Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Sunday, April 21, 2019 11:09:58 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Will Trump's nominee turn the World Bank against China ?

By
10th-Feb-2019       
Comments
Share your thought
Post a comment »
Read all () »

Michael Igoe :
In the wake of U.S. President Donald Trump's announcement on Wednesday that he will nominate David Malpass to be the next president of the World Bank, Malpass' record as a critic of the bank - and particularly of its relationship with China - has some staffers and development experts worried.
As the United States trade war with China continues, and as the administration's global development leaders increasingly describe their missions as part of a battle for influence with Beijing, many have interpreted Malpass' nomination as a signal that the White House might enlist the World Bank in this economic and geopolitical struggle. Whether Malpass approaches his nomination as an opportunity to forward this part of the Trump agenda, or with a commitment to the best interests of an international institution could mean the difference between his success or rejection.
"As a Treasury official, Malpass has sought to unwind seemingly every aspect of the World Bank's relationship with China. As bank president, this would not be a viable posture toward his third-largest shareholder. Presumably, the Chinese will be seeking assurances about which Malpass they're going to get," Scott Morris, senior fellow at the Center for Global Development, wrote in an email to Devex. Currently under secretary of the treasury for international affairs, Malpass has repeatedly criticized World Bank lending to China and China's role as a development actor in general.
Speaking at the Council on Foreign Relations in 2017, he said, "the World Bank's biggest borrower is China. Well, China has plenty of resources. And it doesn't make sense to have money borrowed in the U.S., using the U.S. government guarantee, going into lending in China for a country that's got other resources and access to capital markets."
In written testimony to a Senate Foreign Relationship Subcommittee in November, Malpass said, "we are working with allies and like-minded countries to guide the MDBs [multilateral development banks] away from what could be viewed as endorsement of China's geopolitical ambitions."
That guidance includes convincing countries to endorse standards for transparency in procurement, financing, and safeguards, which the Trump administration says Chinese financing fails to deliver. Former World Bank President Jim Kim adopted a mostly collaborative stance with Beijing, welcoming China's massive Belt and Road Initiative as another source of badly needed infrastructure finance and frequently quoting Chinese President Xi Jinping on the inevitability and potential of globalization.
Despite his grievances, Malpass played a key role in negotiations over the World Bank's $13 billion capital increase that shareholders agreed to last April. That deal included a commitment from the bank to curtail costs, particularly by limiting staff salary growth, and it introduced lending reforms that include higher rates for developing countries with higher incomes, such as China. Many viewed the agreement as an unlikely victory for the bank in the face of skeptical Trump administration officials such as Malpass, who have labeled the institution's growth a symptom of bureaucratic multilateral sprawl.
"I was a bit surprised actually that that agreement allowed lending at the amounts indicated … I think it's a reasonable compromise," said Yukon Huang, a senior fellow at the Carnegie Endowment for International Peace and former World Bank country director for China, noting that the issue of lending rules for emerging economies appears to have been mostly settled in that agreement.
Some inside the World Bank are worried Malpass could seek to drive a bigger wedge between the World Bank and China at the Trump administration's behest. American representatives to the bank already "try to block any lending to the country," one World Bank official told Devex on the condition of anonymity, calling these efforts by the U.S. executive director "ridiculous," "shortsighted," and "extremely counterproductive."
"If it has become difficult with simply trying to get the board to approve projects in China, what will happen if there is a president tasked with advancing Trump's bidding rather than having purely the interest of development in mind?" the official said in an email.
The official was not sure what a World Bank president with an aggressive stance toward China would actually attempt to do to influence the bank's position, but noted that it seems unlikely the administration would be so "brazen" as to try to pursue policies directed solely at China.
More likely, according to the official, would be "changes to terms and conditions of borrowing for [International Bank for Reconstruction and Development] countries as well as safeguard requirements and the expectations of the types of projects."
The governance structure of the World Bank could provide some reassurance. While changes such as these would have wider-reaching consequences, they would likely also require board approval, the official noted.
When the bank was created - and the agreement with Europe ensured its president would be an American for the foreseeable future - the purpose of establishing a sitting board of directors was partly to offset the American president's power, Huang said. If the president appeared to be acting in the interests of the administration that nominated him instead of in the interests of the institution, it would be the board's responsibility to do something about it.
"Can the president do what he wants on behalf of the administration? If he actually went down that route it would create a real problem within the institution," Huang said. Given that the capital increase deal - which was negotiated over the course of many months and represented a consensus view among the executive directors - already put new lending rules in place, additional changes seem unlikely at this point, according to Huang.
"Is something going to change in terms of the bank's approach to China? ... Probably not in the short term," he said. "They've already reached an understanding as to what that lending program will be."
In Huang's view, the argument that the bank shouldn't lend to China is based on several misunderstandings - the first being that China is somehow taking advantage of the World Bank and its shareholders by borrowing money from it.
As a financial institution, the bank's solvency depends on lending to creditable borrowers like China, Huang said, adding that loans to China tend to return better than average results - which can generate lessons for other borrowers - and are routinely paid back ahead of schedule.
"In some ways, you could say that the World Bank needs China more than China needs the World Bank," Huang said. China's interest in keeping an open line to World Bank finance is largely related to the institutional, technological, and knowledge transfer that accompanies these long-term projects, he said.
Malpass made a similar observation in his testimony last year. "China is absorbing decades of financial know-how into its institutions in a few short years, a similar pattern to its absorption of manufacturing technology," he told Congress. While that statement sounds like a criticism or complaint, it also reflects a basic mission of the World Bank and a key reason it was created in the first place. "The whole precept for the World Bank rested on the proposition that developing countries, to grow faster, need to learn from developed countries," Huang said. That raises a fundamental question about how well Trump's nominee understands the institution's purpose - and whether that purpose aligns with America's interests.
"What is the objective of the Trump administration? Do they support the transfer of knowledge and strengthening of institutions from rich countries to poor countries? Because that was the purpose of the World Bank. That's why it was created," Huang said.
"If it doesn't, then, of course, the whole institution is nonsensical. It doesn't make any sense," he added.
(Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C).

