1 business thing: Trump's test at the World Bank
The presidency of the World Bank — the most powerful job in international development — is up for grabs, in the wake of the surprise resignation of Jim Yong Kim.
Why it matters: Kim's departure puts the Trump administration in a tough position. It can nominate an internationally acceptable globalist to the job or face rejection as the world selects a non-American to head the bank for the first time in its history.
Less than a year ago, Kim said he was "completely committed to my job at the World Bank Group" after reportedly being approached to be president of Harvard. That was then. No one knows why Kim quit so suddenly (although rumors are swirling), but the vacuum caused by his departure is likely to create an international diplomatic whirlpool that could prove very tough for Trump to navigate.
- The president of the World Bank is elected by all the bank's member states, according (it says here) to an "open, merit-based and transparent" process. So far, American men have always prevailed in that process, in accordance with the gentlemen's agreement under which the head of the IMF is always European and the head of the World Bank is always American. Essentially, the Europeans and Americans scratch each others' banks, and everybody else merely spectates.
- With Trump in the White House, the Europeans have never been less inclined to scratch the Americans' back. If Trump were to nominate a well-qualified candidate like Indra Nooyi, then they would probably go along with the nomination, just because cooperative game theory has worked well for them to date.
- On the other hand, there's no way Europeans would vote for a unilateralist Bannonite (John Bolton, say), and there's even less chance they would vote for Ivanka Trump, who helped launch the new World Bank women's entrepreneurship fund. Were Trump to nominate someone unacceptable to the Europeans, then the field would be wide open for other qualified candidates to seize the day. Former World Bank managing directors Ngozi Okonjo-Iweala and Sri Mulyani Indrawati would both make excellent presidents.
The ball is now in Treasury Secretary Steven Mnuchin's court. He has three options.
- Start having quiet conversations with his European counterparts about mutually acceptable American candidates, and nominate someone he knows will receive an easy confirmation.
- Nominate an American populist who will almost certainly fail to win the bank presidency, allowing Trump to rail even more against the globalist elite.
- Do nothing, and allow the very qualified Kristalina Georgieva, Kim's interim replacement, to stay in the role indefinitely. She's Bulgarian and is entirely acceptable to the Europeans.