World Bank boss quits setting up fight for role

World Bank president Robert Zoellick announced that he would step down at the end of June, setting up a possible new fight over US dominance at the global development lender.

Mr Zoellick, 58, said he would leave at the end of his five-year term, during which he shepherded the bank and its members through a global economic downturn that, though rooted in the US and European financial crises, had a heavy impact on many of the poorest countries.

“I’m very pleased that when the world needed the bank to step up, our shareholders responded with expanded resources and support for key reforms that made us quicker, more effective and more open,” Mr Zoellick said in a statement.

“The bank is now strong, healthy and well positioned for new challenges, and so it is a natural time for me to move on and support new leadership.”

His departure sets up the second battle in less than a year over US and European dominance of the bank and the International Monetary Fund, the world’s two leading multilateral financial institutions.

Thanks to an unwritten pact between European powers and the United States, set when the two Washington-based institutions were launched in 1945, all 11 bank presidents have been Americans, and men, and all IMF managing directors have come from Europe.

After IMF chief Dominique Strauss-Kahn’s sudden resignation last May, strong pressure arose from emerging countries to end the cozy US-European deal and to name a non-European to lead the Fund.

But in the end French finance minister Christine Lagarde was chosen over several non-Europeans to replace him, the first woman to hold the post.

“It is time for the US to publicly announce that it will no longer seek to monopolise the presidential position,” said a group of five dozen NGOS and activists in an open letter published on Wednesday by the Bretton Woods Project, critics of IMF and World Bank management.

The group called for “an open, merit-based, transparent process” that ensures the next president has the support of the wider Bank membership, “not just a powerful minority of countries”.

With Mr Zoellick’s resignation expected, speculation for months has focused on US Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner and former Treasury chief Larry Summers as his successor.

White House spokesman Jay Carney declined to comment on those or other names.

But he told reporters aboard Air Force One that the administration had “obvious appreciation of [Mr Zoellick’s] service to his country and to the international community through his work at the World Bank”.

The position is powerful, managing a huge operation which aims to help countries and people out of poverty but also, through its massive financial resources, is able to set development and social priorities around the world.

In its fiscal year to June 2011, the bank made $US26.7 billion in funding commitments. It has a staff of around 10,000.

A former US Trade Representative and deputy secretary of state, Mr Zoellick took the job in July 2007, just as the US financial crisis began to erupt.

He replaced Paul Wolfowitz, a former US deputy defence secretary who held the job for two years before resigning under an ethics cloud related to his alleged unfair career support for a World Bank external communications official with whom he had a personal relationship.

Under Mr Zoellick the bank played “a historic role” during the global economic crisis, boosting its resources to provide more than $US247 billion to help developing countries boost growth, the bank said in a statement.

Mr Zoellick is also credited with boosting the bank’s focus on the role of women in development and strengthening its program for Africa.

According to Dow Jones Newswires, the US Treasury has already established a team to find a replacement for Mr Zoellick, led by under-secretary for international affairs Lael Brainard.

Mrs Clinton, Ms Brainard’s boss Mr Geithner, and Mr Summers have all been mum on whether they are interested in the job. While Mrs Clinton and Mr Geithner are both at the moment crucial deputies of US President Barack Obama, Mr Summers is a professor at Harvard University, where he once served as president.

Mr Summers was also Mr Obama’s top economic adviser from 2008-2010.

Source: theage