IDB’s new chief confident of US backing for big capital increase
The world’s oldest and largest regional multilateral development bank is used to having its name associated with wind farms, sewage projects and rural education initiatives. But its new president has a different image in mind: a Colombian reggaeton star eating a Big Mac and an Oreo McFlurry.
Mauricio Claver-Carone, the incoming president of the Inter-American Development Bank, said four-time Latin Grammy winner J Balvin’s new ad campaign for McDonald’s highlighted the potential of Latin America’s often-overlooked creative industries.
“A major general market campaign like the one McDonald’s has done with J Balvin would normally have been completely done . . . right here in the United States,” Mr Claver-Carone told the Financial Times. “But J Balvin lives in Medellín, Colombia, and J Balvin did not want to travel because of Covid.
“The entire general market campaign for McDonald’s . . . was done in Medellín, Colombia with local talent, with local digital creative professionals . . . and it was outstanding. It’s one of the best campaigns that’s ever been put together. We need to explore more of those opportunities.”
Mr Claver-Carone’s appointment last month was controversial. Formerly US President Donald Trump’s top adviser on Latin America, he was the first IDB president in the bank’s 61-year history to be nominated by the US, breaking an unwritten rule that the post should go to a Latin American. Although US allies in the region such as Brazil and Colombia quickly fell into line, some Latin American officials expressed dismay about what they saw as an imposition from Washington.
A Hispanic-American who grew up in Miami, Mr Claver-Carone aims to win over his critics by persuading the US Congress to back a big capital increase for the IDB. This would allow it to boost annual lending from an average of about $12bn to nearly $20bn, especially important at a time when the region is strapped for capital amid the coronavirus crisis.
“There's never been a champion of the IDB at the US Congress,” Mr Claver-Carone said, adding that he had already spoken to Democrats and Republicans in both houses to prepare the ground and “there’s a lot of interest”, regardless of the outcome of next month’s US presidential election, in which Mr Trump is facing Democratic challenger Joe Biden.
Mr Claver-Carone argued that the IDB has a historic opportunity to replace Chinese lending to Latin America.
“The question is going to be posed to the United States Congress: Do you prefer for the region to borrow from the IDB where you have a 30 per cent shareholding and . . . you have a seat at the table . . . or do you want the region to go borrow from China? And I would be very surprised if Congress chose China over the IDB,” he said.
A brash, fast-talking enthusiast who thinks big and is not afraid of ruffling feathers, Mr Claver-Carone could hardly be more different in style from Luis Alberto Moreno, the suave, understated Colombian diplomat who steered the IDB for the past 15 years.
Major changes are coming at the bank’s Washington headquarters: Mr Claver-Carone has nominated Reina Irene Mejía, the head of Citibank in Honduras, as his deputy. She would be the most senior woman ever at the IDB and the first deputy from one of the region’s smaller countries. Other planned senior appointments include the former finance ministers of Ecuador, Richard Martínez, and Paraguay, Benigno López.
Mr Claver-Carone has promised to shift the bank’s emphasis away from analysis towards more aggressive promotion of Latin America and the Caribbean as an investment destination for everything from creative industries to call centres.
“We’ve always been great and are known for diagnostics, but there’s a lot of people in the diagnostic game, right?” he said. “We’re going to go out there and sell the region, you know, we’re going to go tie one and one together from the digital space, from the nearshoring space, and from the small and medium-sized business space.”
Lending to SMEs will be a priority, Mr Claver-Carone said, quoting data indicating that female entrepreneurs in the region have incomes on average 10 per cent higher than their male equivalents and a better record of repaying loans, yet still find it much harder to access credit. “That’s completely illogical,” he said.
Closely associated with the Trump administration’s hawkish positions on Cuba and Venezuela, Mr Claver-Carone insisted that he would have no problem working with Latin America’s growing number of leftwing leaders.
“There is no lack of will, by President [Andrés Manuel] López Obrador or by President [Alberto] Fernández, in regards to bringing and attracting foreign investment into Mexico and Argentina,” he said.
“I just spoke yesterday to President-elect [Luis] Arce from Bolivia . . . and we had a great conversation. I didn’t get any type of feeling that President-elect Arce is going to be against foreign investment coming into Bolivia, quite the contrary. So, if that’s the left, they want foreign investment just as much [as conservative leaders].”
Mr Claver-Carone’s five-year term at the IDB is likely to be judged by whether he can secure the big capital increase he has pledged. He has promised not to seek an extension.
A Democratic win in November’s US elections could yet provoke an upset. Mr Claver-Carone claims bipartisan support, but some senior Democrats believe a Biden administration might not want to keep a Trump nominee closely associated with “America First” policies at the bank.
“Let’s see what happens after November 3,” said one person close to the debate.