Can multilateral development institutions survive the era?Last week, U.S. President Donald Trump nominated a new president of the World Bank, a post traditionally occupied by an American. Aid experts were worried, if not necessarily surprised, that the White House nominee—Treasury official David Malpass—has a history of criticizing bodies like the bank.
Commentators picked up on congressional testimony by Malpass from 2017, in which he supported the administration’s view “that globalism and multilateralism have gone too far,” and promised to limit or end U.S. support to underperforming aid institutions. He was more positive about the World Bank in further testimony to Congress last year, noting reforms that had been implemented. But aid experts still fear that his goal will be to rein in the bank’s projects and ensure they serve U.S. interests.
This would be in line with Trump’s own skepticism about international aid. Last September, the president told the United Nations General Assembly that “we are only going to give foreign aid to those who respect us and, frankly, are our friends.” As I noted at the time, the administration seems to see aid as one tool in its broader competition for global influence with China. Malpass told Congress last year that the U.S. was working through international institutions to “push back on China’s over-lending to fragile developing nations, including those with weak governance.”
Malpass will not necessarily be a wrecker at the World Bank. International officials agree that he is a serious figure and note that he recently helped negotiate an increase in the bank’s funding. The U.S. has worked quietly behind the scenes to convince allies that he is a good choice, defusing talk of a challenge by a non-American candidate. For all its unilateral bluster, the Trump administration has made some rather good choices of leaders for multilateral institutions. The current heads of the World Food Program and UNICEF—David Beasley and Henrietta H. Fore, respectively, both nominated by Trump in 2017—get positive reviews from U.N. staff and foreign diplomats.
Nonetheless, whatever stance Malpass takes should he be confirmed as the World Bank president, geopolitical tensions are increasingly likely to complicate multilateral aid policy in future. This is not solely due to Trump. Many Democrats share the administration’s suspicions of China’s behavior. Meanwhile, even some American allies with a strong history of development spending are asking whether it is worth it.
There are signs, for example, that British politicians are starting to question the country’s commitment to Official Development Aid, or ODA. The U.K. has championed aid since the days of former Prime Minister Tony Blair and has made its commitment to spend 0.7 percent of Gross National Income on ODA a legal obligation.
Even some American allies with a strong history of development spending are asking whether it is worth it.Yet there are persistent rumors that the current development minister, Penny Mordaunt, has argued that this level of spending is unsustainable. Boris Johnson, the former foreign secretary and perennial prime ministerial hopeful, has created a stir by endorsing a recent think-tank report calling for the U.K. to cut aid projects and shift some funds from development to the armed forces.
In reality, the U.K. is not going to give up on all its aid commitments, even if it faces economic squalls as it leaves the European Union. London has been investing heavily in the World Bank and flagging its continued commitment to aid as proof of its post-Brexit internationalist credentials. The report endorsed by Johnson, published by the conservative-leaning Henry Jackson Society, focuses on aid effectiveness rather than advocating blind cuts in foreign funding. And if the current Labour opposition wins the next general elections, the U.K. is likely to double down on its ODA promises.
But the current arguments over aid in Washington and London may be harbingers of broader shifts in debates over international development to come. While China’s rise has brought a new political dimension to these discussions, the aid business faces even more fundamental questions about its business model. ODA is increasingly marginal to global growth. The World Bank estimates that people in middle- and low-income countries receive $500 billion of remittances each year, or more than three times all ODA flows. Aid experts are increasingly focused on ways to offer technical wisdom to developing countries, not just cash. Even critics of David Malpass admit that many of his criticisms of inefficiencies in the multilateral aid system are valid. U.N. Secretary-General Antonio Guterres is pushing the organization to shrink its sprawling network of offices worldwide, for instance, among other efforts to reduce costs while improving effectiveness.
In these circumstances, national and multilateral aid agencies will only face more pressure to show that their work has value in future. For the time being, governments remain committed to the U.N.’s Sustainable Development Goals, or SDGs, including the pledge to end extreme poverty by 2030. This basic moral target still resonates. But there are already signs that many very poor countries will not be able to achieve the SDGs, raising more questions about the utility of ODA.
Not everyone is turning away from aid: Some EU members, notably Germany, have boosted their ODA efforts to help manage refugee and migrant flows in recent years. It is possible that China’s challenge to the U.S. and other traditional donors will ultimately inspire Western leaders to invest more in foreign assistance as a means to retain their influence. But we may equally be approaching a “post-aid” world, with ODA declining as both a major factor in relations between rich and poor countries and as a significant political cause in donor countries.
President Trump may not like ODA very much. But he is only accelerating a necessary debate about what purpose aid should serve in a new geopolitical and economic environment.
Progress PalmSprings is senior researcher and fellow with the PalmSprings Institute of International Affairs, based in Johannesburg. He is also concurrently a TV Producer for a plethora of Current Affairs shows with a reach of 790 million viewers on LoveWorldSAT.
BY Progress PalmSprings