8:52am

Fri May 27, 2011
Opinion

Foreign Policy: World Leaders Need To Share Power

David Rothkopf is a visiting scholar at the Carnegie Endowment for International Peace and President and CEO of Garten Rothkopf.

Two years ago, I wrote a post suggesting that there were serious conversations going on at a high level within the U.S. government about whether or not it might someday support the candidacy of a non-U.S. citizen to be the head of the World Bank. At the time, I heard from senior officials that there was a real openness to do so. There was even speculation that Brazil's President Lula might be a candidate.

Since then several things have happened. Lula has handed over the presidency of Brazil to his protege, Dilma Rousseff. There was allegedly a conversation between him and France's President Sarkozy at one point about the World Bank job and Lula immediately demurred, expressing no interest in it.

And, at the U.S. Treasury, there has been a reported change of heart. The current inclination is to stick with tradition, in part because of a "campaign" by World Bank President Robert Zoellick to persuade senior officials that the Congress will not tolerate a non-U.S. president at the Bank and would stop supporting the institution were such a change to take place.

The reports of this shift in views come at the same time that Europeans are arguing that a European must remain at the helm of the IMF due to the special demands of the moment.

Of course, the special demands of the moment they cite are that Europe is in precarious financial shape thanks to widespread and extraordinary financial mismanagement by the continent's elites — either because they let their national deficits balloon up or, in countries where the conditions are less dire, because they didn't fully realize the degree to which their countries were on the hook for the more feckless members of the Eurozone.

It's not a pretty picture: Europe and America using the fact they are bleeding red ink to argue that their continued leadership of the world's most important international financial institutions is essential. It is the textbook illustration of the definition of chutzpah: the child who murders both his parents seeking mercy because he is an orphan.

The current financial mess that Europeans and Americans have played such a central role in manufacturing should actually, of course, disqualify them from continuing in their familiar leadership roles — if the rise of new powers did not already make such a compelling case that the time for change has come.

Some argue that the developed powers should hold onto the reins because only representatives of those powers have the network of private financial contacts necessary to do their jobs. Such a view ignores the reality of modern global financial markets and the fact that many of the world's most well-connected and prominent financial leaders are from outside the U.S. and Europe.

Others argue that the developed powers should not pass the baton until the emerging powers pay for the privilege of leadership by paying in more capital. Such an argument would suggest that only the number one and two donors should rule the roost (not the case) or that an outsider might not better serve the collective interests of the donor countries (also not the case).

To pick just two among many examples of great choices for these jobs from outside the small group of countries that traditionally get them:

Singapore's Finance Minister Tharman Shanmugaratnam would rank up with or outshine any of the top candidates for the IMF job Europe could muster...even the much admired and likely to get the job (despite her own little mini-controversy) Christine Lagarde. Tharman, a brilliantly gifted technocrat with advanced degrees from both Cambridge and Harvard, is already the chairman of the policy steering committee of the IMF-where he was the first Asian to hold the job.

And Brazil's Luciano Coutinho, the head of that country's development bank, the high-performing BNDES, may be better qualified than anyone else to run a major development institution like the World Bank. (The bank lent about $70 billion in 2010 outpacing both the World Bank and the Inter-American Development Bank. And BNDES rank first among comparable financial institutions for return on assets with a rate of delinquencies that is one-twentieth of the international average.) For the record, China's two development banks lent more money in 2009 and 2010 than did the World Bank, as well.

In other words, the world's leading development bankers actually now come from the developing world. That such choices would also bring new perspectives and greater sensitivity toward the needs of borrowers while better reflecting a changing world power structure are only the icing on the cake. (Actually, they're the cake itself...but the opponents of change won't acknowledge that.)

Any fair study of the situation and the available candidates would suggest that not only is now not the time for the status quo, it is a time such changes are urgently needed. But then again, we must contend with Henry Kissinger's unassailable observation that the most potent force in Washington and bureaucracies everywhere is inertia. Add self-interest, timidity and short-sightedness to that and you have precisely the formula for inaction and missteps that have gotten us into the mess we are in the first place.

Copyright 2011 Foreign Policy. To see more, visit http://www.foreignpolicy.com/.