Central America Needs a Latin American IDB President
The Inter-American Development Bank (IDB) is the main source of multilateral funding for all the countries in Central America and serves as an essential public policy advisor. In the past decades new governments in the region usually start their mandate meeting with IDB experts to discuss their future sectoral strategies. The Bank has provided key policy based funding (PBL) during the economic crisis of the member countries. It is the only multilateral institution with offices in all LAC countries. For Central Americans, it has been their “reliable partner”— the IDB is “their bank.”
The IDB president is a key actor in policymaking and the base for the institution’s relationship with all member countries. Thus, the upcoming election for the next IDB president, is a matter of critical importance for the Central American region.
The election, which is scheduled for September, has three unique and worrisome characteristics: it will be virtual for the first time; a non-regional country (the United States) is presenting a candidate (Mauricio Claver-Carone); and it will take place less than two months before the U.S. presidential election. These conditions are especially significant for Central America countries because of their size, strong dependence on the U.S., and relatively small influence within the Bank.
In a virtual election, candidates campaign mainly through their countries’ diplomatic corps. A tremendous gap exists between the diplomatic power of the United States and any Latin American or Caribbean country (LAC), but especially the Central American countries. In a virtual election, it will be difficult for IDB member countries to evaluate the candidates and to reach the consensus needed for the bank’s future. It will be harder for LAC countries in general, and for Central American countries in particular, to view the upcoming election as fair and for their candidates to compete on an equal basis with the U.S.-backed candidate.
Traditionally, the IDB president has always been a Latin American. This arrangement is part of a diplomatic agreement among all multinational organizations that predates the bank’s founding. In 1958, then-U.S. President Eisenhower affirmed that the regional bank’s success depended on its president coming from the region itself. A president from within Latin American or the Caribbean knows the region better and has a greater capacity to reach consensus, both in the region and with other member countries, than someone from without. For LAC to continue considering IDB as “their bank,” this is an important difference.
The IDB president’s consensus-building capacity would be jeopardized if he or she is from the United States, especially if they’re from a different political party than the president. This is particularly true for someone like Mr. Claver-Carone, who is part of the Trump administration’s inner circle. If, as all polls currently predict, Mr. Biden wins the U.S. presidency in November, having the Trump candidate at the helm of the IDB would not be good either for the Bank itself or for its relations with its member countries. The Central American governments should consider, or in some cases reconsider, that possibility when supporting the U.S.-backed candidate. In this respect, for them the next four years are much more significant than the next two months.
Mr. Claver-Carone’s agenda for the IDB also concerns most of the LAC countries as well as other non-regional IDB members. It is not an agenda based on regional priorities or consensus-building. Examples of Mr. Claver-Carone’s agenda includes focusing on the China-US trade dispute, deprioritizing climate change mitigation efforts, and taking hardline positions with some regional IDB countries.
Given all of the above, it is not logical to hold the IDB election in September. Why not wait until early spring 2021, as the European Union recently proposed and other Latin countries have now endorsed? This will coincide with the next scheduled IDB General Assembly when, hopefully, an in-person election can take place, circumventing two of the worrisome conditions noted earlier. The IDB can either continue working with an interim president or the governors could ask Mr. Moreno to continue as president for a few months longer.
Central America, along with other regional countries, can make that happen. The election of the IDB president is one of the few occasions when the region has much more weight than its voting power. The region should use this opportunity for the best interests of the IDB and itself. The Central American nations should join the initiative of the European Union, Argentina, Chile, Mexico, Costa Rica, and hopefully others to come, to request the postponement of the election. Support by the regional nations for that initiative is vital.
To elect the IDB president during its General Assembly two conditions must be met. The candidate must have more than 50 percent of the votes and a majority of the votes from the region’s 28 countries (including Canada and the U.S.). While the United States and its current supporters have more than 50 percent of the votes, Central America and the Caribbean comprise the majority of the regional countries.
However, obtaining the votes of all the Central American and Caribbean countries is very difficult and risky. For those who do not want a candidate imposed, it is risky because once the General Assembly is called, the election must take place and Mr. Claver-Carole will likely win. The alternative is postponing the election. To accomplish that, only 25 percent of the voting power within the IDB is needed. That is what the EU and several Latin countries are betting on and where the Central American and Caribbean countries can play a substantial role.
*Mauricio Silva worked at IDB for 20 years, 10 on the Board as Director for El Salvador and Central America.
FI name: August 2020