Asian Devpt Bank Presidency: Guardian

Asian Development Bank Presidency: looking beyond Japan

The ADB board could be missing the opportunity to create a more inclusive leadership by avoiding open elections

John Sinclair
Guardian Professional, Monday 22 April 2013 17.53 BST

Haruhiko Kuroda, former president of Asian Development Bank has been recalled by Tokyo to head Japan’s central bank. Photograph: Toshifumi Kitamura/AFP/Getty Images

When Japan recalled president of the Asian Development Bank, Haruhiko Kuroda, to head up its central bank, it seems to have missed an opportunity to promote openness. The Japanese and the ADB’s board seem to have ignored the emerging international consensus favouring competition in electing the heads of multilateral banks.

Just last summer the board of the World Bank, representatives of most world governments, decided it would be good practice to finally have a competition for their new president. There had been a little reluctance at first in Washington, but later the US felt it would be too embarrassing to refuse an open election for the World Bank presidency, though the man for the job happened to be another American.

The same arguments should have worked for the ADB. Competitive elections have become the practice in the other regional development banks, with recent examples being the African (AfDB) and European banks. The same western governments represent a key voting bloc on the ADB board, so why not the same practice there? Japan is an important but far from dominant member, contributing 12.8% the bank’s capital. Several other developing Asian countries could have provided strong candidates for president of Asia’s core multilateral financial institution.

The ADB’s board has been slow to modernise. Members, both western and regional have missed the opportunity to create a more inclusive leadership and align the with the


emerging global powers in Asia. In contrast, the western heads of state are flocking to China, India, Indonesia and other Asian countries to promote trade and investment. But even that doesn’t seem to have impressed the ADB board.

There are Asian countries with strong leadership candidates waiting in the wings. One is China, which in recent years passed Japan to become the world’s second-largest economy. Another is India, closing in fast economically on Japan and full of world-class expertise in the ADB’s core business of development and poverty reduction. Even Thailand and Vietnam are not lacking talented leaders. It is not clear why none of them pressed for the open election which the bank’s rule-book formally permits.

So what has happened in the meanwhile? Japan almost immediately announced its candidate, Takehiko Nakao, an experienced finance ministry official specialising in currency issues, hardly the core developmental challenges for today’s ADB. By the closing date for nominations no other candidate had been proposed. Other member countries were seemingly too polite or politically hesitant to create a real competition, leaving the process as a ritual confirmatory vote, a Japanese coronation.

In stark contrast, the World Bank presidential election last year saw three strong candidates, two from developing countries. Formal board interviews and their informal campaigns focused on which of them would be best skilled at understanding the development challenges linked to poverty and then having the managerial experience to deliver programmes in areas such as health, job creation and infrastructure.

Did Japan miss a leadership opportunity? As a leading voice in the ADB, it had a great opportunity to promote it (and themselves) as modernising forces in a rapidly changing Asia. Taking the initiative to propose an open selection process would have gained it respect and prestige in the region at a time when it is looking increasingly to its Asian neighbours, countries such as China and India, for markets and business partners. There are few if any direct financial benefits to lose. Japan would still have had major influence through its nationals in the many key ADB positions, and there would be important political gains.

Developing Asia seems to have been equally hesitant. Was their inaction strategic or simply an inability to compromise on a single candidate? They have complained bitterly at their lack of an equitable voice in the World Bank and the IMF boards but in their own backyard they chose to sit on their hands. In practical terms to defeat a Japanese candidate, likely to be supported by most western board members, they would have needed to agree on a single candidate.

There would be important gains from an open ADB election. While the president is not a dictator, a developing Asia face at the top would likely change the tone and some important priorities in the institution. The need for both infrastructure and social services would not fundamentally change, but poverty reduction would likely be more central to its agenda.

New faces might appear in senior operational and policy positions, bringing new ideas and experience into the bank’s operations. Commitments to country leadership would likely be stronger, with programming more directly shaped by the bank’s borrowing partners, as opposed to its financiers. Most democracies find important merit in simply changing the face at the top to open up their power structures to new ideas. The same would be true for the ADB.

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There is another possible factor at play. Is the developing south in the ADB, explicitly or

not, saying something more fundamental? Are they deliberately exploring another path, one not so closely shared with the west? They are clearly aware of the steps among Latin Americans towards creating their own development bank, despite already controlling the Inter-American Development Bank. By coincidence just days after the ADB closing date for nominations was past, the Brics, the obvious rival to the old G7, met in South Africa for their fifth summit and took the first practical steps to creating a new development bank. Such new approaches point to a possible developing Asian preference for finding their own solutions rather than depending on institutions heavily influenced by western economies. A competitive ADB election would not necessarily change that preference for parallelism over better partnership. But it could help.

What of the immediate future? The formal election to confirm the new ADB president is due by 24 April. The bank will again have a president from Japan. It might be a timely gesture for the board and/or Japan to simultaneously announce that the rules for the next election would require at least two candidates to be presented, including at least one from a developing Asian member country.

John Sinclair is a former official of the World Bank and Cida. He is an associate of the North-South institute and a member of the development advocacy, The McLeod Group.

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