The Neoliberal Ways Of The World Bank May Be Numbered If Jeffrey Sachs Becomes Its President

9:40 am in Uncategorized by TheCallUp

When World Bank President Robert Zoellick announced that he would step down at the end of his five-year term in June, calls were made for his successor to be selected based on merit this time, rather than on nationality, as has been the custom for the past 68 years.

Whereas the International Monetary Fund’s Managing Director has always been a European, the World Bank’s President has always been an American. Though the U.S. is indeed the institution’s biggest funder and largest shareholder, its finances are paid by taxpayers around the world.

The moment Zoellick made his announcement last January, the Obama Administration indicated it had every intention of inserting an American as the new President. At a briefing on Feb. 21 , State Dept. Spokesperson Victoria Nuland stated, “Our expectation is that we will nominate a strong American candidate and we will put our full backing behind that person.”

After Nuland ruled out Secretary of State Hillary Clinton as a possible successor, several other top contenders’ names have been floated around.

These include Former Obama Economic Adviser and former U.S. Treasury Secretary Lawrence Summers, U.S. Ambassador to the U.N. Susan Rice (who has also been rumored to be Clinton’s likely replacement as Secretary of State), PepsiCo Inc CEO Indra Nooyi, and Sen. John Kerry (note: his spokesperson said he was not interested, and had never even been contacted about it).

If Rice does in fact have her eyes on State, this would leave Summers and Nooyi as two ‘short-listed’ contenders. The Chicago Tribune listed the pros and cons of Summers and Nooyi:

Lawrence Summers:

Sources within the World Bank and the Obama administration said that while Summers has excellent credentials, he also has political baggage.

While president of Harvard University, he created a firestorm by suggesting women may have a lower aptitude for science and engineering. He is also remembered for a memo he wrote in 1991 when he was the World Bank’s top economist that laid out the economic logic of dumping toxic waste in developing countries.

By selecting Summers, Obama “would have to use political capital” with his liberal base and women’s groups, the source with knowledge of the administration’s thinking said.

Indra Nooyi:

Nooyi, the Indian-born chief executive of PepsiCo, has been under pressure from investors for a stagnating stock price. She recently laid out a plan to turn around the company’s North American soft drink business and took responsibility for management missteps. PepsiCo spokesman Peter Land declined to comment on whether she would be interested in the World Bank job.

If Obama chose a woman, he would be breaking the mold for a job that has always been held by a white male, a move that could garner support from developing nations.

But as the White House vets its candidates, it is facing international pressure to democratize the selection process. The fastest emerging economies, including China, Russia, India, Brazil, and S. Africa have coalesced to end this 70 year old passport-as-determining-factor tradition.

They were so appalled at how Europe arrogantly moved to replace the IMF head last year with one of its own, despite pleas to open the process, that they have responded more forcefully this time with Zoellick’s announcement. They have every intention of nominating some stellar candidates of their own to fill the impending vacancy.

Well, one American Economist, Jeffrey Sachs, who is director of the Earth Institute at Columbia University and serves as Adviser to U.N. Secretary General Ban Ki-moon, has helped to make this a true contest. He has thrown his hat into the ring, albeit his nomination didn’t come from the U.S. He has been nominated by Kenya, Malaysia, Jordan, Namibia, Bhutan and East Timor.

And in stark contrast to outgoing President (Bush-appointee) Zoellick, who had been a former Managing Dir. of Goldman Sachs, Jeffrey Sachs considers ’Neoliberal’ a dirty word (as demonstrated by his Tweeted response to one critic’s accusation):

Lamat Rising ‏ @lamat_rising: Jeffrey Sachs shouldn’t become World Bank prez. His neoliberal record in Latin America + Eastern Europe is a disgrace even 4 WB #EP #US

Jeffrey D. Sachs‏ @JeffDSachs: @lamat_rising Neoliberal??? What a joke. I led the debt cancellation campaign. I fought the IMF and Treasury in Russia, and lost.

