In New Hampshire’s White Mountains 77 years ago, the leaders of 44 nations met to chart the course of the international monetary system. At what became known as the Bretton Woods Conference, the United States played a pivotal role in the creation of the International Monetary Fund (IMF) and the World Bank.
Now, with the world reeling from wave after wave of the COVID-19 pandemic, robust U.S. leadership at these international financial institutions is more important than ever. Washington is the largest contributor to these institutions and their largest shareholder. Consistent with that role, the United States spearheaded last year’s efforts to promote financial stability and economic resilience in the face of global devastation wrought by the pandemic.
In January, the Biden administration removed the U.S. representatives to the IMF and the World Bank that had been appointed by his predecessor—but has yet to nominate replacements. This oversight should be promptly remedied. Strong U.S. leadership will ensure assistance gets to the poorest nations, focus these institutions on their core missions, preserve their budget disciplines, and advance U.S. foreign-policy goals.
The World Bank, in particular, plays a critical role in day-to-day pandemic response, and therefore, it especially needs active support and guidance from the administration. Under the leadership of its president, David Malpass, the bank has mounted a historic response to COVID-19. To countries in need, it has made available up to $160 billion in financial support, including $50 billion for the poorest countries. It focused first on immediate relief, then on debt restructuring, and finally on economic recovery measures. The size, scope, and speed of this support are unprecedented. As the pandemic recedes, the World Bank can resume its pursuit of its twin goals: eradicating extreme poverty and boosting shared prosperity.
COVID-19 overwhelmed the health systems of many countries and jeopardized development advances that have been decades in the making. The poorest countries—those eligible for support from the World Bank’s International Development Association—have fared the worst. In April 2020, the World Bank’s board approved a $6 billion global COVID-19 response program: the COVID-19 Strategic Preparedness and Response Program. The board approved an additional $12 billion last October. This program has provided vital emergency assistance to bolster national health systems in many developing countries.
As of July, the board has approved $4.4 billion to support the vaccine rollout in 53 countries, including vaccine procurement through collective purchase mechanisms, direct purchases, and purchases of excess stocks held by rich countries. Although more than 100 countries have benefited from these efforts, much more work remains to ramp up vaccination rates.
Last month, the Biden administration announced the United States will purchase and donate 500 million doses of the Pfizer-BioNTech vaccine to needy countries and the African Union. Although this is a good start, Washington should do more to support widespread vaccination in the developing world. Doing so would not just help recipient countries but also have global benefits as it would reduce the threat of novel variants that could extend the pandemic’s duration and effect—as we are already seeing with the delta variant. Higher global vaccination rates would also speed the resumption of international travel and trade, which are engines of growth for developed and developing countries alike.
The pandemic exacerbated already surging debt levels in emerging markets, pushing poor countries into debt distress. Over the past year, the G-20 sought to head off debt crises through initiatives to suspend and relieve the poorest nations’ debt obligations so they could prioritize health spending. These efforts are helping many poor countries protect their most vulnerable citizens and return to fiscal sustainability. But realizing the full potential of these efforts would require faster participation by more creditors, especially private creditors and state-controlled Chinese banks. The United States should continue leading international efforts to secure more complete participation in debt restructuring and relief.
The World Bank must also be certain that resources deployed to respond to COVID-19 actually reach their intended recipients and aren’t wasted or syphoned off for other purposes. In this respect, the pandemic has only heightened the need for the bank’s oversight functions. This year marks the 25th anniversary of the “cancer of corruption” speech delivered by former World Bank President James D. Wolfensohn, in which he called for a stronger effort to ensure the efficient use of resources to help the world’s poorest countries.
That speech led to the creation of the bank’s integrity function in 2001. This was a laudable development, but the unprecedented size and accelerated speed of the pandemic response poses a historic challenge for that function. Therefore, the bank’s response should be accompanied by a renewed emphasis on the “transparency, accountability, and institutional capacity” Wolfensohn championed. A swift response must not sacrifice project quality, environmental and social safeguards, or rigorous oversight.
The World Bank’s effectiveness and commitment to transparency will benefit from renewed focus on other areas as well. For example, the bank’s 2012 strategy for supporting developing countries’ information infrastructure and telecommunication sectors must be updated to reflect major advances in technology, ever-increasing cybersecurity risks, and the destabilizing effects of malicious actors on communications systems. The recent surge in cyber and ransomware attacks demonstrate the need for a fresh approach at the bank.
Similarly, the World Bank’s 2016 procurement framework can be strengthened to provide greater transparency, with systematic tracking and documentation of subcontractors used to complete projects. These enhancements will go a long way toward addressing national security, cybersecurity, data privacy, intellectual property, and human rights concerns.
The voice and vote of the United States at multilateral institutions advance U.S. objectives, including peace, stability, economic growth, and global public health. Just like the Bretton Woods Conference nearly eight decades ago, this is a turning point in history that will determine future economic stability and prosperity—then, as the world searched for a new financial architecture at the close of a terrible world war and now, as we begin to emerge from a devastating global pandemic.
U.S. representatives to the World Bank and other international financial institutions are critical to advancing those objectives—as are U.S. Treasury Department officials who coordinate policy for those institutions. The Biden administration can and should lead the charge by promptly nominating forceful leaders who understand the challenges that lie ahead and are willing to roll up their sleeves and work toward pragmatic solutions. With a pandemic still raging, there’s no time to waste.
