authoritarianism, Economy / Finance, Populism

WHY THE ELECTION OF THE PRESIDENCY OF THE IDB SHOULD BE POSTPONED

Aug 18 2020

By Juan Gabriel Tokatlian*

 The Inter-American Development Bank (IDB) was founded in 1959 and it has been the leading provider of financial support for Latin American and the Caribbean. Since then the President of the institution has been a Latin American. There are several candidates to head it. Among them, and for the first time in history, a US one: Mauricio Claver-Carone, currently a Senior Director of the United States National Security Council‘s Western Hemisphere Affairs directorate. There has been much discomfort and debate in Latin America and the Caribbean surrounding the decision by President Donald Trump to propose him.

At present there is no need to delve in with regards to ideology. The argument should be pragmatic: for the sake of Latin America and the Caribbean interests, for the future well-being of US-Latin American relations, for even the benefit of the United States, and for the purpose of avoiding a new motive for China’s growing influence in the region it is far better to postpone the election of the IDB President. Several motives justify the deferral.

Let`s start by analyzing the current pandemic. The key concern is to keep in mind that although COVID-19 is identical in its damaging effects on people, it does manifest itself in different ways in the developed North and the global South. In the South the degree and extent of inequality are more acute; demographic density levels in main cities are very high; state capacities are generally low; health infrastructure is highly insufficient; economic fragility is significant; the conditions of vulnerability of specific minorities are ostensible; the material, legal and political disadvantages for women are blatant; and several nations were already witnessing dramatic conflicts that hinder the efficacy of mitigating sanitary policies. In Latin America and the Caribbean many of these characteristics, with slight variations by country, are present throughout the region. In short, the COVID-19 among us is really deadly.

Thus, the crucial question is what type of Inter-American bank we need in the post-pandemic. The debate is still absent; especially regarding what is understood and will be understood by “development” after COVID-19. Within this context it may be useful to evaluate a sort of mega Marshall Plan for Latin America and the Caribbean by which the IDB, the Development Bank of Latin America, the Caribbean Development Bank, the Central American Bank for Economic Integration, and the World Bank join efforts, initiatives and resources in order to answer the critical necessities of a region that is seriously damaged by the pandemic. A hasty and contentious election of the IDB President does not contribute or facilitate this urgent task.

In addition, there is a diplomatic consideration. The US-Latin American relations are at the lowest point in decades. There has been recurrent tensions with different countries. There is a lack of common viewpoints on issues such as the environment, tariffs, illegal drugs, migration, human rights, international law, handgun regulations, among others. The use of sticks with no carrots by Washington has been the reality of the Inter-American agenda over the past four years. However, the record of United States’ failures in the region is unprecedented. Why add a new source of controversy in the Americas? Why does Washington become so obsessed in making Latin America more attractive to Chinese projection of power? An American President in the IDB is a recipe for frictions and frustrations. The United States has total control of its Import-Export Bank and the US International Development Finance Corporation, together with the largest project preparation facilities operating in Latin American and the Caribbean through the US Trade and Development Agency. The relative lack of success of US commercial and investment attraction in the region over the last decade has nothing to do with the IDB or China: it reflects that something is happening with the US business community and Washington’s emphasis on involving the military in domestic public order throughout Latin America and the Caribbean.  

 Finally, a political argument. According to the voting rules of the IDB the US share is 30%. Latin American and the Caribbean have 50%; Canada, 4%; and non-regional members (mostly European plus Japan, among others), 16%. Washington may believe that it has already the absolute majority of the votes for his candidate. But surprises may happen. With 25% of the vote there can be no quorum to deliberate: a very strong but highly probable posture that demands a coalition of countries to reach that number. Take into consideration that due to its 30% voting share Washington can unilaterally affect the quorum and no one has ever said that the usage of this political option is a demonstration of hostility. For the first time several Latin American governments, of different political persuasion, are willing to go that far. With 50% of the votes several countries can call for a new election day: a broader coalition should be mobilized and reacch that percentage. This is something very difficult to achieve but US traditional allies such as Canada and many European countries may believe it is time to show its uneasiness with the White House. Is President Trump willing to gamble with one or the other possibility? There is still time to arrange for a new date for electing the IDB president.

