The World Bank may soon be headed … by one of its fiercest critics. The White House has officially this Wednesday the candidacy of David Malpass. This economist is currently Under-Secretary for International Affairs at the US Treasury. In this capacity, he notably participated in the negotiations between Washington and Beijing on trade, and repeatedly judged that the Chinese economy had become strong enough to stop borrowing from the World Bank.
David Malpass held a number of roles under the Reagan and George H. Bush administrations, before becoming chief economist at Bear Stearns just before his bankruptcy. During Donald Trump's presidential campaign, he was also part of his economic advisers.
The Trump administration has, these days, tried to smooth its image. Notably, despite his criticisms of the institution, he played a decisive role in the recent $ 13 billion financing by the World Bank, which Washington finally supported – even though opposed to refinancing by the International Monetary Fund (IMF). One of its priorities would be the growth of developing countries, arguing that it would also ultimately benefit the United States.
" A desaster "
Elsewhere, David Malpass remains the candidate of the "America First", hardly compatible with this role. And the emerging countries believe that it is time to elect a non-American to the World Bank.
But an alternative candidacy is unlikely to succeed. Traditionally, the World Bank elects an American at its head, the Europeans retaining the IMF. If they have no desire to see a close Donald Trump inherit the post, they should not oppose it, at the risk of losing the IMF, considered much more strategic. The American (16%) and European (26%) votes should be decisive for winning the decision. In the final hours before the formalization of his candidacy, Treasury Secretary Steve Mnuchin also reportedly campaigned for Malpass with US allies, and some representatives on the World Bank board would be willing to support him, according to the report. Wall Street Journal.
Critics, however, appeared internally. These voices hoped to see Ivanka Trump, who oversees the appointment of the US candidate with Steve Mnuchin, change his mind at the last moment. In Washington, one mocks notably the attitude of David Malpass during the crisis of 2008.
In August 2007, he wrote a column entitled: "Do not panic about the credit market". A few months later, his own Bear Stearns bank was swept away by the explosion of real estate loans and derivatives. " David Malpass would be a disaster, a toxic choice Said former White House spokesman George W. Bush Tony Fratto. As for Paul Krugman, he recalled on Twitter all the errors of judgment of Malpass during the crisis. " Donald Trump can be credited with the merit of consistency, judge the economist. His strategy to always name the worst and the stupid did not change an inch. "
Give Trump credit for consistency: his "the worst and the dumbest" strategy of choosing the world's greatest asset. World Bank 1 / https://t.co/9M0POeGjze
– Paul Krugman (@paulkrugman) February 5, 2019 Nicolas Rauline
New York Office