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Trump’s World Bank pick echoes calls for reform from other critics
WASHINGTON, Feb 9, 2019 (BSS/AFP) – President Donald Trump’s choice to
lead the World Bank is a firebrand critic of the world’s largest anti-poverty
lender — an institution he has called wasteful, corrupt and overly generous
to China.
Those criticisms are similar to those expressed by others in the
development community. But that does not mean they have found a new ally in
David Malpass, the senior US Treasury official who has pledged to reform the
bank.
Nancy Pelosi, the newly reinstalled Democratic speaker of the US House of
Representatives, says Trump’s choice threatens to “undermine the
institution’s mission.”
And Liberia’s former minister of public works W. Gyude Moore tweeted that
“an incorrigible arsonist will now be our fire chief.”
Still Malpass’s many criticisms of the Washington-based lender echo
familiar refrains.
Many activists have long called for reforms at the World Bank, citing a
litany of alleged human rights failures and scandals, and saying projects all
too often left the world’s poorest even worse off, harmed the environment or
entrenched the power of oligarchies and despots.
Those critics might well have nodded their heads in accord in 2017 when
Malpass said international financial institutions such as the World Bank
“spend a lot of money” but are “not very efficient.”
“They are often corrupt in their lending practices and they don’t get the
benefit to the actual people in the countries,” he said in congressional
testimony.
However, when pressed for examples, he cited situations in Venezuela and
South Africa, countries that do not have programs with the World Bank.
Internal audits and outside reports have tied World Bank funds to forced
labor in Uzbekistan, death squads in Honduras and a Chadian oil pipeline that
enriched the undemocratic local government all while child mortality rose, to
name just a few examples.
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So is Malpass a kindred spirit?
Analysts and activists say probably not.
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David Pred, head of Inclusive Development International, which has accused
the World Bank of back-door financing for coal-fired energy in Asia that is
likely to spur global warming, questioned Trump’s choice.
“While some of Malpass’s past critiques of the World Bank may be valid,
the former chief economist of a financial institution whose recklessness
helped blow up the global economy in 2008 is one of the last people we can
count on to make the bank more accountable,” he told AFP.
Malpass served as chief economist at the former investment bank Bear
Stearns, whose collapse marked the start of the global financial crisis.
– ‘Fundamentally opposed’? –
Malpass is not viewed simply as a critic.
Moore, the former Liberian minister, told AFP that Malpass’ opposition to
lending to China could be incompatible with the bank’s business model.
Returns from those loans provide helps to fund for assistance to low-
income countries, many of which are now concentrated in Africa, he said.
“He’s never put forth an alternative about how the bank is going to grow
its reserves,” Moore said.
“To have a person who is fundamentally opposed to the way the bank does
business raises questions for me and is alarming.”
The bank did not respond to Malpass’s criticism in 2017 but it touts the
precipitous drop in extreme global poverty — which it says fell to 10
percent from 36 percent between 1990 and 2015 — as evidence of its success.
The global lender also routinely blacklists corrupt companies and says it
scrutinizes projects for corruption risk.
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Malpass told reporters last week that the bank had changed since his 2017
testimony.
“There were criticisms that I had that were addressed in the reform
package” of 2018, he said, adding that he wanted to focus on the bank’s “core
mission” of poverty eradication.
The bank’s board will accept nominations for through mid-March, but under
an unwritten rule Washington has anointed World Bank’s president since its
creation following World War II — a practice that faces mounting opposition.
Elana Berger, executive director of the Bank Information Center, which
scrutinizes World Bank lending, also is dubious about Malpass, despite
sharing some of his concerns.
“I agree that the World Bank frequently falls short of achieving its
mission because its projects are very often not well targeted” towards the
goal of poverty reduction, she told AFP.
But it was unclear whether Malpass shares the bank’s goals.
In accepting Trump’s nomination last week, Malpass hailed the bank’s new
Saudi-supported Women Entrepreneurs Finance Initiative, spearheaded by the
president’s daughter and advisor Ivanka Trump.
Berger said that $1 billion fund represented “a drop in the bucket”
compared to the billions the bank spends in a given year.
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