WASHINGTON (Reuters Breakingviews) - David Malpass running the World Bank would be a fox in the henhouse. President Donald Trump is set to nominate the Treasury official and economist to lead the global lender. Malpass is skeptical of multilateralism and of closer ties to China. And some World Bank priorities, like climate change, could fade on his watch.
As head of international affairs at the U.S. Treasury Department, Malpass has said that the multilateral lender is “often corrupt” in its lending practices as well as being inefficient and sometimes making things worse for countries that receive its assistance.
He has also bashed World Bank employees. He noted they fly first class and pushed for salary cuts and compensation reviews as part of reforms needed in return for U.S. support for a $13 billion funding increase. Previously, Malpass had argued that the size of the organization should “plateau.” The bank has also cut loans to China by almost 30 percent because of U.S. demands.
One vulnerable World Bank initiative could be its effort to alleviate the effects of climate change. This was a priority under former President Jim Yong Kim. Just a few months into Kim’s second term in the job in 2017, Trump pulled out of the Paris climate accord. Last December, the World Bank said it would double its five-year investment to $200 billion, which includes homes that are better adapted to climate conditions, sustainable water-management programs, and reducing emissions.
The bank has also long helped countries improve trade practices to meet World Trade Organization rules, on the grounds that commerce facilitates development. Malpass, however, is one of Washington’s trade hawks in the ongoing U.S. negotiations with China.
America is the largest shareholder in the World Bank and traditionally chooses the institution’s president. In 2012, contenders from Nigeria and Colombia vied against Kim. Malpass’ candidacy might inspire a challenger, but one hasn’t yet emerged.
He is politically astute and may work to build good will before rocking the boat. The influence of Trump’s daughter, Ivanka, could soften his approach, too, if she is involved. She helped create a women’s entrepreneur program at the bank and is more aligned with goals under Kim. If it’s left to Malpass, though, the World Bank’s status quo will be under threat.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.