Feb 8, 2021 - Economy

Trump’s World Bank head speaks out on climate change, inequality

Against the backdrop of the coronavirus pandemic, World Bank president David Malpass has been a surprisingly outspoken advocate for policies to reduce global warming, rein in economic inequality and use multilateral institutions to fight the worst of the pandemic's impacts.

Why it matters: As a nominee of former President Donald Trump and a longtime skeptic of multilateral institutions, many feared that Malpass would weaken the World Bank's work on climate change or make it more "America First" in its orientation. But that hasn't been the case, as he explained on "Axios on HBO."

The big picture: Malpass leads one of the world’s most powerful financial institutions, whose mission is to reduce global poverty and is often the last resort for countries that are struggling to stay afloat.

  • "We've seen this growing, rising inequality ... it seems like the system we currently have in place is not working."
  • "There's been less and less capital available for small businesses. And there's been a centralization of the wealth within the various economies."

Where it stands: In December, the World Bank raised its target and now expects 35% of its financing to have "climate co-benefits, on average, over the next five years." That's up from 28% in 2019 and an 18% target under Malpass' predecessor, Jim Yong Kim.

  • The Bank also has been a strong supporter of implementing and backing the Paris Climate Accord, with Malpass telling "Axios on HBO" that the Bank has been "heavily involved in this effort."

On inequality, Malpass has been one of the most outspoken critics of the current state of affairs and the way central banks have addressed the issue.

  • "Central banks are buying bonds, which by definition, bonds are issued by people that already have money and they're bought by people that already have money. So the system is set up to to stabilize the upper end."
  • "But it's been hard for the advanced economies to get benefits to people at the at the lower end."

Flashback: When Malpass was nominated in 2019, Stewart Patrick, a senior fellow at the Council on Foreign Relations, wrote that Malpass held views "antithetical to the Bank’s mission."

  • Patrick also said Malpass shared "Trump’s misguided view that multilateral institutions inherently run athwart to U.S. sovereignty and national interests, and he can be counted on to undermine the Bank’s invaluable work around the globe."
  • "He is precisely the wrong person at the wrong time to helm the Bank," Patrick concluded.

Kim reportedly left his post three years early because of disagreements over the Trump administration's stance on climate change, including Trump's claims that climate change was a "hoax" and his plans to pull out of the Paris agreement.

The last word: "Climate change, poverty and inequality are defining issues of our age," Malpass said in a recent speech.

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