Banga is the former chief executive of Mastercard. He grew up, went to university and started his spectacular career in India before moving to the USA. His South Asian background is undeniable even though he has a US passport. Most likely, the World Bank’s member countries will appoint him.
Critics have long bemoaned the conventional practice of World Bank presidents being US citizens and nominated by the White House. By picking a financial-sector manager who is from India and proudly displays his Sikh identity by wearing a turban and having a beard, Biden is reaching out to non-western cultures. In particular, he is reaching out to those emerging markets that have a long track record of keeping a distance or even opposing the west. Diplomats from Brazil, China and South Africa will certainly consider Banga to be just as Indian as American.
Decisive expertise
Banga’s track record does not include long stints in multilateral institutions or development agencies, but he has shown a strong interest in developmental issues, including the devastating impacts of global heating in particular. On the other hand, he has thrived as a financial-sector manager on Wall Street. He knows how to mobilise private capital and invest it competently. Biden obviously wants the World Bank to improve its performance as a financial institution.
Some observers are disappointed that the White House did not pick a climate expert or a development professional, but to guide the bank for the better performance regarding those issues, financial-sector competence may actually be more important than in-depth knowledge of ecological matters and development economics. The latter are not needed to define the right goals, while the former is indispensable for achieving them. In terms of competence, Banga will thus be hard to reject as well.
Some criticise Biden for not nominating a woman. I agree that it would be great to get a female World Bank president, but I do think that Banga’s nomination makes a very good sense in terms of fighting destructive identity politics.
Subtle message to Indians
Indeed, Narendra Modi, India’s prime minister, is probably quite unhappy about Biden’s proposal, but will have to accept Banga nonetheless. The point is that Banga does not confirm Modi’s Hindu-supremacist ideology. Sikhism is a different faith, and proud Sikhs resent the attempts that Modi and his ideological camp make to subordinate their religion to Hinduism.
Banga is the son of a high ranking military officer. In his generation, that meant being raised in the Nehruvian spirit of secular nationhood and rejection of sectarian divisiveness. While some Indian immigrants in the USA support Modi, many do not, and Banga is certainly in the latter camp. He is an ally of Vice President Kamala Harris, who opposes discrimination of all kinds. Banga has a history of supporting causes of inclusiveness.
The Indian public celebrates compatriots who rise to positions of global leadership. Such persons represent the nation at the international level and serve as role models at the domestic one. Biden’s subtle message to India is thus: we appreciate you, but we don’t fall for your government’s ideology of an exclusively Hindu nation. By endorsing a liberal Sikh, Biden is weakening Modi’s claim to define Indian nationhood.
Global perspective
At the global level, Biden’s message is different. He wants the World Bank to become more forceful and to use its clout in response to the climate crisis. This approach makes sense. Global heating is an urgent problem and all available resources must be used to get a grip on it.
If the World Bank is becoming a climate bank, however, an unresolved question becomes even more urgent. It is to what extent climate finance is being conflated with official development assistance (ODA). The big promise was always that climate finance would be provided on top of ODA.
ODA is well defined and the flows are transparent. On average, high-income nations are paying about half of what they promised. Climate finance promises have perhaps been kept by 80 % or so, but definitions are more vague and there is obviously quite a bit of double counting with ODA. The World Bank is not responsible for this confusing state of affairs, but it is an agency that can contribute a lot to providing more transparency, so international observers should pay attention to what its top leader does in this respect.
Hans Dembowski is the editor-in-chief of D+C/E+Z.
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