Bloomberg News

U.S. to Nominate World Bank President Candidate in Coming Weeks

February 15, 2012

Feb. 15 (Bloomberg) -- The Obama administration plans to nominate within weeks a candidate to replace World Bank President Robert Zoellick, who says he’ll leave the institution when his five-year term ends June 30.

“It is very important that we continue to have a strong, effective leadership in this important institution,” Treasury Secretary Timothy F. Geithner said in an e-mailed statement today. “In the coming weeks we plan to put forward a candidate with the experience and requisite qualities to take this institution forward.”

The announced departure of Zoellick, who was chosen by President George W. Bush in 2007, opened the competition for a job that has always been held by a U.S. national under an informal agreement that also has a European head the International Monetary Fund. Christine Lagarde, then France’s finance minister, was picked over Mexican central bank Governor Agustin Carstens for the IMF job with U.S. support last year.

Under Zoellick’s presidency, shareholders approved the first capital increase in more than 20 years to meet demand from countries hit by the global slump that followed the 2008 financial crisis. His successor may face another surge in loan requests as the European debt crisis threatens to trigger more global turmoil.

“Together we have focused on supporting developing countries to navigate crises and adjust to global economic shifts,” Zoellick, 58, said in an e-mailed statement today. “The bank is now strong, healthy and well positioned for new challenges, and so it is a natural time for me to move on and support new leadership.”

Summers, Clinton

President Barack Obama may nominate Lawrence Summers, his former National Economic Council adviser, to replace Zoellick, two people familiar with the matter said last month. Secretary of State Hillary Clinton is also being considered, one of the people said.

Clinton has said she doesn’t plan to stay in her post if Obama wins a second term and plans to leave government.

“After 20 years -- and it will be 20 years -- of being on the high wire of American politics and all of the challenges that come with that, it would probably be a good idea to find out how tired I am,” Clinton told State Department employees during a town-hall meeting on Jan. 26.

White House press secretary Jay Carney, speaking with reporters on Air Force One, said today President Obama appreciates Zoellick’s service and that he had no information about potential successors. He declined to answer questions from reporters about Summers and Clinton, saying he would not discuss speculation.

Wolfowitz Furor

Zoellick, a former U.S. trade representative, took over an institution bruised by the scandal that engulfed his predecessor Paul Wolfowitz, who resigned over his involvement in giving his companion an unusually large pay raise and promotion.

Zoellick “brought calm and a return of a sense of mission when he went to the bank,” said Nancy Birdsall, president of the Washington-based Center for Global Development, an aid research group, in a phone interview. “What is needed in the next president of the World Bank is a big vision about the bank’s role in this century.”

A veteran of three Republican administrations, Zoellick appointed Chinese academic Justin Lin as chief economist and picked several women for top management positions, including Ngozi Okonjo-Iweala of Nigeria, who has since returned home to become finance minister.

He alerted the world to a forthcoming food crisis, secured $49 billion in 2010 to replenish the unit that funds projects for the poorest countries and made more information on the lender’s projects public.

Bank Boosted

The bank boosted loans to a record during the financial crisis, though an internal audit published in 2010 said it had responded to it with “some delay.” Management rejected the criticism, saying it had acted quickly.

The Washington-based lender, which was established to rebuild Europe after World War II, made loans worth about $57 billion in the year ended June 30. Now focused on developing economies, it offers financial and technical assistance, with Pakistan for example set to receive $5.5 billion in grants and loans through mid 2015.

Group of 20 nations have pledged to make recruitment at the bank and the IMF open and transparent. Last year, the U.S. waited until the end of Lagarde’s campaign for the job before declaring its support for her. Still, members of Congress, who decide on U.S. funding for development banks, have indicated they are not ready to relinquish U.S. control of the World Bank.

Fair Process

Brazil’s Finance Minister Guido Mantega today said Zoellick’s successor shouldn’t come from a specific country and that he would work to change how the Washington-based lender chooses its leadership.

“Emerging markets have the right to seek the leadership of the World Bank,” Mantega told reporters.

Still, developing economies failed to unite behind Carstens for the IMF.

A coalition of non-governmental organizations today called for a fair selection process to replace Zoellick and said it asked the U.S. to announce it will not seek to monopolize the job.

“The next World Bank chief can’t be selected in a behind- the-scenes carve-up,” said Jeroen Kwakkenbos, a spokesman for Eurodad, one of the organizations based in Brussels, in an e- mailed statement. “The second wave of global economic crisis is almost certainly going to start hitting poor countries very hard, very soon.”

--With assistance by Margaret Talev in Washington, Andre Soliani in Brasilia and Kate Andersen Brower aboard Air Force One. Editors: Kevin Costelloe, Gail DeGeorge

To contact the reporters on this story: Sandrine Rastello in Washington at srastello@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net;


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