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Activists display a banner calling out World Bank president David Malpass in front of the organisation’s headquarters in Washington on September 22. Climate groups called for Malpass to be removed after he refused to say if he believed man-made emissions contributed to global warming. Photo: AFP
Opinion
Inside Out
by David Dodwell
Inside Out
by David Dodwell

World Bank and other multilateral bodies need reform, but still have critical role to play

  • The resignation of the World Bank chief has renewed discussion of the failings of multilateral organisations
  • While calls for reform of these institutions are justified, problems like the global pandemic, climate change or the threat of nuclear war cannot be addressed without them
David Dodwell
David Dodwell
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On February 16, after months of calls for his resignation, the head of the World Bank, David Malpass – who had been nominated to the position by former US president Donald Trump in 2019 – announced he would step down prematurely “to pursue new challenges”.

Environmentalists were reportedly jubilant. “This is great news,” one activist was quoted by Reuters as saying. “It is hard to think of a worse fit for World Bank President than an alleged climate denier and the chief economist of Bear Stearns ahead of the 2008 recession.”

Last week, US President Joe Biden nominated Ajay Banga as Malpass’s successor. Who again? Banga is a US citizen, who worked for Nestle, Pizza Hut and KFC in India, before moving on to Citigroup, and then Mastercard, where he served as global CEO from 2010 to 2020. In short, apart from being unknown in development lending circles, his impeccable private-sector credentials offer no comfort to those pressing for World Bank reform.

At the heart of this World Bank controversy is not just argument over who should head major multilateral organisations, but a much wider discussion over the fitness for purpose of the institutions set up in the wake of the 1944 Bretton Woods conference. Pressure for reform has also been felt at the International Monetary Fund, the World Trade Organization and the World Health Organization.

Some have called for the abolition of these institutions, which they see as hives of nepotism, corruption and wastefulness, while hypernationalists like Trump and his base resent the constraints these bodies place on their country.

While the calls for reform have been widespread, and despite Trump’s unilateralist urges, a resounding consensus remains that, in spite of our concerns, the World Bank, IMF, WTO and the specialist bodies under the United Nations umbrella play an indispensable role across a range of global challenges which cannot be easily resolved at the national or bilateral level.

It is not only when addressing the global pandemic, climate change or the threat of nuclear war that it is clear there are certain problems which transcend geographical, national or ideological boundaries.

World Bank president David Malpass (left) and Chinese Premier Li Keqiang talk before a press conference for a round-table dialogue at the Diaoyutai State Guesthouse in Beijing on November 21, 2019. Photo: AP
Think, for example, of the thankless and unending work of the UN High Commissioner for Refugees; of the constant battle against poverty and starvation induced by floods, droughts and other natural catastrophes; of the WHO’s work on diseases like smallpox and malaria; of the multi-agency cooperation related to Ukraine encompassing refugees, global food supplies and protection of a nuclear power plant. The list of transnational challenges that can only be addressed, mitigated or resolved through collective action is long and daunting.

As UN Secretary General Antonio Guterres said in his address to the General Assembly last September: “No major global challenge can be solved by a coalition of the willing. We need a coalition of the world.”

This conviction is reminiscent of the words of then US president Franklin D. Roosevelt at the Yalta Conference between the United States, United Kingdom and the Soviet Union in 1945. He said the conference’s efforts “ought to spell the end of the system of unilateral action, the exclusive alliances, the spheres of influence, the balances of power, and all the other expedients that have been tried for centuries – and have always failed”.

The sentiment was also echoed in 2016 by Antony Blinken, now US secretary of state: “There remains no substitute for the work the UN does, the legitimacy it brings, the reach it allows.”

Steward Patrick, a senior fellow at the Carnegie Endowment for International Peace, noted that this work is “a relative bargain”: the US’ funding to the UN was US$11.6 billion in 2020. “For only about [US]$6 per American, the United States supports the life-saving work of roughly 75,000 military and police personnel in a dozen missions around the world – a fraction of the cost of sending US soldiers to perform similar tasks,” he wrote. Think of the billions the US spent in Iraq, Afghanistan, or, over the past year, in support of Ukraine.

02:40

Zelensky calls for UN action after Russian air strikes leave Ukraine cold and dark

Zelensky calls for UN action after Russian air strikes leave Ukraine cold and dark

So, despite the decline in support for global cooperation and multilateralism since Trump’s presidency, the pressure on the world’s leading multilateral organisations is for reform, rather than abolition.

This is not to make light of the challenges facing these institutions. For example, the WHO’s failures in its response to the Covid-19 pandemic are due as much to the wilful refusal of the organisation’s members – particularly the US and China – to cooperate as to the WHO’s own, acknowledged, structural shortcomings.
It only takes a few influential countries to bring these institutions to a grinding halt. This is well illustrated at the WTO, whose dispute settlement role has been crippled by the US blocking the appointment of members to the panel that hears appeals to trade disputes. Failure to provide funds, or even the simple decision to send junior officials lacking decision-making power to meetings, can similarly castrate the capacity of a multilateral institution to perform its role effectively.

There are certain global imperatives on which countries like China and the US need to put aside their rivalry and focus on problem-solving. If our indispensable multilateral institutions are to be effective, and the likes of Ajay Banga are to succeed, then we depend on it.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades

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