Trump Taps Global-Order Critic Malpass to Lead World Bank
(Bloomberg) -- President Donald Trump nominated senior Treasury official David Malpass to lead the World Bank, choosing a loyalist who has been sharply critical of China and has called for a shakeup of the global economic order.
“My administration has made it a top priority to make sure U.S. taxpayers’ dollars are spent effectively and wisely,” Trump said Wednesday at the White House. “David has been a strong advocate for accountability at the World Bank for a long time.”
The nomination makes Malpass the top contender to lead the bank for a five-year term, based on the long-standing custom of an American serving as its president.
“I care deeply about the mission,” Malpass told reporters after the announcement, referring to the bank’s goal of reducing poverty around the world. “I’m sure the World Bank can succeed.”
Malpass has portrayed the World Bank as too big, inefficient and reluctant to wean developing countries that grow into dynamic emerging markets. He has pushed the World Bank to lend less to China, arguing the world’s second-biggest economy has the financial resources to support itself, and has criticized Beijing for not moving fast enough to open up its markets.
“It doesn’t make too much sense for the higher-income countries to be drawing so many of the resources of the bank when there are poorer countries that could make use of those resources,” Malpass said. “I look forward to working with China and with the major shareholders, obviously with Japan and with the European shareholders, on the appropriate pace of that wind-down.”
The lender’s executive board, which represents the 189 member nations, has the final say in choosing the leader. The board has given countries until March 14 to put forward candidates.
The U.S. pick could provoke opposition from countries that have defended the existing global order against Trump, who rejected “the ideology of globalism” in a speech last year. It could also reignite calls for the bank to break with tradition and appoint a non-American in a recognition of the growing clout of emerging markets such as China and India.
But administration officials pushed back on Wednesday against the notion that Malpass’s views are hostile to the World Bank, noting that he played a leading role in negotiations that led to a $13-billion capital increase for the bank last year. Treasury Secretary Steven Mnuchin has reached out to other countries to press the case, and other governments have been receptive to Malpass’s candidacy, the officials said.
Malpass, 62, is a Trump loyalist who joined his presidential campaign early as an economic adviser. As undersecretary of international affairs at the Treasury, he has enthusiastically supported Trump’s agenda of tax cuts and deregulation to bolster economic growth.
He has also echoed the president’s doubts about international cooperation, declaring that “multilateralism has gone substantially too far” by straying from the “values of
limited government, freedom and the rule of law.”
“They spend a lot of money, they’re not very efficient,” Malpass told a congressional hearing in 2017, referring to multilateral organizations. “They’re often corrupt in their lending practices and they don’t get the benefit to the actual people in the countries.”
He told lawmakers in December that he hopes “we do change the global order, make it better and make it work better.”
Malpass would replace Jim Yong Kim, who abruptly resigned as head of the bank in January to become vice chairman of investment firm Global Infrastructure Partners.
Malpass held senior posts at the Treasury and the State departments under Ronald Reagan and George H. W. Bush. He served as chief economist at Bear Stearns, an investment bank that collapsed during the global financial crisis.
The World Bank was conceived during World War II at a conference in Bretton Woods, New Hampshire, that also spawned the International Monetary Fund. Its original purpose was to finance the reconstruction of Europe. But under Robert McNamara, who led the bank from 1968 to 1981, it shifted its focus toward financing development in the world’s poorest countries, a mission it maintains to this day.
The U.S. is the World Bank’s largest shareholder. Under an informal trans-Atlantic pact, an American has always run the institution, while the IMF leader has always been European.
Malpass said he’ll be traveling to other countries to make his case for the role. He will try and raise support for his candidacy with Japanese officials and in Beijing when goes there next week for the next round of talks aimed at easing U.S.-China trade tensions.
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