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

CID man held with Yaba: Virus in the antidote


A CONSTABLE of Criminal Investigation Department and one of his associates were arrested with 990 Yaba pills from Savar on Thursday evening, some newspapers reported. The arrestees are Taijuddin, a constable of CID's Uttara Zone, and his associate Mofiz Mia, said Officer-in-Charge of Detective Branch of Police in Dhaka (North). ...

Cricket »

Ton-up Kohli hails Moeen for crucial IPL win


AFP, Kolkata :Virat Kohli scored his first Indian Premier League (IPL) century of the year, then paid tribute Saturday to Royal Challengers Bangalore teammate Moeen Ali for setting up a crucial second win of the season."Moeen changed the game completely and that allowed me to play my game," said the ...

Entertainment »

Farah Khan to remake three Bollywood classics?


Bollywood filmmaker Farah Khan had recently announced that she will be collaborating with ace director, Rohit Shetty. Speculations are that the duo has decided to remake the much loved film that had megastar Amitabh Bachchan, Satte Pe Satta (1982). The film itself was a remake as well, and besides this, ...

International »

Trump rating drops 3 points to 2019 low post Mueller report


Reuters, New York  :The number of Americans who approve of President Donald Trump dropped by 3 percentage points to the lowest level of the year following the release of a special counsel report detailing Russian interference in the last U.S. presidential election, according to an exclusive Reuters/ Ipsos public opinion ...

Football »

FIFA backs English players' social media boycott over racism


AP, England :FIFA is backing a 24-hour social media boycott by professional players in England in a protest against racial abuse and revealed plans for a new global campaign to eradicate discrimination in soccer.Following a series of high-profile cases in recent weeks, the Professional Footballers' Association has gathered support from ...

International »

US President Trump declares victory on Mueller report D-Day


President Donald Trump, backed by his attorney general, declared himself fully vindicated on Thursday in the investigation into Russian election meddling and alleged collusion with his campaign - even before the American people and lawmakers see the full probe report."Game Over," Trump tweeted, using a "Game of Thrones" style montage ...

Entertainment »

Shanta Jahan in Australia for hosting


Sheikh Arif Bulbon :Shanta Jahan is a popular host of present time. Though she acts sometimes but always feels comfortable to present herself as a host to all. For the first time Shanta went to Australia to host a show. She left Dhaka at night on April 18. Today is ...

Editorial »

One is punished for another's sin!


LOCAL media reported that a day labourer was allegedly sent to jail on Wednesday for not paying electricity bill of Tk 4007, even though his house at Mochagora village in Muradnagar upazila in Cumilla district had no electrical line. On Thursday evening, Chief Judicial Magistrate granted him bail after hearing ...

Cricket »

Sri Lanka dump Chandimal, bring back Thirimanne for World Cup


AFP, Colombo :Sri Lanka Thursday dumped established stars including former captain Dinesh Chandimal to hand batsman Lahiru Thirimanne and leg-spinner Jeffrey Vandersay a place in their World Cup squad.Chandimal, who was one-day captain until last October, wicketkeeper-batsman Niroshan Dickwella, off-spinner Akila Dananjaya, openers Danushka Gunathilaka and Upul Tharanga were all ...

Cricket »

Senior players need to take the responsibility: Faruk Ahmed


Former chief selector Faruk Ahmed insisted on the performance of the senior players, stating that they need to take the onus if Bangladesh want to do well in the upcoming ICC Cricket World Cup.According to Faruk, the condition should give Bangladesh a confidence, given that they stormed into the semifinal ...

Entertainment »

Mehazabien’s Boishakhi works create viewers’ attention


Sheikh Arif Bulbon :For the last few years, Mehazabien Chowdhury established her strong position in media by virtue of her acting quality and skill. She is now getting positive response for acting in two Boishakhi plays. Afran Nisho was her co-actor in these two plays - Tom & Jerry and ...

International »

Turkish opposition takes control of Istanbul, re-run appeal still pending


Reuters, Istanbul :Turkey's main opposition candidate took office as Istanbul mayor on Wednesday after a stunning victory over President Tayyip Erdogan's AK Party, but the new head of the country's largest city still faces an appeal for the vote to be re-run.The final result of the March 31 local elections ...

Editorial »

Power politics in Egypt


A HUGE majority of Egypt's MPs on April 16 approved constitutional amendments to allow President Abdel-Fattah al-Sisi in power until 2030. The amendments were initially introduced in February, however after lengthy debates and discussions favouring the Egyptian society it was updated earlier this week. "The president's current term shall expire ...

Football »

Iniesta's J-League club Kobe part ways with coach Lillo


AFP, Tokyo :Barcelona legend Andres Iniesta's Vissel Kobe have terminated the contract of manager Juan Manuel Lillo following a poor run of results, the Japanese club said on Wednesday.The 53-year-old former Real Sociedad and Zaragoza boss won just two of six games since taking charge last October as star-studded Vissel ...

International »

US waging 'financial war' against Palestinians


AP, Ramallah, West Bank :The new Palestinian prime minister on Tuesday accused the United States of declaring "financial war" on his people and said an American peace plan purported to be in the works will be "born dead."In his first interview with international media since taking office over the weekend, ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news