As Global Financial Stakes Are Raised, U.S. Calls BRICS’ Bluff

By A. M. Newhall, BASC Research Assistant

On March 16th, President Barack Obama nominated Jim Yong Kim to replace the graying Robert Zoellick as President of the World Bank. Although The Wall Street Journal hailed the selection of a candidate lacking experience in either finance or diplomacy as a refreshingly daring choice, other states in the international system did not share this enthusiasm. Many viewed Kim’s nomination as the perpetuation of U.S. domination of the global financial system. Following Kim’s nomination, representatives of the BRICS — Brazil, Russia, India, China, and South Africa — met in New Delhi to discuss the creation of a non-Western version of a “World Bank,” one more equitable to emerging economies.

Analysts unfamiliar with poker viewed such statements as a serious attempt to create a rival economic financial system. Indeed, even Robert Zoellick addressed the hypothetical scenario by gamely suggesting a partnership between the World Bank and the proposed BRICS-run institution. However, more perceptive analysts realized this was an attempt to bluff the World Bank into considering a less conventional candidate and, more importantly, gain some policy concessions. Indeed, as journalist Richard Blackden of The Telegraph observed, “the fight for the top job at the bank starred a dog that barked loudly but did not, in the end, bite.” The much-touted plan to create a rival institution to the World Bank had become nothing more than hot air amid the parlor tables of power by March 28th. Soon, most European governments such as the United Kingdom and France had endorsed Kim. On April 13th, Russia, ever crafty in international power politics, betrayed its BRICS comrades and threw its support behind the U.S. nominee. On April 16th, the World Bank confirmed Kim as its next leader.

The selection of Kim, whose Harvard pedigree and presidency of Dartmouth College makes him the consummate American choice, was decried as narrow-minded in a world in which global power increasingly shifts away from the United States and the World Bank is dogged by accusations of irrelevancy in the modern global economy. According to William Easterly of New York University’s Development Research Institute, “The World Bank doesn’t have any obvious role in the current world environment.” Indeed, with China offering FTAs with few strings attached and pouring billions of dollars as “free gifts” to impressionable regions such as the Caribbean, one must wonder if the World Bank is still relevant except as a symbol of waning U.S. power in an increasingly multipolar world. To his credit, Kim understands these issues and has pledged to guide the World Bank in a new direction, one more in harmony with the changing international order. If Kim honors his pledge, the Bank might take its cue from the International Monetary Fund and appoint an important Chinese official to a key post.