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Malpass moves to reassure doubters after World Bank nomination

Malpass moves to reassure doubters after World Bank nomination

Avowed sceptic of multilateral institutions to visit Asia to seek backing

James Politi and Sam Fleming in Washington

David Malpass sought to reassure governments around the world about his commitment to multilateralism after being tapped by President Donald Trump on Wednesday as the US candidate for the presidency of the World Bank. 

“I care deeply about the mission and about breaking out of poverty and achieving growth and I’m sure that the World Bank can succeed,” Mr Malpass, the top US Treasury department official on international affairs, told reporters in his Washington office. 

The selection of Mr Malpass, an avowed sceptic of multilateral institutions, has already triggered a backlash among development policy analysts and, privately, doubts and reservations inside the World Bank and among some senior foreign officials.

But Mr Malpass said he had already received “numerous expressions of support” for his candidacy and was “eager to have the chance” to become World Bank president.

Mr Malpass will begin his campaign for the role by heading to Asia, where he will initially be seeking backing from China — where, in his current role, he has been engaged in the Trump administration’s high-stakes trade talks — and Japan, which is the World Bank’s second-largest shareholder, after the US. 

“Japan is important in all of this mix because it has been involved over so many years in the World Bank and in multilateral lending in general,” he said. 

"David Malpass will have a lot of work to do to convince other shareholders that he is prepared to move beyond his past statements and track record when it comes to the World Bank’s agenda Scott Morris, Center for Global Development

Mr Malpass, a 62-year-old Michigan native, is a controversial candidate for the post. While he has disavowed isolationism, he told a congressional committee in 2017 that “globalism and multilateralism” had gone “substantially too far” and complained of corrupt lending practices by some organisations. More recently he has warned of rising Chinese influence in multilateral development banks, and has pushed for the World Bank to cut its lending to some larger developing economies, including Brazil and China. 

Mr Trump formally confirmed Mr Malpass’s nomination in the White House on Wednesday afternoon, saying: “I am certain there could be no better candidate to lead the World Bank than David.” He suggested Mr Malpass’s backing for his presidential campaign in 2016 was a crucial factor behind the decision. “He’s been a supporter for a long time, a supporter in the financial sense. Even before I ran, he liked the job I did. I like those people somehow,” Mr Trump said.

The World Bank presidency became vacant when Jim Yong Kim quit to join a private equity fund, three years ahead of the end of his second term in office. The role of World Bank president traditionally has gone to the US nominee, as part of an unwritten agreement in which a European leads the International Monetary Fund and a Japanese candidate runs the Asian Development Bank. 

“David Malpass will have a lot of work to do to convince other shareholders that he is prepared to move beyond his past statements and track record when it comes to the World Bank’s agenda,” said Scott Morris, a senior fellow at the Center for Global Development in Washington. “That includes the bank’s critical role in climate finance and the need for constructive engagement with China. The rest of the world holds 84 per cent of the voting power at the World Bank. It’s fully within their ability to block an unsuitable nominee.” 

At the Treasury, Mr Malpass helped lead US talks that ended up with Washington’s unexpected support for a capital increase at the World Bank.

Speaking to reporters, Mr Malpass said that many of his criticisms of the World Bank preceded the reforms to the institution which were paired with the capital increase. He also said that he would not slash the World Bank’s work on climate change and the environment. “I would expect that leadership to continue and also the Bank to honour the obligation it has with regards to the environment,” he said.

The World Bank’s board has said nominations can be submitted between February 7 and March 14, and it would then evaluate them. So far, no alternative candidate has been presented.

On Wednesday, it emerged that Mr Malpass had one close family link with the World Bank. The Financial Times reported that his eldest son Robert has been a research analyst there since July 2018. Robert Malpass has offered to resign if his father becomes president, in compliance with World Bank staff rules. 

This is by no means the first time the US has put forward a controversial World Bank president. The arrival of Paul Wolfowitz, the neo-conservative architect of the Iraq War, in 2005 triggered anxiety within the institution, while Mr Kim had little previous experience of finance or public service when he was plucked by Barack Obama from the presidency of Dartmouth College in 2012. 

Mr Malpass was complimentary of the staff at the World Bank, reflecting an effort to avoid a controversial relationship during the nomination process. He said it had a “big cadre of skilled people” and “strong management”, including Kristalina Georgieva, the former EU official who is chief executive of the World Bank and acting president at the moment. 

“What I hope to do is bring focus,” Mr Malpass said.

 

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