The best alternative for the Americas now is to postpone the election of the President of the IDB for early 2021.Three crucial elements are required. First, Latin American leaders should make the call. It is now or never. Second, American personalities from both the democratic and republican party should support such a demand from the region. Third, the administration must realize it is better to negotiate instead of impose a candidate for the bank. These three factors are reasonable, not adventurous.


* Ph. D., International Relations from The Johns Hopkins University School of Advanced International Studies. Provost, Universidad Di Tella, Buenos Aires, Argentina.

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Related:

A call for the postponement of the election of the president of the Inter-American Development Bank

We, the undersigned, Members of World Leadership Alliance – Club de Madrid, all democratic former Heads of State and Government from Inter- American Development Bank member countries, call for the postponement of the appointment of the next president of the InterAmerican Development Bank (IDB), scheduled for September 12th. We thus join the call made by the High Representative and Vice President of the European Union, several Latin American governments, former presidents, foreign ministers, members of Parliament and scholars from the region.

The world is going through one of the most dramatic chapters in its recent history, given the devastating health, economic and social consequences produced by the COVID19 pandemic. Latin America and the Caribbean has been one of the regions hardest hit by the pandemic. With only 8% of the global population, it accounts for over 25% of the infections and 28% of the deaths caused by the new coronavirus worldwide – more than five million infections and over 200.000 deaths. Moreover, according to the IMF, it will be one of the regions most severely affected by the economic and social impact of the pandemic.

The multilateral system and its regional organizations will be called upon to play a fundamental role in supporting the growth and development of regions such as Latin America. The IDB is one of the most important multilateral institutions in Latin America and the Caribbean and a fundamental partner of each and every one of its borrowing countries in terms of financing and development, channelling around 12 billion U$S a year in loans funding infrastructure, social and state modernization projects in LAC countries, more than any other multilateral development bank, including the World Bank. The decision on who is to lead the organization for the next five years will, therefore, be one of the most relevant for the present and future of the region.

The election comes at a time when the region is not only at the peak of an unprecedented pandemic, but in the middle of the sharpest economic downturn of any developing region, and major social upheavals exacerbated by the growing frustration of middle classes seeing their efforts at growth U-turned towards poverty and precariousness – another lost decade.

Conditions are far from favourable for the deep and thoughtful debate that such an important decision demands. A hasty decision could end up weakening the institution when LAC needs it most. It is for this reason that we propose postponing the election until March of 2021 and, in much the same manner as the World Trade Organization, name an acting chief, giving member countries time for an in-depth discussion on the role of the IDB and its leadership and the appropriate institutional response to the post-COVID-19 recovery.

………..

Jan Peter Balkenende Prime Minister of the Netherlands (2002-2010)

Carl Bildt Prime Minister of Sweden (1991-1994)

Felipe Calderón President of Mexico (2006-2012)

Micheline Calmy-Rey President of Switzerland (2007 and 2011)

Kim Campbell Prime Minister of Canada (1993)

Fernando Henrique Cardoso President of Brazil (1995-2003)

Laura Chinchilla President of Costa Rica (2010-2014)

Vicente Fox President of Mexico (2000-2006)

Yasuo Fukuda Prime Minister of Japan (2007-2008)

Felipe González President of the Government of Spain (1982-1996)

Alfred Gusenbauer Chancellor of Austria (2007-2008)

Han Seung-Soo Prime Minister of the Rep. of Korea (2008-2009)

Osvaldo Hurtado President of Ecuador (1981-1984)

Ivo Josipovic President of Croatia (2010-2015)

Ricardo Lagos President of Chile (2000-2006)

Yves Leterme Prime Minister of Belgium (2008; 2009-2011)

Carlos Mesa President of Bolivia (2003-2005)

PJ Patterson Prime Minister of Jamaica (1992-2006)

Julio María Sanguinetti President of Uruguay (1985-1990; 1995-2000)

Danilo Türk President of Slovenia (2007-2012) and WLA-CdM President

Herman Van Rompuy Prime Minister of Belgium (2008-2009)

Ernesto Zedillo President of Mexico (1994-2000)

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