The World Bank should expel the US

The US has abandoned credibility as the Bank's leader

The administration’s vandalism of the fiscal integrity of the United States and its destruction of USAID should compel other World Bank shareholders to ask the US to leave the institution.

This post explains what the World Bank does, suggests how the other shareholders could act to expel the US, and answers some questions about the impact of exit. I do not argue that it is in the US interest to quit the Bank—it is not in the US interest—but it is in the global interest that the US leave the Bank as part of a liquidation of the institution and transfer of its balance sheet to the other multilateral development banks (MDBs). A less radical measure in defense of the global interest would be to facilitate the institution’s move to a country that does not view the polycrisis as an opportunity for ever more rapacious looting, which would require a much smaller role for the US in the Bank at all levels.

What is the World Bank ?

The victors^[1] in World War II established two Bretton Woods institutions in 1944, with the Bank becoming operational in June 1946. The mandate of the International Bank for Reconstruction and Development (IBRD, now generally known as the World Bank) was to help Europe’s recovery from the war by providing financial and technical support for reconstruction, stabilization of the global monetary system, and facilitation of trade and investment. The World Bank Group now comprises four institutions in addition to the IBRD: The International Development Association (IDA), created in 1960 to assist low-income countries, the Multi-lateral Investment Guarantee Agency (MIGA), the International Finance Corporation (IFC), and the International Court for the Settlement of Investment Disputes (ICSID).

The WBG lends money to governments, or to borrowers backed by sovereign guarantees, for projects in education, health, water, all modes of transport, agriculture and the environment, capacity building, energy (renewables and FFs) and other sectors.

The balance sheets of IBRD and IDA are as follows^[2]:

Items IBRD IDA

(US$ current billion)

Assets 342.3 235.3

Liabilities 279.9 48.7

Equity 62.4 186.7

IBRD lends on a small discount (perhaps 5-10 % in NPV terms) to middle-income countries. IDA extends “credits” (loans at an NPV discount of about 70%) to sovereign borrowers in low-income countries (in 2024 countries were eligible for IDA credits if they had a per capita GDP less than $1,315).

The WBG has a small research department and other specialized units to manage the Group’s money, to handle personnel issues, to provide security, etc. The vital internal organ is the Independent Evaluation Group (IEG) which “ … evaluates the development effectiveness of the World Bank Group …” while being independent of Bank management and reporting directly to the Bank’s Executive Board.

How do the WB shareholders operate ?

The top 8 countries in terms of IBRD voting power are^[3]: United States, 15.83 US$ billion; Japan, 5.02; China, 5.86; Germany, 4.18; France, 3.83; UK, 3.83; India, 3.07; and the Russian Federation, 2.80.

Shareholders hold "chairs" on the World Bank's Board of Executive Directors in rough proportion to their holdings of IBRD capital. Smaller shareholders join to hold a single chair in “constituencies”. For example, 24 African nations hold one chair as a constituency while the US, China, the UK, Japan, France, and Germany hold individual chairs. Executive Directors (EDs) and their staff do the work of representing a constituency. I use "work" here in a very approximate sense in speaking of the EDs, who can barely turn up two day a week though the working classes will certainly admire the Board’s progressive spirit in moving to a 20-hour work week.

The Board of Executive Directors^[4] has one operational job--to approve projects. Board members approve most projects by consensus with no formal vote. (Legend has it that the most recent vote on a project took place more than 20 years ago when Jim Wolfensohn had a flight to catch). One may say that this is a fine operating principle. Yet-- the well-informed reader may smile here--the reason for “consensus” in place of voting is to preserve the cowardly anonymity of the EDs, most of whom have only the remotest idea of what is happening in the operations they approve. I was Country Director in the Bank for Senegal, Cape Verde, Guinea-Bissau, and The Gambia from 2000-04; and for Tanzania, Uganda, and Burundi from 2007-11. Our department presented many projects to the Board involving billions of IDA credits and additional billions in HIPC debt relief packages. Our project teams rarely received inputs of any value from Board members or from their advisers, who are political, not technical, appointees from constituencies. Consensus tries to maintain the fiction that all are equal before the Bank's law. It is the pretense that the US and Guinea-Bissau have the same weight in the Bank.

