Obama’s Lula Gamble

During the G8 summit in Italy in July, President Obama and Brazil’s President Lula once again demonstrated their mutual admiration. Earlier this year, when asked about Lula during the G20 summit in London, Obama said he “loved this guy,” calling him “the most popular politician in the world.” And over the past months, rumors spread among Brazil’s political elite that President Obama had tapped Brazil’s President Lula to head the World Bank in 2011. Picking Brazil’s outgoing President, whose term ends next year, seems like an attractive and risk-free chance for Mr. Obama to play the role of visionary reformer, and break with the increasingly anachronistic tradition of appointing only US citizens for the job of World Bank Chief.

Yet, the US President should look again. Lula may be a skilled diplomat and immensely popular both at home and abroad. A closer look, however, reveals that Lula fails to represent the key values the World Bank aims to project: democracy and human rights. While the World Bank’s stated objective is poverty reduction, its legitimacy is based on the commitment to human rights and democratic governance. Lula is the wrong choice for World Bank President.

True, there are points in Lula’s favor. As a policy-maker he has been effective. He genuinely cares about development and poverty reduction: having grown up in poverty himself, Lula expanded Bolsa Familia, a highly effective anti-poverty program which has won praise internationally. Lula has also frequently traveled to Africa and made economic development an important part of his foreign policy.

There are political arguments in his favor as well. Lula comes from a region where respect for the World Bank is low. In Latin America, the Bank is primarily associated with the Washington Consensus, a botched attempt to spur economic development by radical economic liberalization. Lula’s appointment would appeal to constituencies across the continent and mend the rift between the developing and developed world. And Lula is a great communicator who, as figurehead and symbol rather than as day-to-day manager of the Bank, could help humanize an institution that at times has seemed overly aloof from the problems on the ground.  And, from a practical point of view, Democrats in the US Congress would be likely to accept Lula, given his past as a union leader.

Yet, despite all this, a Lula candidacy has major flaws—and it would set an appalling precedent for international organizations in general.

The truth is that Brazil’s foreign policy under Lula has been opportunistic, short-term, and void of principles. While condemning “white, blue-eyed” bankers for the global financial crisis, Lula has failed to criticize human rights abuses in Cuba and an increasingly authoritarian Hugo Chavez in Venezuela. During a recent visit to Kazakhstan, another authoritarian regime, Lula affirmed that there was “no fraud in the Iranian election,” congratulating President Ahmadinejad on his victory. Rather than helping Colombia’s democratically elected President Uribe in his fight against a leftist insurgency, Lula remained neutral and even temporarily allowed the FARC guerillas to enter Brazilian territory to evade Colombia’s army. And in 2005, Brazilian diplomats visited Khartoum and promised not to condemn Sudan for its genocide as long as Sudanese President Omar al-Bashir supported Brazil’s in its bid for a permanent seat on the UN Security Council.

Always quick to find fault with “evil Western institutions” and “imperialists”, Lula gets along with third world dictators so well that one may ask whether he would have the courage to openly criticize them as World Bank President. His decision to open a Brazilian embassy in North Korea shortly after Kim Jong Il’s missile testing has raised further doubts about Lula’s aptitude. His high domestic approval ratings are not necessarily a sign of good policy, but rather of his reluctance to push his constituents out of their comfort zone and tackle Brazil’s most serious problems, such as social security and tax reform. Western leaders have a romanticized vision of Lula. The fact that Western leaders ignore Lula’s diatribes shows how irrelevant he has become.

So who should Mr. Obama appoint to head the World Bank? If Mr. Obama truly wants to modernize the Bank, he must appoint no-one. Instead, he needs to create a democratic decision making process to elect somebody who has exercised exceptional leadership.

For example, India’s Prime Minister Manmohan Singh is not only committed to democracy and human rights, but he is also the architect of India’s economic growth story. He would be well-prepared to lead the Bank. The handshake agreement that gave the United States the right to appoint the World Bank chief is a remnant of a past era. It undermines the World Bank’s legitimacy where it matters most: in the poor countries. It is in America’s best interest to disassociate itself from the World Bank President selection process.

As its name suggests, the World Bank aspires to be a global institution, and the fight against poverty requires a universal effort. But as long as the United States dominates the World Bank, developing countries will question its sincerity and legitimacy, severely weakening the Bank’s impact. The selection process must therefore be transparent and not based on nationality, but on merit. Rather than appointing Lula, Mr. Obama needs to democratize the World Bank to give it the strength to help lift the bottom billion out of poverty.