Now or Later: The Election of the President of the Inter-American Development Bank Needs Time
In December of last year, I wrote that the importance of the Inter-American Development Bank (IDB) to the United States argued for a transparent and rigorous process for selecting its next president. Given the importance of this decision and the inability to have a fulsome in-person vetting of all the candidates due to Covid-19, the governors of the IDB should ramp up conversations now or delay the decision until in-person meetings can take place.
The window for nominations opens on July 27 with the vote expected to take place during the September 12-13 annual meeting. Several governments have informally floated their candidates around the region: Argentine Gustavo Béliz, Bolivian Augusto Lopez-Claros, Brazilian Rodrigo Xavier, Chilean Felipe Larraín, Costa Rican Laura Chinchilla, Ecuadorian Richard Martinez, and Paraguayan Benigno López. In addition, the following names also continue to circulate—Salvadoran Juan José Daboub and Mexicans José Antonio Meade and Vanessa Rubio Márquez. Voting is proportional based on each of the 48 member countries’ shareholding. The winner requires the support of 15 of the 26 borrowing countries but in practical terms will largely be decided by the United States (30 percent) plus two of either Argentina (11.4 percent), Brazil (11.4 percent), or Mexico (7.3 percent). The inertia toward consensus will likely result in a consolidation of support to avoid a public contest.
Delaying any election is a serious decision that should be evaluated with great care. In this case, the timeline need not impact the October departure of the current president, Luis Alberto Moreno, who has built an institution that can easily stand on its own for six months.
From now until September, countries in the Americas need to have the chance to fully evaluate the current candidates as well as propose additional ones. The longer list should include not only former government leaders but also C-suite executives and non-party loyalists. Beyond a narrow technical or regional skill set, the next president must be proven to be able to lead a large and complex global organization and navigate politics at the highest levels. If the discussions are not accelerated, we could see a late-game compromise that could limit a world-class institution.
Given that the process for selecting leaders to multilateral organizations is driven by countries nominating their own nationals, there is no headhunter to comb talent and pique their interest to get in the game. Naturally, countries will follow their broad strategic interests. However, those interests might be more concerned with regional horse-trading on foreign policy priorities of the day rather than what is best for the IDB and for the development of the region for the decade. However, in spite of the inherently political nature of these decisions, more structured steps can be taken to allow member-states to vote in a more informed manner.
In 2012 and 2016, the European Bank for Reconstruction and Development subjected candidates to additional processes, which helped open the discussion. These included written candidate statements, concentrating the discussion in a one-month window, and in one case, candidates participated in public discussions with outside organizations. The IDB process includes internal statements of interest but could also include more opportunities for public debate. Such a fulsome debate cannot take place under the current travel restrictions.
The reason this election matters goes back 20 years, during which the United States argued for an all-too-modest role of the IDB and other multilateral development banks, which has allowed unfriendly competition to gain ground. In addition, Covid-19 proved that we need coordination across the region, and the IDB is perfectly suited for that role. To be fair, as of January, much of the region’s progress across key social and economic indicators suggests that they might “graduate” from financing from publicly backed institutions. After all, their economic stability before Covid-19 afforded some governments the option of borrowing in the private markets. However, just because governments have other options, does not make them better options—not for the countries themselves nor for the interests of the shareholders of the IDB.
The safeguards required for IDB loans help investments meet minimal standards regarding procurement, the environment, among others. Designing creative financing mechanisms like green bonds and gender bonds are areas the IDB can do well, and something the private markets alone are unlikely to get right. These non-value-neutral mechanisms help put money where it matters. The use of such mechanisms is a win for the United States and for the region. Especially considering that other financing alternatives, while more expeditious, are certainly less rigorous, or worse, namely China.
In the coming decade, the United States will need a serious economic growth agenda for the region. Such an agenda includes a serious role for the IDB, which requires a serious leader to drive it. Especially in light of the rocky years ahead due to Covid-19, the IDB needs a uniting figure who can get big things done for all of the Americas, and the governors of the IDB deserve the time and space to make their decision.
Mark Lopes is a senior adviser (non-resident) at the Center for Strategic and International Studies and the U.S. executive director to the IDB from 2015-2018.
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