Is Jim Kim Destroying the World Bank — or Saving it From Itself?
The good doctor Kim is out to salvage the bank's global relevance. But his radical reforms have critics calling for his head.
Photographs by John Loomis
When the government contacted him, Kim confesses, he had only the foggiest notion of how development finance worked. He had seen enough in his career, however, to know that running the bank would give him resources he scarcely could have imagined during his years of aid work, or even at Dartmouth. Instead of agonizing over every drop of water in the budgetary bathtub, he could operate a global spigot. “When I really saw what it meant to be a bank with a balance sheet, with a mission to end extreme poverty,” Kim says, “it’s like, wow.” His interest was bolstered by the bank’s adoption, partly in response to 1990s-era activists, of stringent “safeguards,” or lending rules intended to protect human rights and the environment in client states.
By custom, the World Bank had always been run by an American, nominated by the U.S. president for a five-year term. But in 2012, there was a real international race for the post. Some emerging-market nations questioned deference to the United States, and finance experts from Nigeria and Colombia announced their candidacies. After considering political heavyweights like Susan Rice, John Kerry, and Hillary Clinton — who were all more interested in other jobs — Obama decided he needed an American he could present as an outsider to replace outgoing President Robert Zoellick, a colorless former Goldman Sachs banker and Republican trade negotiator. Clinton suggested Kim and “championed Jim as candidate,” says Farmer. (Partners in Health works with the Clinton Foundation.)
Embedded within the dispute over superpower prerogatives was a larger anxiety about what role the World Bank should play in the 21st century. Extreme poverty had dropped from 37 percent in 1990 to just under 13 percent in 2012, so fewer countries needed the bank’s help. With interest rates at record lows, the states that needed aid had more options for borrowing cheap capital, often without paternalistic ethical dictates. New competitors, such as investment banks, were concerned mainly with profits, not safeguards. As a result, whereas the World Bank had once enjoyed a virtual monopoly on the development-finance market, by 2012 its lending represented only about 5 percent of aggregate private-capital flows to the developing world, according to Georgetown University economist Martin Ravallion. And while the bank possessed a wealth of data, technical expertise, and analytical capabilities, it was hampered by red tape. One top executive kept a chart in her office illustrating the loan process, which looked like a tangle of spaghetti.
At Kim’s White House interview, Obama still needed some convincing that the global-health expert could take on the task of reinvigorating the bank. When asked what qualified him over candidates with backgrounds in finance, Kim referenced Obama’s mother’s anthropology dissertation, about Indonesian artisans threatened by globalization, to argue that there is no substitute for on-the-ground knowledge of economic policies’ impact. Two days later, Obama unveiled his pick at a Rose Garden ceremony, declaring that it was “time for a development professional to lead the world’s largest development agency.”
Kim campaigned for the job with the zeal of a convert: In an interview with the New York Times, he praised the fact that, unlike in the 1990s, “now the notion of pro-poor development is at the core of the World Bank.” He also embarked on an international “listening” tour to meet with heads of state and finance ministers, gathering ideas to shape his priorities in office. Because votes on the bank’s board are apportioned according to shareholding, America holds the greatest sway, and Obama’s candidate was easily elected. Kim took office in July 2012, with plans to eradicate extreme poverty. Farmer cites a motto carved in the World Bank’s entryway — “Our Dream Is a World Free of Poverty” — that activists like Kim once snickered at: “Jim said, ‘Let’s change it from a dream to a plan, and then we don’t have to mock it.’”
But Kim still had to win over another powerful constituency: his staff. Bank experts consider themselves an elite fraternity. Presidents and their mission statements may come and go, but the institutional culture remains largely impervious. “The bank staff,” says Jim Adams, a former senior manager, “has never fully accepted the governance.” When Robert McNamara expanded the bank’s mission in the late 1960s, doing things like sending helicopters to spray the African black fly larvae that spread river blindness, many staffers were “deeply distressed to see the institution ‘running off in all directions’…submerging so cheerfully its basic role as financier of economic infrastructure,” according to a history published in 1973. When James Wolfensohn arrived in the mid-1990s with plans to move away from structural adjustment and remake the bank like a consulting firm, employees aired their gripes in the press. “Shake-up or cock-up?” asked an Economist headline. Paul Wolfowitz, whose presidency was marred by leaks, was pushed out in 2007 after accusations of cronyism resulted in a damning internal investigation.
