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New World Bank President David Malpass breaks with Trump on climate change

President Trump nominated David Malpass to serve as president         of the World Bank in February, choosing a loyal supporter who         criticized China and called for shaking up the global economic         order.
President Trump nominated David Malpass to serve as president of the World Bank in February, choosing a loyal supporter who criticized China and called for shaking up the global economic order. (Joshua Roberts/Bloomberg)

Since taking over as World Bank president in April, ­David Malpass’s biggest challenge has been convincing people he is not doing President Trump’s bidding.

Malpass, 63, was picked by Trump to lead the World Bank, the global institution that provides more than $65 billion a year to help the world’s poor. Critics feared he would arrive on his first day with a hatchet and a game plan to make dramatic changes.

But so far there has been relief — even cautious optimism — among World Bank staff and the development community about Malpass, who has gone out of his way to provide reassurance that he is not planning to gut the bank’s personnel, alienate China or slash funding for climate change initiatives.

“We are committed to the Climate Change Action Plan,” said Malpass, referring to the bank’s pledge to invest $200 billion by 2025 to help countries adapt to global warming. “That’s a good number. That’s a beneficial number.”

In his early days on the job, Malpass has won over many skeptics with his eagerness to listen and learn. The question now is: What are his priorities?

“My focus is on the bank’s mission: poverty alleviation and shared prosperity,” said Malpass in an interview on the sidelines of the World Bank’s recent “Multilateralism: Past, Present, and Future” conference. “Where I’m putting a lot of my emphasis is in trying to have country programs that get good outcomes.”

The head of the World Bank has been chosen by the United States since the organization was founded in 1944, but experts say the best leaders have quickly realized they represent a global constituency during their five-year term, not just the White House.

During his time as a senior Treasury official in the Trump administration, Malpass said that multilateralism had gone “substantially too far.” Now he runs one of the leading institutions set up during or after World War II to bring the nations of the world together.

The fine line Malpass is trying to walk between Trump’s “America First” demands and those of other global powers is evident when he is asked whether he is a “globalist,” a term that has become a slight in Trump circles. Malpass recoils, scrunching his face as if encountering a bad smell.

It is best to think of him as a pragmatist, he said. “You said globalist. I think I’d rather, you know, think in terms of having a pragmatic goal of good outcomes in countries.”

A Republican, Malpass stressed that faster global growth is a top goal and that most countries would benefit from more competition and less red tape, a similar economic message to Trump’s. Malpass is also not a fan of mass migration, arguing the goal should be to improve poor or war-torn countries enough so people will want to stay put, including in Central America.

But Malpass appears to have broken from Trump by embracing the World Bank’s work to help poor countries address climate change and by expressing a desire to partner more with other global organizations, including initiatives led by China.

Trump has called climate change a “hoax” and tweeted in 2012, “The World Bank is tying poverty to ‘climate change’ And we wonder why international organizations are ineffective.”

“It’s certainly the case that a lot of the worst fears that were being expressed about the direction he might take the bank in — climate change denial or using the bank as a new front for a trade war with China — have not been realized,” said Kevin Watkins, head of Save the Children UK, who wrote an op-ed when Malpass took office warning of his “heavy political baggage.”

Malpass earned goodwill in development circles when he flew to Madagascar, Ethiopia and Mozambique in his first month on the job. The trip affected him, especially meeting Daviz Simango, the mayor of Beira, Mozambique, a major port city devastated by a cyclone in March.

Simango has been vocal about wanting Trump and anyone else who does not believe in the urgent need to address climate change to see the damage to his city. The World Bank is working on a massive drainage system in Beira to try to help the city deal with environmental crises.

“The [World Bank’s] mission is clear of poverty alleviation and of shared prosperity, and that includes living standards rising. That includes environmental and climate activity by the bank,” Malpass said, noting Simango told him the drainage system was a “lifesaver.”

Trump has taken actions to boost the U.S. coal industry, and some development experts were concerned Malpass might reverse the bank’s preference not to fund any more coal-fired power plants in developing countries. But Malpass made it clear he would not alter this, either.

“There aren’t any plans for changing policy in that area,” he said when asked about coal.

The World Bank estimates 736 million people were living in deep poverty in 2015, defined as less than $1.90 a day. That is about 10 percent of the global population, and there is a worldwide push to reduce that to 3 percent by 2030 as part of the United Nations Sustainable Development Goals.

Malpass called it a good aspiration but would not commit to hitting that target.

“The numbers are challenging. One of the challenges right now is, with global growth being slower, it’s harder to achieve the exact goals,” he said. “Whether the 3 percent is reachable depends, to some extent, what’s your growth forecast over the next five years for Europe, for the U.S., for China, for the major economies.”

World Bank economists predict slowing growth this year, largely because of less trade. Malpass, a former chief economist at a Wall Street firm, would not criticize Trump’s trade war specifically but did say there was a negative effect on growth.

“Uncertainty on trade has a slowing effect on the economy,” he said. “When there’s uncertainty about the trade environment, then it makes it harder to make a long-term investment.”

Some development experts are frustrated that Malpass is not more vocal in calling for more aid for the poorest nations, which they believe is key to making progress toward the 3 percent deep poverty goal. Some also worry that Malpass does not seem interested in pushing for universal health care.

“Unless we can increase the share of money going to the bottom 20 percent, there is no prospect of realizing the targets for poverty elimination. Malpass needs to be speaking much more about redistributive growth,” Watkins said.

There has also been a lot of attention on whether Malpass would push for the World Bank to scale back its lending to China now that it is the world’s second-largest economy and in Trump’s crosshairs on trade.

He stressed that he sees no need to deviate from the latest agreement the bank struck before he arrived to increase borrowing costs for wealthier nations, including China. The widespread expectation is that World Bank lending to China will gradually decline.

“We have a very constructive relationship with China,” said Malpass, who recently met with Chinese Premier Li Keqiang.

He called China’s progress on poverty reduction a “remarkable achievement” and said the Asian Infrastructure Investment Bank, which opened three years ago in Beijing and is often viewed as a World Bank rival, is “in general a constructive force” and partner.

The one area Malpass has already been outspoken on is calling for more transparency in the loans China is making to developing countries through its Belt and Road Initiative, a goal many economists and financiers share as it can be hard to decide whether to lend to an African nation when it is not clear what China has already given the country — or what the terms of the loan are.

“China’s involvement in developing countries grew very rapidly. And that causes challenges in transparency, in record-keeping, in the quality of the projects,” Malpass said. “I think they’re making some progress on that, and that’s clearly one of the areas that can be improved.”

But perhaps the biggest surprise of Malpass’s tenure so far is that he is not pushing for a major reorganization at the World Bank as his immediate predecessor did, a move that caused alarm among staff. His focus has been on how to improve work at the country level.

“It’s early days, but I’m cautiously optimistic about Malpass based on what I’ve seen,” said Masood Ahmed, president of the Center for Global Development.