Monday 15 Aug 2022 | 22:09 | SYDNEY
Monday 15 Aug 2022 | 22:09 | SYDNEY

Commie spies and the World Bank


Stephen Grenville

19 April 2012 09:18

With Jim Yong Kim (pictured, to President Obama's right) now formally appointed as President of the World Bank, it might be worth relaying a footnote on the history of this position.

It does seem curious that the US should have pre-emptive rights over the World Bank presidency, leaving the more prestigious job of heading the International Monetary Fund to the Europeans. Benn Steil, writing in the New York Times, tells the story like this. JM Keynes and Harry Dexter White (US Treasury) had hammered out the Bretton Woods agreements which created these two institutions. White was all set to be head of the IMF (with Keynes to head the World Bank) when J Edgar Hoover identified White as a communist spy.

Whatever the truth of this accusation, in the poisonous anti-communist climate of the time, President Truman was forced into a last-minute change, with White relegated to the number two position in the Fund behind a Belgian, Camille Gutt; thus the hardy tradition of a European leading the Fund was established. The Americans instead claimed the top job at the World Bank.

As usual, there is another narrative that fits the facts (and is not inconsistent with this story). The World Bank needed to raise funds from financial markets. The only big market was the US. Some felt that only an American would speak the language that US financial markets understood.

With the appointment of Kim, this durable tradition has been extended. It was never in question. The BRICS countries demonstrated their usual incoherence; the ink was hardly dry on their communique urging the appointment of an emerging county candidate to the job when Russia announced its support for the US candidate.