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Trump nominates David Malpass to head World Bank
[WASHINGTON] President Donald Trump on Wednesday nominated David Malpass, a top Treasury official and Wall Street veteran, to be the next president of the World Bank.
Mr Malpass, currently the undersecretary for international affairs at the Treasury Department, has been a point person in the Trump administration's trade negotiations with China and has overseen the government's relationship with the World Bank.
He is also a longtime critic of the World Bank's lending practices and its business model and has expressed concern about the power that multilateral institutions exert. His appointment, which must be approved by the World Bank's board, could prove controversial given Mr Malpass' skepticism of the bank and concerns that the Trump administration could politicise the role and use it to curb China's growing influence around the world.
Mr Malpass tried to clarify his views toward the World Bank on Wednesday afternoon, arguing that critics ignore his experience with development issues and insisting that he believes in the mission of the organisation.
"As I look at it, I've been a constructive force for development and for developing countries," Mr Malpass told reporters during a briefing at the Treasury Department. "I think the bank is well positioned to be a positive contributor to that".
The World Bank is collectively owned by nearly 200 countries, and its priorities include addressing global poverty, combating climate change and providing foreign aid. Much of its mission is at odds with the Trump administration's priorities, prompting supporters of the bank's role to question how effective a Trump-installed president would be in fulfilling the World Bank's goals.
"If you believe there is any meritocratic element to the selection process, there are others who are by most objective metrics more qualified," said Douglas Rediker, who represented the United States on the executive board of the International Monetary Fund from 2010 to 2012. "That suggests a political agenda by the Trump administration to put someone in to address a US-policy-driven agenda".
He added, "That was not necessarily how that job was intended when it was created".
In nominating Mr Malpass, Mr Trump is installing a loyalist and presidential campaign adviser to a prominent post that comes with a five-year term. The president, in announcing his pick, called Mr Malpass a "very extraordinary man".
"He's been a supporter for a long time," Mr Trump said.
The former Bear Stearns economist and veteran of the George Bush and Reagan administrations has managed to win accolades from both the populist and free-market wings of the Trump administration by mixing financial acumen with hawkishness on China.
Mr Malpass is being tapped to head the World Bank after its previous president, Jim Yong Kim, abruptly announced in January that he would resign from the post, nearly three years before his term expired.
Senior Trump administration officials told reporters Wednesday that Steven Mnuchin, the Treasury secretary, has briefed many finance ministers of other countries about the plan to select Mr Malpass and that they have been "receptive" to the choice. The officials said that Mr Malpass has a history of working constructively with China and that he would honour commitments the bank had made on issues such as climate change.
Other countries have until March 14 to offer their own candidates for president and, on Wednesday, a World Bank official said that at least one other country is expected to nominate someone. The head of the World Bank is traditionally selected by the United States, but the nomination must be approved the bank's board, which consists of officials from across the world.
Mr Malpass said he had already received numerous expressions of support from other countries.
He will begin a six-week confirmation process by traveling to Japan and China to present his credentials and ask for support from officials from those countries. He will also join the US delegation heading to Beijing next week for the next round of trade talks before a March 2 deadline.
As World Bank president, Mr Malpass could put additional pressure on China at a time when it is locked in a protracted battle with the United States for geopolitical and economic dominance. The Trump administration has been urging the bank to reduce lending to China, which since 2016 has received more than US$7.8 billion in bank loans, according to the Center for Global Development. In comments in 2017 at the Council on Foreign Relations, Mr Malpass argued that this should change.
"The World Bank's biggest borrower is China," Mr Malpass said. "Well, China has plenty of resources. And it doesn't make sense to have money borrowed in the US, using the US government guarantee, going into lending in China for a country that's got other resources and access to capital markets".
On Wednesday, Mr Malpass made clear that he wants to see greater transparency when it comes to loans that China is giving to developing countries and that, as president of the bank, he would push to make that happen. He said he continues to believe that wealthier countries like China should not drain funds from poor countries that need the bank's assistance.
The Trump administration's doubts about the causes of climate change could also stoke concern about Mr Malpass' role. The World Bank has identified combating climate change as a key priority and plans to invest US$200 billion over the next five years.
"As the US candidate, David Malpass will have a lot of work to do to convince other shareholders that he is prepared to move beyond his past statements and track record when it comes to the World Bank's agenda," said Scott Morris, a senior fellow at the Center for Global Development and a former Treasury deputy assistant secretary for development finance and debt. "That includes the bank's critical role in climate finance and the need for constructive engagement with China".
Mr Malpass, who struck a conciliatory tone, signalled Wednesday that he does not plan to change course on environmental matters.
"The World Bank is a leading environmental incorporator into projects," he said. "I would expect that leadership to continue and also the bank to honour the obligations that it has with regard to the environment".