The US should leave because it has abdicated its responsibility as the Bank's global leader

The US runs the Bank but refuses to recognize that with rights come responsibilities. The US has always appointed the Bank's President. Consistently poor choices for WB President are the first symptom of pathological neglect by successive US administrations. Bank Presidents in this century include a war criminal (Wolfowitz), a Bush family servant who was indifferent to the job (Zoellick), a pal of the Clintons who left hastily in murky circumstances (Kim), a climate denialist (Malpass), and a disengaged money lender (Ajay Banga, the current President) who does not understand what the Bank does and who squeaks in public about his miserable Bank salary.

A second reason is that the US does not lead on global heating, prevents the WB from doing what must be done, is manipulating Ajay Banga into pushing natural gas as a "transition fuel" in poor countries, pimps corrupt carbon pricing schemes, is trying to sell dangerous and unnecessary nuclear energy (which would never pass domestic regulatory standards), and generally fails to set an example.

A third reason is that the US has abandoned its commitments to human rights at home and abroad, however weak those commitments have been in the past. It is therefore incapable of leading the WB in support to principles of universal human rights which include equality of gender, race, and national origin and equality of access to health, education, and economic opportunity, among many.

A fourth reason is that the US is now the global center of financial crimes through money laundering, crypto currencies, financial market manipulation, and soon enough, asset stripping on a colossal scale. Does anyone expect the US to push the Bank (or the IMF) to do anything about these crimes when it is dismantling its own domestic regulation and withdrawing from global structures ?

There are two options to get the US out of the Bank

One option is to break up the Bank and sell its balance sheet to the other multilateral development banks (MDBs). This is my preferred option because it puts financial and technical responsibility on the regions and forces them to substitute investment in their citizens for whining about how the US-led world is mean to them[5].

A second option is to sell most of the US shares and move the Bank to a host country that is committed to human rights, equity, and to fighting global heating. Under that option, the US would join one of the smaller New World constituencies and its ED could influence the institution’s direction by some tool other than that of “Because I said so”.

Can the Bank survive without US capital and leadership ?

Yes. The US share of IBRD's capital is of the order of US$3.7 billion. So what ? Sell the US shares to Mexico, Brazil, Turkey, Spain, Ethiopia, Indonesia, Vietnam, Colombia, Malaysia, and Nigeria. Transfer IBRD and IDA assets to the regional development banks.

The US is not leading anyway so the leadership part of this question is moot—the Bank is surviving but can do much better.

Can IDA survive without US contributions ?

Yes. The US contributed about US$4 billion to the recent IDA replenishment (July 1, 2025 - June 30, 2028) or about one-sixth of the total new IDA money of US$23 billion. Again, so what ? IDA members and regional development banks can make up the difference. The sovereign wealth funds of Norway, Singapore, or the Gulf States could pay the present value of the US contribution (call that US$80 billion at a discount rate of 5 %) and assign the corresponding allocations to low-income countries as is now the practice[6].

IDA does need a radical restructuring including a very short haircut on reflows (dishonestly counted as new money in the most recent replenishment) and the resignation of some notoriously dogmatic senior managers who are long overdue to cash in with the hedge funds. The restructuring of IDA is a topic for a future post.

Will this destroy the Bank's convening role in development finance ?

No. The Bank was once a leader in capital flows to middle-and low-income countries. It is no longer. The greatest flows are now private. Public commitments from China, the European Union, India, Turkey, and the regional development banks are now large shares of total flows. The Bank's main convening role today is in climate finance; even there it persists in the costly effort to force various corrupt carbon market schemes down the gullets of poor nations. The Bank cannot lead in mobilizing green finance and cannot improve the return on green finance if the current US administration is in office.

