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Jim Yong Kim abruptly resigned as president of the World Bank more than three years ahead of schedule, potentially sparking an international tussle over who replaces him as the Trump administration questions the development lender’s purpose.
Kristalina Georgieva, the bank’s second in command, will take over as interim president on Feb. 1, the Washington-based bank said Monday in a statement. In an email to employees of the lender, Kim said he’ll join a private firm focused on infrastructure investments in developing countries.
“The opportunity to join the private sector was unexpected, but I’ve concluded that this is the path through which I will be able to make the largest impact on major global issues like climate change and the infrastructure deficit in emerging markets,” Kim said.
Kim, 59, began his second five-year term at the bank on July 1, 2017. He helped the lender win support from its member countries in April for a US$13-billion capital increase, after the U.S. dropped proposals to limit the World Bank’s resources.
President Donald Trump will now be expected to put forward a preferred American candidate to replace Kim, who was nominated by Barack Obama. The choice could prove controversial if the nominee shares Trump’s own disdain for international institutions such as the World Trade Organization and NATO.
The president’s national-security adviser, John Bolton, wrote an article in 2016 in which he cited arguments for privatizing the World Bank, while Treasury Undersecretary for International Affairs David Malpass has questioned why the bank lends so much money to China when the nation already has access to global financial markets.
Trump’s decision could affect how the bank deploys its capital at a time when emerging markets are facing growing stress from rising U.S. interest rates and trade tensions. The World Bank committed nearly US$64 billion in loans to developing countries in the fiscal year ended June 30 last year.
The U.S. is the largest shareholder in the development lender, which was conceived during the Second World War to finance the reconstruction of Europe. It has since focused on alleviating extreme poverty around the world.
An American has run the bank since it was established in 1945. Its sister institution, the International Monetary Fund, has always been led by a European, as part of an unwritten understanding between Western powers. Former French Finance Minister Christine Lagarde is the current head of the IMF.
But some nations have been pushing for a representative from emerging markets. The selection process is managed by the bank’s board of executive directors, which represents the lender’s 189 member countries.
“It’s always really been about coalitions, and the one key coalition that has held for 75 years is the U.S.-European one,” said Scott Morris, senior fellow at the Center for Global Development and former deputy assistant secretary for development finance at the U.S. Treasury under Obama. “It’s hard to see a strong basis for that continuing to hold.”
‘No Sure Thing’
The Trump administration may face resistance from other countries if the president puts forward a candidate openly hostile to the bank, he said. “They have to go out and get those votes from other member countries, and there’s no sure thing.”
While the U.S. president traditionally nominates the person who eventually heads the bank, the lender’s executive board has the final say. The board said Monday it will immediately begin the process for picking Kim’s successor.
Kim was appointed in 2012 to succeed Robert Zoellick. Kim was previously president of Dartmouth College and head of the HIV/AIDS department at the World Health Organization. He was born in Seoul and grew up in Iowa. He has a medical degree and a PhD in anthropology from Harvard University.
Kim’s resignation caught staff and the board off guard, said a person familiar with the matter who spoke on condition of anonymity. Kim notified the executive board at a meeting Monday morning, after giving little indication that he was planning to leave, the person said.
Kim cultivated close relations with Trump’s daughter Ivanka, who works as a White House adviser. In 2017, the bank started a fund to finance women entrepreneurs, an idea it developed in tandem with the president’s daughter. The fund planned to invest more than US$1 billion to improve access to capital for women.