Craig Eisele on …..

February 26, 2012

Who Will Be The Next Head of the World Bank?

Filed under: Uncategorized — Mr. Craig @ 2:47 am

SINGAPORE (Reuters) – A solid U.S. candidate to head the World Bank would be good for the United States and the bank because the world’s largest economy should be represented in top international bodies, outgoing President Robert Zoellick said on Saturday, while emphasizing he has no role in the selection process.

In an interview in Singapore, Zoellick also said he did not believe Spain, Italy or Portugal needed bailouts to ease massive debt burdens but that reforms needed critical support of Germany and other European leading nations and expressed cautious optimism that the global economy would sustain growth this year.

The World Bank last week launched the nomination process to select a new president to succeed Zoellick when he steps down in June, inviting names from any of its 187 member countries. The Obama administration has said it would open the process to competition.

Zoellick noted however that Americans did not hold top posts at the United Nations, World Trade Organization, regional development banks or International Monetary Fund.

“I want the United States to feel a sense of responsibility to the international system. So in that sense if you get the right American candidate I think that can be good for the United States and the bank.”

So far, two people most often mentioned as possible successors are both American: U.S. Secretary of State Hillary Clinton and former White House economic adviser and former Treasury Secretary Lawrence Summers. The State Department has insisted that Clinton would not be taking the job.

Much like in 2011, when Dominique Strauss-Kahn resigned as managing director of the International Monetary Fund, officials from countries such as Brazil and the Philippines said it was time to break the decades-old pattern of putting an American in charge of the World Bank and a European atop the IMF.

Agustin Carstens, Mexico’s central bank governor, who had made an unsuccessful bid to head up the International Monetary fund last year, said on Wednesday the World Bank presidency should be open to a wide field of candidates.

BUYING TIME IN EUROPE

Zoellick said the latest Greek bailout totaling 130 billion euros would merely buy time.

“It’s too early to know, partly it depends on the actions the Greeks have to take,” he said.

“I think that the European Union has dealt with Greece as one element but the core elements are really going to be the success of some of the bigger countries, such as Italy and Spain.”

But he said bailouts weren’t necessary for these two countries or Portugal.

“Each country’s situation is different and you really have three interconnected problems. For some it’s the size of the sovereign debt, for some it’s the effect on the banking industry, and for some it’s their competitiveness,” he said adding that “Spain and Italy need time to make the reforms.”

“But I do think that all this is harder to accomplish when there is a recession in Europe.”

Support from other European nations was also crucial.

“What I’ve tried to suggest, given the politics of reform in some of the Mediterranean countries, (is that) it will be important for Germany and other leaders in the process to show some prospects if the reforms are taken and how they will be supported by the other European countries.”

Zoellick heads next to China for the release on Monday of a major economic report by the bank and a Chinese government think tank, looking at economic opportunities and challenges to the year 2030.

GLOBAL ECONOMY, CHINA AND OIL

Zoellick said that prospects for global economic growth this year remain guardedly positive with much hinging on Europe stabilizing and China reaching a soft landing, with oil prices a wildcard.

“I have a cautious optimism about the international economy. Our forecasts are that growth might slow down a little bit this year. What I see is that the U.S. economy has got some momentum,” he said.

“If Europe is able to continue to stabilize the situation, that’s a big if, but that’s an important part. And I think China has issues in the real estate sector but my own guess is they are on the process for a soft landing.

“The two big question marks to me are energy prices with the political risk and Europe being able to maintain things.”

Brent crude futures settled near a 10-month high above $125 a barrel on Friday, posting a fifth straight weekly gain as heightened concerns over tensions with Iran about its nuclear program and cuts in supply sent oil prices up on both sides of the Atlantic.

The crude oil price spike has prompted speculation the International Energy Agency may again call for the release of oil stocks, or the U.S. may release strategic petroleum reserves.

Zoellick said oil prices remain a concern, though the World Bank is only an observer in any decision to release strategic oil stocks.

“Not my call,” he said, adding that “I don’t think one should rush into that but the reason that the strategic reserve was created was for use in emergency situations.”

Meanwhile : 

MEXICO CITY, Feb. 25, 2012 (Reuters) — A meeting of BRICS major emerging countries discussed the selection process of the next head of the World Bank and emphasized it should be open to all countries, rejecting the tradition that the job automatically goes to an American, a senior BRIC official said on Saturday. 

The official, speaking after a meeting of the BRICS – Russia, South Africa, Brazil, India and China – said the United States had not circulated the name of its proposed candidate for the World Bank.

Asked whether emerging economies could field their own candidate for the post, the official said: “That is certainly a discussion we will have.”

And THEN: 

India has proposed setting up a multilateral bank that would be funded by developing nations with the aim of funding projects in those countries and possibly other developing nations, Bloomberg reported. A Brazilian official has confirmed the proposal

The proposal has been circulating among BRIC nations and will be discussed when they meet for the G20 talks in Mexico City this weekend. Officials are expected to continue these talks at a March BRICS summit in New Delhi.

MEXICO CITY (Reuters) – The world’s major emerging economies on Saturday rejected the tradition that an American automatically is selected to head the World Bank and they will look at putting forward their own candidate for the open job.

Finance chiefs from the BRICS group of emerging market powerhouses – Brazil, Russia, India, China and South Africa – met on the sidelines of a G20 meeting in Mexico City and agreed the top World Bank job should be open to all countries.

“Candidates should be based on merit and not on nationality,” Brazilian Finance Minister Guido Mantega told reporters.

Another BRICS official said the group will discuss the possibility of putting up their own candidate to challenge whoever the U.S. government nominates. “Certainly it is a discussion we will have.”

Countries have until March 23 to submit names for the top post and a decision is likely by April meetings of the World Bank and International Monetary Fund.

Americans have held the top job since the World Bank was set up at the end of theSecond World War but the unwritten rule has in recent years faced more resistance, along with the tradition that a European heads the International Monetary Fund, as emerging economies gain more economic clout.

“It is time we break the traditions of the U.S. and Europe sharing the two seats and amongst all of us we must try harder this time to find some consensus,” said Pravin Gordhan, South Africa’s finance minister.

Robert Zoellick, the current World Bank president, plans to step down at the end of June after deciding against seeking a second five-year term.

The United States has said it will nominate a replacement candidate but has not yet said who it will be.

Possible candidates are thought to include former U.S. treasury secretary Lawrence Summers, current Secretary of State Hillary Clinton, and Susan Rice, the U.S. ambassador to the United Nations. The State Department has said Clinton would not be taking the job.

The World Bank is the leading provider of development aid to poorer countries and its president is one of the world’s top policymakers.

“They can put forward their candidate,” Gordhan said, referring to the United States. “But rather than it becoming a destructive exercise, it should be a constructive process so that we attempt to build consensus on who the candidate should be. It is idealistic but let’s give it a shot.”

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