Will the operating model of IBRD and IDA change ?

The operating model would not change much. IBRD/IDA would remain organized around country teams within regions (Latin America and the Caribbean, West Africa, etc). The country teams, supported by technical specialists (roads, water, education, telecoms, energy, agriculture, etc), would continue to have wide autonomy to identify, prepare, appraise, negotiate, and support projects while being freer of the constant harassment from the bean counters. Independent evaluation entities would remain (on condition that they stop check-list evaluation models and move to more sophisticated RCT methods with proper experimental controls). Pricing of IBRD loans and IDA credits would vary little, with some latitude for country teams to blend IBRD and IDA instruments in low- and middle-income countries. The instrument of national and sub-regional financing (e.g., agricultural research in East Africa) could be used more forcefully in transport, communications, and power connections.

Will exit kill the Bank’s research and accountability functions ?

No. There is plenty of development research done^[7] without Bank participation and this could continue undisturbed by the loss of US finance. All the development banks have internal evaluation units (some strong, some weak) and there is no reason for them to stop work without the Bank there to hold their hands. Another accountability function to remain should be the Inspection Panel; the Panel’s work, which is certainly needed, might even improve without the covert private intercourse between US NGOs and Panel staff and without the self-dealing of US national Panel members publishing junk law review articles in pursuit of their academic ambitions.

What if the US wants to cede its host country status and remain in the Bank with smaller shareholdings (the second option) ?

Fine. Of course, the US would never do it because the administration (blue and red alike) loves harassing the Bank, stuffing it with non-entities like Wolfowitz who could have been confirmed as dog catcher or with robotic careerists like Zoellick who was deliberately rude to everyone, while pretending to fight global poverty. If my second option holds—reduce US shares and move the Bank—then the residual US holdings would have to be very small or the country would continue its notorious harassment of staff and the other Board chairs.

Will US exit not destroy the RDBs' ability to borrow ?

No. The RDBs would have greatly expanded portfolios in their regions, which form the basis of their future borrowing capacity. The basis of IBRD's lending is its ability to borrow in the capital markets, which in turn depends on loan repayments bearing sovereign guarantees. Those guarantees would not change. World capital markets are deeper than ever and could easily support a cut in US shareholdings in the World Bank. Several sovereign wealth funds could easily contribute to capital increases in the re-structured MDBs and to the impending emergency re-structuring of IDA reflows.

Will this damage the internal governance of the Bank ?

It will improve internal governance. The overbearing presence of the US in Bank governance and management damages the institution’s development impact. A Bank Vice-President once had to make a technical decision involving the debt restructuring of a notoriously problematic sovereign borrower which had been sub judice (of course in the US) for years. The VP decided, correctly, in favor of the borrower despite the venal whining of a certain US interest (who ultimately did very well on the whole sordid deal). The US Executive Director immediately called the VP to complain, without effect, but only because the VP in question is a man of honor who comes from an administrative tradition in which principled governance is respected.

Gone will be the repeated imposition of an unqualified and indifferent CEO.^[8] Gone will be the interference in Bank operations of doctrinaire clowns (Folsom, Cleveland, Kellems) or unqualified personal friends of the White House (Percy, Holland, Solomon). Less ferocious will be the bullying of weak managers by their bosses about, let us say, family planning in Madagascar or forestry and roads in central Africa. There will of course remain the corrupt traffic of Board members into management jobs (China, Nigeria, Brazil, Mexico, the US, and many others), which is inevitable in international organizations, but having a smaller, less aggressive, host nation will limit that traffic. I am not saying interference would cease altogether in Vancouver or in Stockholm or in Brasilia or Madrid, but it will not be as clumsy or as frequent or as wasteful in staff time if the lead shareholder is not so large or so pushy, as the US is. My only hesitation about suggesting Canada,^[9] or one of the Nordics, as host country is that while those countries are (generally) good tenders of the global commons they do tend to whine a lot.

