The next World Bank president: Can Malpass beat expectations?
PLOS Medicine Specialty Consulting Editor Lorenz von Seidlein wonders if the controversial new World Bank president can provide effective leadership of the international agency especially around public health.
Last week, David Malpass was approved to become next president of the World Bank. Why should we be concerned? Critically for global health, the World Bank provides loans to low income countries at preferential rates and even better (or more realistically) gives grants to the poorest countries targeting fields such as health, agriculture and rural development, environmental protection, infrastructure, large industrial construction projects, and good governance. For example in December 2017 the World Bank approved a $105 million (USD) equivalent in non-reimbursable grants for Mozambique’s Primary Health Care program with a focus on coverage, quality, and access to essential primary health care services. In 2019 the WB has committed $5.75 million for HIV research and development and $50 million for nutrition and child development in Benin.
As the US occupies the largest voting block on the World Bank board, it has been the de-facto right of US presidents to appoint the president of the World Bank since its inception following the Bretton Woods agreements in December 1944. A brief look at the financial contributions of the 193 member countries makes it clear that the USA contributes the most. Based on the power divide after the second world war, Europeans appoint the managing director of the International Monetary Fund, set up to provide loans to member countries in financial distress sometime with stringent conditions to the detriment of healthcare. US presidents have long used the World Bank to neutralize cabinet members embroiled in controversy. This dates back to 1967, when Robert McNamara became untenable as Secretary of Defense and US president Lyndon Johnson, the US president at the time, moved the embattled cabinet member to World Bank. Perhaps in an attempt to break with the abuse of the World Bank presidency, Barack Obama appointed Jim Yong Kim, founding member of US-based non-profit health care organization Partners in Health, and a card-carrying global health specialist, as his World Bank president. Following an initial period of observation, Jim Yong Kim reorganised the Bank during his first 4-year tenure, but his reforms were considered ineffectual in resolving the problems they aimed to address, such as the much criticised silo mentality in the World Bank. Despite the opposition of the staff association, Jim Yong Kim was re-elected in 2016. One of major achievements during Jim Yong Kim’s second term was a $13 billion capital increase in 2018 – somewhat unexpected considering the America-first policy of the Trump administration. Key to this funding windfall may have been the early inclusion of Ivanka Trump in negotiations, who was apparently swayed by the Bank’s support for women’s empowerment. However, Kim’s tenure with the World Bank has overall been disappointing, hitting the public health community particularly deeply. For the first time in a long time, a specialist in global health was given the power to steer one of the largest institutions, which should support people living in low-income countries. There could be more oblique reasons for Jim Yong Kim’s departure yet within days of resigning he joined the private equity firm Global Infrastructure Partners (GIP) with the statement “This opportunity came, and, you know, it is very hard to predict when these things come to you in your life.” He also re-joined the board of Partners in Health, despite what would seem like obvious competing interests with his new position at GIP.
There is not much reason to be optimistic about Kim’s successor. As chief economist of the investment bank Bear Stearns, Mr. Malpass misjudged the subprime mortgage crisis which ultimately lead to the collapse of the bank in 2008. As Senior Economic Advisor in Donald Trump’s presidential campaign, Mr. Malpass left little doubt about his scepticism of multilateral institutions in frequent television and radio appearances. This public disbelief in the benefits of multilateralism could now turn against Mr. Malpass’ acceptance by staff and clients of the bank. The current largest recipients of World Bank loans, India and China, may feel little distress, but low-income countries may consider alternative capital sources such as private investors and the Asian Infrastructure Investment Bank, dominated by China. The consequent exposure to increasing foreign debt is a danger for low-income countries which should not be underestimated. Several beneficiaries of Chinese loans, including Malaysia, Sri Lanka, the Maldives, Pakistan and Kenya, are already realising that they are paying an unacceptably high price for loans and are trying to re-negotiate terms for loans or cancel large projects. A debt default in a low-income country will have a direct, often catastrophic effect for people depending on the government supported health sector. For people depending knowingly or unknowingly on funds from the World Bank the situation could become a whole lot worse as Mr. Malpass takes over.
Few people on the left had high expectations in Robert McNamara’s motivation and achievements; he was perceived as a main strategist of the Vietnam war when he took over as World Bank president. Yet it was McNamara who shifted the focus of the World Bank to poverty reduction which is now the declared goal of World Bank. Let’s hope Mr. Malpass can beat the expectations, too many people depend on a functioning World Bank.
Lorenz von Seidlein has worked for 20 years on malaria and other issues in global health. Lorenz is currently coordinating a malaria elimination project with the Mahidol Oxford Research unit in Bangkok, Thailand. He is a Specialty Consulting Editor for PLOS Medicine.
Feature image credit: Christine und Hagen Graf, Flickr