One of these is at the World Bank, where James Wolfensohn, president for the past decade, recently announced he will be leaving when his current term expires on June 1.
As a result, the search is on for a replacement. The most prominently mentioned candidates for the job are: Randall Tobias, the government’s global HIV/Aids co-ordinator and a former chief executive of Eli Lilly; John B Taylor, currently Treasury Secretary for international affairs; and Colin Powell who, though he has ruled himself out, is still considered a candidate by some European and developing countries.
All three candidates are Americans, reflecting a tradition (which is expected to be upheld again this year) that the US, the largest shareholder of the World Bank, chooses who should head the bank, while European countries select the head of the International Monetary Fund (IMF).
Meanwhile, a key issue in the decision regarding Wolfensohn’s replacement – which also applies to changes at other top US economic policymaking positions – is the degree to which the candidates are perceived to be independent of the White House, as well as having respected credentials.
“The new appointments provide the government with an opportunity to integrate its international financial diplomacy with its domestic economic and financial policies,” Nicolas Checa, managing director of a conservative international advisory group in Washington, told The Banker.
In contrast, Mr Wolfensohn, who was appointed by Bill Clinton to lead the bank, while popular with developing countries and non-governmental organisations, expressed liberal views that were frequently out of kilter with those of the Bush government. This made his reappointment improbable.
Meanwhile, next year, the government will also have to fill a vacancy at the helm of the US Federal Reserve, now that Fed chairman Alan Greenspan has confirmed he will be stepping down in January 2006, at the end of his fifth consecutive term since taking over in 1987. Finding a new Fed chair will be a challenge.
The position has enormous influence on both the US economy and international financial markets, and carries an authority that stems largely from public trust that the chair’s views are non-partisan.
Against this background, in another top-level appointment, Mr Bush has named Allan Hubbard – an industrialist, a friend and a top Republican fundraiser – as director of the National Economic Council (NEC), which co-ordinates economic policy between various government departments. Mr Hubbard will replace Stephen Friedman, a former co-chair of Goldman Sachs, who resigned in Noember after two years in the job. AGREEMENT ON GRANTS After years of deadlock between James Wolfensohn and Washington, a tentative agreement has just been reached to increase the amount of aid that the World Bank gives in the form of grants, rather than loans, to the world’s poorest nations. The agreement, still subject to final approval this month, covers both the funding of the International Development Association (IDA), the World Bank’s concessional lending arm for the world’s poorest countries (such as Ethiopia, Haiti and Bangladesh), and a more effective use of IDA aid. The first stage came in December when major donor countries agreed to increase IDA’s funding over the next three years, beginning on July 1, 2005, by 30% to about $34bn, which will be raised by contributions from donor countries, repayment of past loans and other sources. Now, in an accord that comes close to a 2001 goal of President George W Bush, when he called for grants to represent half of the World Bank aid going to developing countries that get aid solely from IDA, 68 countries will start getting grants totalling between 44% and 47% of all their World Bank aid, compared with about 25% at present.
