Must a Yank Lead the Bank?

By Moises Naim
Sunday, May 13, 2007

For more than 60 years, Mexico's most important political practice was known as the dedazo. It was a moment near the end of the president's term when he would metaphorically point his finger (dedo) at a crony, thereby anointing his successor. An election campaign would ensue, but everyone knew who the winner would be.

This primitive practice was abandoned in Mexico in 2000, but it is still very much alive at the World Bank, an institution that preaches -- and often tries to impose -- good governance, transparency and meritocracy on poor countries. Like his predecessors, World Bank President Paul D. Wolfowitz was anointed by a dedazo from the U.S. president, even though the bank is not part of the U.S. government and even though 84 percent of the bank's shares are owned by 185 other nations. Of course, the bank's board of directors has a formal process by which it considers candidates, interviews them and deliberates at length. But the process is as bogus as the Mexican elections used to be. The pool of candidates is usually limited to friends of the U.S. president or members of his inner circle. Foreigners need not apply.

This last restriction results from a long-standing informal deal between the United States and Europe, whereby the former gets to appoint an American to run the World Bank while the latter appoints a European to lead the International Monetary Fund (IMF). Americans and Europeans have happily done this for 63 years, and they may have to do it again soon if Wolfowitz leaves over the uproar caused by his handling of a conflict of interest over the pay and promotion of his girlfriend, Shaha Ali Riza, a longtime bank employee.

The selection process for Wolfowitz's successor is likely to be as arbitrary, secretive and medieval as ever. That's too bad.

In an ideal world, the bank's shareholders would insist on a competitive, fair method for choosing a replacement. To make good on our rhetoric about fighting world poverty, we should start by finding a World Bank president who has produced real economic success in a poor country. The world does not lack for competent, highly trained and experienced leaders. Many of them just happen not to be American.

Take, for example, Kemal Dervish of Turkey. During an earlier stint at the bank, he proved to be a highly effective manager of economic reconstruction in Bosnia. Later, as Turkey's economics minister, he engineered the difficult reforms that avoided a financial meltdown there. He holds a PhD in economics.

Or consider Ernesto Zedillo, a former president of Mexico who not only dealt skillfully with his nation's 1994 economic crisis but also killed off the dedazo. He has a PhD in economics from Yale, ministerial experience and a proven track record in managing large-scale change.

Another attractive candidate would be Trevor Manuel, South Africa's long-serving and widely respected finance minister. Not only would he bring valuable experience about Africa's economic development challenges, but he is a skilled politician whose previous life as an anti-apartheid activist landed him in prison for years.

Montek Singh Ahluwalia is an Oxford-trained Indian economist who has held several important jobs in the Indian government. He was founding director of an independent IMF unit charged with evaluating the fund's work. He would also bring useful experience gained in the rough politics of the world's most populous democracy.

Leszek Balcerowicz is a former deputy prime minister and finance minister of Poland who has also served as governor of its Central Bank. He became legendary in the 1990s for shepherding the reforms that tamed runaway inflation and created the conditions that have allowed Poland to enjoy some of the fastest growth rates of all post-communist countries. Like the others mentioned here, Balcerowicz is no mere technocrat; he's also a savvy politician, one who got his start as a member of the Communist Party before being expelled for siding with the Solidarity trade-union movement.

Want an even bigger revolution? Don't just appoint the first foreigner to lead the World Bank; also pick the first woman. One fine candidate would be Rebeca Grynspan. She is a former vice president of Costa Rica, where she led major programs in social development and coordinated the activities of the social and economic ministries. She now serves as the head of the U.N. Development Program for Latin America.

Of course, these candidates lack one key requirement: a U.S. passport. So none of these superbly qualified, passionate, lifelong advocates for the poor are in the running, although any American policymaker, no matter how undistinguished or tainted, could be. Surely Washington should want to pick a candidate at least as good as the ones above. For now, though, the only foreigner who seems genuinely to be in the running is a man seen around the world as an honorary American: Tony Blair.

Moisés Naím, the editor in chief of Foreign Policy magazine, served as Venezuela's minister of trade and industry and as executive director of the World Bank in the early 1990s.

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