Recognizing this fraught history, Kim went on a second listening tour: He met with every bank department and obtained what he describes, in anthropologist-speak, as “almost a formal ethnography” of the place. What he lacked in economic knowledge, he made up for in charm. “Dr. Kim is personable, Dr. Kim is articulate, Dr. Kim looks very moved by what he has to say,” says Paul Cadario, a former bank executive who is now a professor at the University of Toronto.
The initial goodwill, however, vanished when Kim announced his own form of structural adjustment: a top-to-bottom reorganization of the bank. It wasn’t so much the idea of change that riled up the staff. Even before Kim took office, respected voices were calling for a shake-up. In 2012, a group of eminent bank alumni had published a report criticizing an “archaic management structure”; low morale was causing staff turnover, and there was an overreliance on consultants, promotion on the basis of nationality, and a “Balkanization of expertise.” Where Kim went awry, opponents say, was in imposing his will without first garnering political support. “One famous statement is that the World Bank is a big village,” says Cadario, now a Kim critic. “And if you live in a village, it is a really bad idea to have enemies.”
The bank had been designed around the idea that local needs, assessed by staff assigned to particular countries and regions, should dictate funding; cooperation across geographical lines required internal wrangling over resources. So Kim decided to dismantle existing networks. He brought in McKinsey & Co., which recommended regrouping the staff into 14 “global practices,” each of which would focus on a policy area, such as trade, agriculture, or water. Kim hired outsiders to lead some departments and pushed out several formerly powerful bank officials with little explanation. To symbolize that he was knocking down old walls, he had a palatial, wood-paneled space on the World Bank’s executive floor retrofitted as a Silicon Valley-style, open-plan office, where he could work alongside his top staff.
Kim also announced that he would cut $400 million in administrative expenses, and eliminate about 500 jobs — a necessary measure, he said, because low interest rates were cutting into the bank’s profits. Kim says he “made a very conscious decision to let anyone who wanted…air their grievances.” His opponents detected no such tolerance, however, and their criticisms turned ad hominem. Around Halloween in 2014, a satirical newsletter circulated among the staff, depicting Kim as Dr. Frankenstein: “Taking random pieces from dead change management theories,” it read, “he and his band of external consultants cobble together an unholy creature resembling no development bank ever seen before.” Anonymous fliers attacking Kim also began to appear around bank headquarters.
Kim portrayed internal dissent as a petty reaction to perks like travel per diems being cut. “There’s grumbling about parking and there’s grumbling about breakfast,” he told the Economist. Meanwhile, bank staffers whispered about imperial indulgences on Kim’s part, like chartering a private jet. (Kim claims this is a longstanding practice among bank presidents, which he only uses when there are no other travel options.)
A French country officer named Fabrice Houdart emerged as a lead dissenter, broadcasting his frustrations with Kim on a blog he kept on the World Bank’s intranet. In one post, he questioned whether “a frantic race to show savings…might lead to irreversible long-term damages to the institution.” (This being the World Bank, his sedition was often illustrated with charts and statistics.) The staff went into open rebellion after Houdart revealed that Chief Financial Officer Bertrand Badré, whom Kim had hired and who was in charge of budget cutting, had received a nearly $100,000 bonus on top of his $379,000 salary. Kim addressed a raucous town-hall meeting in October 2014, where he told furious staffers, “I am just as tired of the change process as all of you are.”
A few months later, Houdart was demoted after being investigated for leaking a privileged document. The alleged disclosure was unrelated to Kim’s reorganization — it had to do with Houdart’s human rights advocacy, for which he was well known at the bank — and Kim says the investigation began before Houdart’s denunciations of his presidency. Critics, however, portray it as retaliatory. “Fabrice has become a folk hero,” Cadario says, “because he was brave enough to say what many of the people within the bank are thinking.” (Houdart is currently disputing his demotion before an internal administrative tribunal.)
Kim admits that “it’s never fun when large parts of the organization are criticizing you personally,” yet he maintains that his tough decisions were necessary. “In order to do a real change, you have to put jobs at risk,” he says. “And completely understandably, people hate that.”