Here is how he distinguishes himself from traditional World Bank Presidents:

Unlike previous World Bank presidents, I don’t come from Wall Street or U.S. politics. I am a practitioner of economic development, a scholar and a writer. My track record is to side with the poor and hungry, not with a corporate balance sheet or a government. Yet the solutions work for all — the poor, companies, governments and the rest of us — by creating a more prosperous, healthy and secure world.

Sachs has the full support of Congressman John Conyers (D-MI), who is circulating a letter on his behalf to President Obama. Current signatories include John Conyers, Hansen Clarke, Jesse Jackson, Jr., Barbara Lee, Zoe Lofgren, Jim McGovern, Lynn Woolsey, Raul Grijalva, Eleanor Holmes Norton, Keith Ellison, Robert Brady, Rubén Hinojosa, Peter DeFazio, Steve Cohen, Maxine Waters, and Bob Filner.

Mark Weisbrot, in his piece yesterday in The Guardian (which I highly recommend reading), highlighted some of the World Bank’s disgraceful policies over the last 15 years. He then explains why Sachs is the right guy to help turn the institution around:

The bank could … play a positive role by increased financing of urgent development needs such as health, education, and sustainable agriculture. In these areas, Jeffrey Sachs has a proven track record over the past decade. He has played an important role in supporting the Global Fund to Fight Aids, Tuberculosis and Malaria, which has saved millions of lives in poor countries. His Millennium Villages project has also provided a significant positive example of how development aid can be used to boost agricultural productivity and health outcomes. This is an important refutation of the widespread cynicism that helps limit the financing of real, positive development aid.

Sachs has also been a strong advocate for debt cancellation in poor countries. His 2008 book Common Wealth provides one of the best overviews of the interrelated problems of climate change, development, poverty, population and health – as well as a set of concrete proposals for addressing them. This is clearly someone who has the knowledge, ideas, and experience to lead the bank in a different direction. … As Sachs noted last week:

“US officials have traditionally viewed the World Bank as an extension of United States foreign policy and commercial interests. … Many projects have catered to US corporate interests rather than to sustainable development.”

But Weisbrot believes ‘Sachs is facing an uphill battle,’ being an election year. Many of Obama’s biggest contributors happen to be the Wall Street banks and corporations that have millions at stake in the World Bank. They will obviously want another one of their Neoliberal bank cronies to man the top spot.

World Bank officials will be accepting nominations for Zoellick’s successor until March 23rd.

WATCH: CNN’s recent interview with Jeffrey Sachs

TAKE ACTION: Ask your Congressperson to Sign John Conyers Letter Pressing Obama to Name Sachs to World Bank (The deadline to sign Conyers letter to Obama is COB Monday, March 12.)

UPDATE:

Thought it only fair to post a quote from Naomi Klein, who in her book, The Shock Doctrine, critiqued Neoliberal policies that Sachs had overseen in places like Poland and Russia. She was asked in 2007, if she believed Sachs was merely re-branding his image, or had truly changed:

A lot of people are under the impression that Jeffrey Sachs has renounced his past as a shock therapist and is doing penance now. But if you read The End of Poverty more closely he continues to defend these policies, but simply says there should be a greater cushion for the people at the bottom.

The real legacy of neoliberalism is the story of the income gap. It destroyed the tools that narrowed the gap between rich and poor. The very people who opened up this violent divide might now be saying that we have to do something for the people at the very bottom, but they still have nothing to say for the people in the middle who’ve lost everything.

This is really just a charity model. Jeffrey Sachs says he defines poverty as those whose lives are at risk, the people living on a dollar a day, the same people discussed in the Millennium Development Goals. Of course that needs to be addressed, but let us be clear that we’re talking here about noblesse oblige, that’s all.

Just thought I should put it out there, since I have a world of respect for Naomi Klein and her opinions on the matter.

Originally published at AlterPolitics