Indian-American executive Ajay Banga has been nominated by US President Joe Biden to become the new President of the World Bank. His election to the position will be a mere formality since the presidency has traditionally been held by the United States.
All 13 Presidents of the World Bank so far have been US citizens; the only exception being Bulgarian national Kristalina Georgieva, who served as the acting president in 2019.
This connection between the United States and the World Bank presidency is no co-incidence.
The US is the single-largest shareholder in the Bank, with 16.35 per cent of total capital subscription and over 15 per cent of the votes. The United States is also the only country with veto power over certain changes in the Bank’s structure.
“The US has picked its president, using the appointment as a vehicle to advance American economic interests, power and development priorities around the globe,” a report in The Wall Street Journal encapsulates the US domination of the World Bank.
In fact, the US faced no challenge for the presidency till 2011, when the system was changed for a “transparent, merit-based process.”
The genesis of the World Bank provides another reason for the pre-eminence of the United States.
The World Bank was established towards the end of World War II, which devastated European economies but led to the emergence of the US as an economic powerhouse. Washington DC bought the most shares, controlled 35.07 per cent of the voting rights, and heavily funded the Bank.
In its early years, the World Bank focused on the reconstruction of Western Europe. The US, which largely escaped the war’s tragedy, was in pole position to take up the leadership role.
On the other hand, according to an informal understanding, the Europeans chose to lead the International Monetary Fund, which was also established alongside the World Bank. All Managing Directors of the IMF have been Europeans.
How The World Bank President Is Elected
The World Bank has a weighted system of voting. All member nations receive votes consisting of share votes (one vote for each share of the Bank’s capital stock held by the member nation) and basic votes.
According to the Bank, “basic votes shall be the number of votes that results from the equal distribution among all members of 5.55 per cent of the aggregate sum of the voting power of all the members.”
The President is elected by the board of Executive Directors. There are 25 Executive Directors in total – five nominated and 20 elected.
The nomination process began on February 23 at 9 am Eastern Standard Time (EST) and will end on Wednesday, March 29 at 6 pm EST. The nomination is made by Executive Directors, or by Governors through their Executive Director.
A country’s finance minister or the chief of the central bank is a Governor at the World Bank. The Executive Director manages the day-to-day affairs on behalf of the Governor.
The Executive Directors will later shortlist three names and formally interview them. Following confirmation by the board, a new President – Mr Banga in all likelihood – is likely to be in place by early May 2023, as per reports.
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