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What does the resignation of the President of the World Bank mean?

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The twelfth president of the organization announced his resignation to start working in a private firm, what will happen now?

What does the resignation of the President of the World Bank mean?

Jim Yong Kim, president of the World Bank since 2012, announced this week his retirement from one of the most important positions in the economy and development. Born in South Korea but raised in the United States, Jim Yong Kim held positions in several Ivy League universities, becoming president of Dartmouth College from 2009 to 2012, from where he went to the largest development bank in the world.

Leer en español: ¿Qué significa la renuncia del presidente del Banco Mundial?

After almost six years in the institution, Kim announced that he would go to work for a New York investment fund: Global Infrastructure Partners, whose business, according to the World Bank, focuses on increasing investment for infrastructure in developing countries. Just last year, Jim Yong Kim was re-elected to serve as president of the World Bank until 2022.

In a note to his team, published by The Financial Times, Kim said he intends to continue his fight to eradicate poverty and promote development, only from the private sector.

"The opportunity to work in the private sector was unexpected, but I have concluded that this is the path through which I will be able to have the greatest impact in global issues of first importance, such as climate change and the infrastructure deficit in emerging economies".

A possible conflict of interest?

The sudden retirement of Kim supposes a series of problems. For him, moving to the infrastructure and development sector from a private firm means a strong conflict of interest with the World Bank, which is the largest lender within that same field.

As a measure to mitigate the effects of a possible conflict of interest, Global Infrastructure Partners will forbid Jim Yong Kim to deal with the World Bank in any dimension during his first year in office.

A difficult succession

As of February 1, when Jim Yong Kim retires, the current executive director of the organization, Kristalina Georgieva, will assume the chair temporarily. The Bulgarian, although from a temporary position, stands out for being the first woman in this position.

Georgieva's position is probably temporary, since the president of the World Bank has always been chosen by the United States, has been a majority investor of the bank, and has always been a citizen of this country.

However, during the Trump era, it will be difficult to predict who will permanently succeed Jim Yong Kim.

Since his days as a candidate, Donald Trump has been skeptical about the role of multilateral organizations such as the World Bank. For that reason, Kim's retirement is likely to motivate critics of the current operation of the bank to mobilize to break the dominion that the United States holds over the institution.

For Trump, on the other hand, the election should not be underestimated, since a quick and forceful appointment can make the difference when guaranteeing the power of his country through the World Bank, at least during the next five years, the duration of a presidency in this organization.

China, who is frequently involved in projects with the World Bank, is currently the third contributor to the institution, which translates into the third highest number of votes within the same.

Read also: China will become the world's largest economy

He could use this break to press reforms, because a Republican-style appointment could hurt both its projections of power through the Bank, and its own development, to which the World Bank has contributed significantly.

"If the Trump administration leaves with a credible candidate, the succession process could turn out to be simple. If not, the duopoly of the United States and Europe on the World Bank and the International Monetary Fund could be put to the test", told Brad Setser, of the Council on Foreign Relations, to The Financial Times.

 

LatinAmerican Post | Pedro Bernal

Translated from "¿Qué significa la renuncia del presidente del Banco Mundial?"

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