Is it in the interest of the US to leave the MDBs ?

No, but this does not affect my argument. It has been reported that the US is threatening to leave the World Bank and the other multilateral development banks (MDBs) on the cheese paring idea departure would somehow save money for the US. The amount “saved” by leaving IBRD would be US$3.7 billion in returned IBRD capital; other amounts would be “saved” by leaving IFC and by foregoing periodic IDA replenishments. The White House can surely find some moth-eaten monetarist to update the ravings of the Meltzer Commission, which will need little updating because X * zero is still zero in terms of the value of the Commission’s original argument. I note that this US menace arrives just as the US is threatening selective default on its own debt which is an even greater measure of the frivolous character of the Treasury’s reasoning about fiscal savings from selling its MDG assets.

It is possible that the US will do a hasty review of exit options, that Pissant Bessant will use the review to frighten his boss about the impacts on the bond markets, that the US will appoint some fire-breathing dolt to the Board (Nordquist and Cleveland are probably standing by) demanding “reform”, or the White House may even demand that Banga go. In that scenario, life at the Bank would go on though with ever more wasteful procedural steps, with magnified risks of vandalism by the US ED’s office, and with the usual bullying of staff by that office. The smart Chairs (China, France, Mexico, Ethiopia, Vietnam, Morocco) would use the US “remain” decision for their own purposes and the others would go along.

My argument does not depend on what the US loses by exit--the US loses a lot but it seems not to care. My argument depends on what the world gains, which is substantial given that US capital in the MDBs can be replaced and even augmented, given that the US has abandoned its financial, intellectual, and moral leadership in the MDBs, and given that US exit will reduce production costs of global public goods, especially those needed in the long twilight struggle against climate change.

---

[1]. Not all the victors of course, notably missing was the USSR which sacrificed the most to defeat the Axis.

[2]. Not including guarantees from MIGA.

[3]. The capital of the Bank is inherently political and is at times manipulated to serve certain national interests, notably to push vanity appointees into senior management jobs. Bush family servant Bob Zoellick, on one of the rare occasions when he deigned to speak to the Bank’s operational directors (the people who lead the real work), once explained how he traded a higher Nordic capital contribution for the promise of a Vice-Presidential appointment to a Dane who was known in the Bank to be unqualified in terms of research and sectoral experience in agriculture and the environment.

[4]. My earlier Substack on the Bank's Board: https://johnmcintire.substack.com/p/the-world-bank-must-improve-accountability?r=lxiat

[5] An example is from African constituencies who claim that the bond rating agencies are biased against them, an argument refuted by research done by African economists, most recently by William Gbohoui, Rasmane Ouedraogo and Yirbehogre Modeste Some, IMF Working Paper, “Sub-Saharan Africa’s Risk Perception Premium: In the Search of Missing Factors”.

[6]. One fear may stay the US hand. I have always said that the US would never leave the Fund because it (and the European banks too) uses the Fund as its enforcer on insolvent borrowers (Argentina, Pakistan, Nigeria, Mexico in the past, others). Now that IDA budget support is used to bail out private lenders to insolvent IDA borrowers (e.g., Kenya, Ethiopia, Ghana, others), the private banks will lean on their representative at Treasury to listen to reason, or at least to their crooked version of it.

[7]. One example is Stephane Hallegatte, recently named as Chief Climate Economist in the Bank, who has the remarkably high H score of 89, generated in his climate modeling work before joining the Bank.

[8]. This would have to be watched. There will always be greedy packs of careerist Bank staff, senior managers, and EDs who would stab their grandmothers to seize the Presidency of the World Bank.

[9]. Mark Carney’s current grift on carbon pricing in Canada makes me wonder about that country too.