.), Rep. Barbara Lee
(D-Calif.), Rep. Zoe Lofgren (D-Calif.), Rep. James P. McGovern (D-Mass.),
Rep. Lynn Woolsey (D-Calif.), Rep. Raul M. Grijalva (D-Ariz.), Del. Eleanor
Holmes Norton (D-DC), Rep. Keith Ellison (D-Minn.), Rep. Robert Brady
(D-Pa.), Rep. Ruben Hinojosa (D-Texas), Rep. Peter DeFazio (D-Ore.), Rep.
Steve Cohen (D-Tenn.), Rep. Maxine Waters (D-Calif.), Rep. Bob Filner
(D-Calif.), Rep. Anna Eshoo (D-Calif.), Rep. Andre Carson (D-Ind.), Rep.
Chaka Fattah (D-Pa.), Rep. Rush Holt (D-N.J.), Rep. Charles B. Rangel
(D-N.Y.), Rep. Yvette Clarke (D-N.Y.), Rep. Donna Edwards (D-Md.), Rep. Jim
McDermott (D-Wash.), Rep. Sheila Jackson-Lee (D-Texas), Rep. Jerrold Nadler
(D-N.Y.) and Rep. Hank Johnson (D-Ga.).]

Then, it turned out that the U.S. candidate was Larry Summers. And then it
turned out that Europe wasn't going to go along with that after all, the *New
York Times*' "almost certainty" notwithstanding.

A week earlier, Treasury had leaked a purported "short list" consisting of
former Harvard President Larry Summers, UN Ambassador Susan Rice, and
Senator John Kerry. But it turned out that Susan Rice and John Kerry were
fake candidates, because neither one wanted the job. So it appears that
Treasury Secretary Timothy Geithner really had a "short list" consisting of
just one person: his buddy Larry Summers. Perhaps Geithner calculated that
if he presented President Obama with a "short list" consisting of Larry
Summers and two fake candidates, then Obama would have to choose Summers.

But apparently Geithner did not anticipate that Europe would object to
Summers.

Late Friday night, *AFP*
reported<http://news.yahoo.com/sachs-gets-support-world-bank-us-stalls-024504025.html>
:

Harvard University economics professor and former World Bank chief
economist Larry Summers is seen as divisive by some key allies of
Washington.

Summers doesn't look like a candidate who will have strong support...
Apparently, he cannot gain the backing of all Group of Seven countries,"
the person [close to the World Bank] said.

That probably means Europe, because it was Europe that Treasury had
signaled that it cared about, because the only G7 countries which are not
European are the U.S., Canada, and Japan (the European G7 countries are
Britain, France, Germany and Italy); and because British Prime Minister
David Cameron met with President Obama on Thursday, and perhaps that was
when it was revealed to Obama that Europe -- perhaps Britain itself --
would not go along with Summers.

Note that the fact that anyone is even talking about the fact that Summers
"cannot gain the backing of all Group of Seven countries" shows how U.S.
Treasury was trying to exclude developing countries from having any say
whatsoever. The "Group of Seven countries" aren't supposed to be
determining the President of the World Bank. At the G20 summit in
Pittsburgh in September, 2009 -- partly at the instigation of the Obama
Administration -- the G20
announced<http://www.sbs.com.au/news/article/1099172/G20-to-replace-the-G8>
that
it, not the G8, would be the premier world forum for consideration of
issues regarding the international economic and financial system. The
stated reason for the shift was that the G20 includes major "emerging
economies" like Brazil, Russia, India, China, and South Africa [the
"BRICS"], as well as countries like Mexico, South Korea, and Turkey.

And even the (self-appointed) G20 isn't supposed to be determining the
President of the World Bank -- there's supposed to be an "open, merit-based
process," in which every country can nominate, and then the World Bank
board -- supposedly representing all of the member countries -- is supposed
to make a selection. So Treasury was signaling its intent to carry out a
lot of exclusion, and to totally disregard the "open, merit-based process"
to which it and other World Bank members were supposedly committed.

But Mexico, the current chair of the G20, has now cleared its
throat<http://www.emergingmarkets.org/Article/2997083/Development/Support-builds-for-Sachs-World-Bank-bid.html>
.

The finance minister of Mexico, which holds the chair of the Group of 20
rich and emerging nations, said it viewed Sachs' surprise self-nomination
for the post "quite positively."

"We are closely watching this process," said Jose Antonio Meade. "We think
Jeffrey Sachs, who is a prestigious economist and knows Latin America well,
has made important contributions, and we view his interest quite
positively.

"We need to see what other candidates express interest, how the process
develops, and at the end of the day, hope that it complies with what G-20
has said, that the multilaterals undertake these processes clearly and
transparently and based on merit."

 Perhaps "we are closely watching this process" was a diplomatic way for
the Mexican Finance Minister to say, "We saw the article in the *New York
Times*, we see Treasury saying that we are going to have no say, and we are
not amused."

Indeed, three Latin American countries -- Chile, Uruguay, and Colombia --
have openly declared for Sachs. They join Kenya, Bhutan, Jordan, Malaysia,
Namibia and East Timor, which have also endorsed Sachs; at least one of
these countries has formally nominated Sachs. None of these countries is a
member of the G20. So, by repeating its insistence on an open, merit-based
process, Mexico isn't just protecting the interests of the G20 countries,
it's protecting the interests of all the member countries of the World
Bank. Way to go, Mexico! Please ask President Dilma Rousseff of Brazil to
reinforce your message.

And what of the U.S. nomination? The World Bank deadline for nominations
was supposed to be this coming Friday, March 23, but Geithner might ask for
an extension, because the dog ate his homework. Word has it that in spite
of the G7 opposition, Geithner has not given up and is still pushing
Summers. President Obama should ask Geithner for a completely new short
list, one with three real candidates who all want the job, and all of whom
can pass muster with the member countries of the World Bank. And that short
list should include development expert Jeffrey Sachs, the only candidate
who can say he has the support of governments in Africa, Latin America, and
Asia -- not to mention 27 Members of Congress.

-- 
Robert Naiman
Policy Director
Just Foreign Policy
www.justforeignpolicy.org
naiman at justforeignpolicy.org
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