Zoellicks World Bank Coronation

It’s all but official. Paul Wolfowitz, the neocon who helped give us the Iraq War only to be sidelined to the World Bank where he ended his presidency mired in a corruption scandal that led to his forced resignation, will officially step down on June 30. The next day, on July 1, he will be replaced by Robert Zoellick, another neocon who advocated invading Iraq in the 1990s. This is a man who ran amok in his role as U.S. Trade Representative.

Leaving aside the question of whether Zoellick is the right man for the job, the selection process is something more like a Roman emperor choosing a regent than anything resembling transparency or democracy. By a “gentleman’s agreement” now more than 60 years old, the U.S. government appoints the head of the World Bank; the head of the International Monetary Fund (IMF) is generally selected by the Europeans. The United States has always appointed someone who is white, male, and friendly with the current administration.

It’s worth noting that the United States has, at least on one occasion, vetoed the European choice for the IMF chief, and that the last selection process for the Fund, though highly flawed, involved three candidates, one of whom was not a European. This is a stark contrast to the one-horse-race “nomination” process that’s now repeating itself for the second time in just over two years at the World Bank.

This informal agreement is not enforceable through any law or treaty. There is nothing to stop other countries, especially those with significant voting power at these institutions, from blocking the process or attempting to gain support for a new process. But as this sad occasion demonstrates, no country is willing to use its political capital to stand up to the Bush administration. At least not on this issue.

Coronation Street

The World Bank’s selection process is just one example of its serious, and possibly terminal, governance failures. Because of the principle of “one dollar, one vote” on the World Bank’s Board of Directors, Northern governments and especially members of the Group of Seven wealthy industrial countries wield nearly half the board’s voting power.

Out of 48 possible seats (executive directors and alternates), a full 24 are taken by representatives of North American, European, and Japanese governments. Though these countries comprise a little over 10% of the world’s population, and about 12% of the number of countries in the world, they control half of the votes at the World Bank. By contrast all of Africa, the region in which the Bank does the most work and has the most power, holds only four seats.

The biggest shareholder is the United States, which effectively holds veto power by ensuring that they control more than 15% of votes (changes in policy direction require a super-majority of 85% of board votes). A basic principle of democracy (as opposed to say a 16th-century kingdom) is that a person should have control over decisions that affect him or her. When understood through this lens, the World Bank becomes the leading advocate for monarchy in the world – an institution that prioritizes making decisions on behalf of those who have the least say over it. Thus it makes sense that the Bank’s president is subject to a coronation rather than an election.

Some Tough Questions

Zoellick’s supporters claim that it’s far too early to begin making predictions about what he will or will not do as head of the World Bank. But it is not too early to start asking him, and the Bush administration, some tough questions.

The first may be whether, since they are big believers in democracy, they would like to genuinely democratize the World Bank itself. Another, in light of Zoellick’s history of prioritizing the interests of corporations when he worked as U.S. Trade Representative, may be whether he believes in enforcing intellectual property rights for life-saving medicines in Africa. Does Zoellick believe that human-induced global warming is a reality, and if so, how does he feel about penalizing companies that continue to pollute (i.e. carbon debits instead of carbon credits)? How does Zoellick feel about moves made on Wolfowitz’s watch to make the Bank a proponent of Bush’s inane “abstinence only” HIV/AIDS policies? What does he intend to do about the World Bank’s continued reliance upon failed structural adjustment policies of privatization, liberalization, and budget austerity?

It’s not clear whether any of these questions were actually put to Zoellick as part of his “confirmation process.” Watchers of the World Bank, and of neoconservatives, will monitor Zoellick’s actions over the next few months for answers that may confirm our worst fears.

Sameer Dossani is the director of the 50 Years Is Enough Network and a frequent contributor to Foreign Policy In Focus.