IFI governance

Background

What is the ‘gentleman’s agreement’?

23 July 2019 | FAQ

The so-called gentleman’s agreement is yet another pillar of an undemocratic governance system. Leadership selection at the World Bank and IMF is subject to a historic ‘gentleman’s agreement’, which has ensured that the IMF managing director has always been European and the World Bank president is a US national. This agreement dates back to the creation of the institutions, when membership was limited to 45 states and when European powers still retained large colonies. Once the US nominates a candidate for Bank president, Europe uses its large voting rights on the Board to ensure the US candidate is picked in exchange for the US in turn supporting a European nominee for IMF managing director. In return, Europeans select their preferred candidate – the majority of whom have been French nationals – and await the seal of approval from the US (see Update 76).

The appointment of David Malpass, the US-nominated candidate, in April 2019 to the position of World Bank president demonstrated that the ‘gentleman’s agreement’ is alive and well (see Observer Spring 2019). Despite over 150 civil society organisations and individuals calling on the Board to live up to its commitment to an open, transparent and merit-based process – which was echoed by the demands by the Bank’s own staff association – Malpass was appointed president. The only other candidate put forward was Ziad Hayek, who was nominated by the Lebanese Government, but who subsequently withdrew, citing that this was due to pressure from “other governments”.

Civil society organisations throughout the world have long-since pointed out that the Fund and Bank continue to undermine their legitimacy by adhering to the gentleman’s agreement (see Observer Spring 2019). To replace this archaic and patently illegitimate process, they have demanded the introduction of an open, democratic, merit-based, transparent process for selecting the heads of both institutions. Importantly, this process, they say, should involve meaningful participation from low-and middle-income member states and allow any state, regardless of nationality, to put forward candidates on an equal footing.

For example, a 2011 civil society letter to the IMF called for the following:

  1. The candidate must gain the open support from at least the majority of IMF member countries, with no single bloc wielding excessive power. The best way to ensure this is for the winner to be required to gain the support of a majority of both voting shares and member countries
  2. The selection process should be strengthened. This should include having a public application procedure open to anyone to apply, and sufficient time to allow proper deliberation, interviews held in public, and open voting procedures and
  3. A clear job description and qualifications should be set out. The right candidate needs to be – and be seen to be – independent, and able to work with a variety of stakeholders, including civil society groups.

Demands to end the ‘gentleman’s agreement’ have been supplemented by broader calls for a democratic governance reform. Imbalanced IMF voting rights, for example, have long-since been a bone of contention from structurally underrepresented countries.The latest IMF managing director selection process is set to coincide with the IMF’s 15th General Review of Quotas (see Observer Invierno 2018). Far from being seen as an opportunity to bolster the Fund’s legitimacy with a comprehensive redistribution of voting rights, the 15th review is expected to cement the structural inequities, reigniting calls for governance reform.

Latest articles on this issue

IFI governance

Analysis

Tout change et rien change pas: Global power and IMF leadership

The present IMF leadership 'contest' makes a mockery of the institution's multilateral character and further diminishes its legitimacy.

3 October 2019 | Guest comment
Illustration Observer Summer 2019

IFI governance

Analysis

Here we go again: Surprise IMF leadership change litmus test for its legitimacy

Lagarde resignation kicks-off another leadership race overshadowed by gentleman’s agreement.

30 July 2019

IFI governance

Analysis

The Bretton Woods Institutions and the second crisis of multilateralism

At 75, the World Bank and IMF face a crisis of multilateralism in no small part of their own making as failed economic policies have resulted in skepticism of the international order they helped to create.

30 July 2019 | At Issue

IFI governance

Analysis

World Bank president selection: 'Gentleman's agreement' alive and well

World Bank's board fails to live up to commitments to open, transparent and merit-based selection process for Bank president.

4 April 2019

IFI governance

Background

What is the ‘gentleman’s agreement’?

Leadership of the IMF and World Bank has been guided by a historical 'gentleman's agreement' between Europe and the United States. What does this agreement entail? And how could it be reformed?

23 July 2019 | FAQ

IFI governance

News

World Bank appoints Independent Evaluation Group Director and Inspection Panel member

World Bank appoints Alison Evans as new IEG Director General and Ramanie Kunanayagam as Inspection Panel member

4 April 2019

IFI governance

Commentary

Bank and Fun(d) speak of the year: 12 days of Christmas – an ode to the World Bank & IMF’s 2018

At the end of every year, the Bretton Woods Project highlights some of the most farcical remarks of Fund and World Bank staff. This time, it’s set to music.

6 December 2018 | Humour

IFI governance

News

IMF appoints Gita Gopinath as its first female chief economist

IMF's new chief economist views on exchange rates considered unorthodox

6 December 2018

IFI governance

News

World Bank announces two new appointments

Pinelopi Goldberg joins as the Bank’s chief economist and Imrana Jalal as the new chairperson of the Inspection Panel

24 July 2018

IFI governance

News

World Bank appoints Georgieva as CEO of IBRD and IDA

In October, World Bank President Jim Yong Kim announced the appointment of Kristalina Georgieva as chief executive officer of IBRD and IDA.

3 July 2017