ollowing an investigation into an alleged ethics violation, the executive directors the Inter-American Development Bank (IDB) voted unanimously to recommend firing IDB President Mauricio Claver-Carone on September 22, 2022. The board of governors followed through with that recommendation on September 26. With the Latin American and Caribbean region facing various an array of political and economic challenges, the IDB needs to find a new leader that can help guide the Bank and the region through these tumultuous times.
Claver-Carone was a controversial choice when elected as IDB President in September 2020. Claver-Carone’s election was a break with Bank tradition, as all previous presidents were from one of the Bank’s borrowing member states, all of which are in Latin America and the Caribbean. This break from tradition was made possible by a lack of consensus around an alternative candidate—as well as Claver-Carone’s support from some of the Bank’s largest shareholders, including Argentina, Brazil, and the United States. The region faces numerous economic and political challenges, so the choice of a new leader for the region’s preeminent development institution will have important implications for regional cooperation and development.
A Hemisphere in Disarray
The Latin American and Caribbean region is going through a particularly challenging economic period. The Americas—as a whole—were the hardest hit by the COVID-19 pandemic and the Latin American and Caribbean region saw GDP fall by 7% in 2020. While the region rebounded faster than initially forecast, it continues to face several ongoing economic challenges. The pandemic’s devastating impact on education will have long lasting growth implications and inflation continues to threaten the pandemic recovery. In addition these shocks, Latin America has long been considered the most unequal region in the world—a factor that only exacerbates these other economic challenges and is exacerbated by them. Furthermore, the impacts of climate change on the region continue to create additional challenges for development and threaten socio-economic gains that have been made.
These economic challenges come at the same time as the region finds itself at a political crossroads. The region’s voters are moving away from mainstream political parties toward outsider candidates in what some observers are calling a “Pink Tide 2.0”—with several left-leaning presidents recently coming to power. Rather than a true leftward shift, however, the pattern looks more like a rejection of the political and economic status quo.
The rise of new leadership and competing visions for the future of the region has also been evident in how Latin American leaders have engaged with regional and international forums. Disagreements over who should (and should not) be invited to the IX Summit of the Americas took away an important opportunity for governments of the Americas to develop a shared vision for hemispheric cooperation. Likewise, at the 2022 UN General Assembly, several leaders from across the region engaged in critiques of the political environment rather than proposing a shared path for addressing regional and global challenges. While many of these disagreements appear political, they also raise important questions about the development paths that the region will take—particularly around the importance of democracy to the development process.
These disagreements have also played out in the multilateral financial institutions’ relations with some of the countries in the region. Notably, the recent challenges faced by Argentina in reaching an agreement with the International Monetary Fund (IMF) and IMF’s concerns over El Salvador’s use of Bitcoin.
Shaping Latin America’s Development Future
Given all the challenges facing the region, the Inter-American Development Bank is well positioned to play a critical role in shaping the development trajectory of the region and in promoting more hemispheric cooperation. This is, after all, part of what the IDB was initially designed for. In the 1950s, Latin American leaders urged the United States to support the creation of the Bank—not only to increase development finance to the region. The United States’ commitment to the program was not only to promote development, but to promote a particular development vision—one that would counter the Cuban model. While the IDB is well placed to play a critical role in shaping the regional cooperation and the Hemispheric development trajectory, it does face one significant hurdle. It only represents 26 borrowing member states—along with the United States and Canada as non-borrowing regional members. Conversely, the Organization of American States represents all 35 sovereign nations of the Western Hemisphere—albeit with Cuba suspended from the organization since the 1960s. All of the countries not represented within the IDB are from the Caribbean.
Claver-Carone’s replacement for President of the IDB could play an important role in shaping the development agenda of the region and hemispheric cooperation. However, given the stakes and conflicting visions for the hemisphere, this election is likely to be contentious—not unlike the Claver-Carone’s own election or the election for OAS Secretary General in 2020. Hopefully, whomever takes over the IDB presidency IDB can help guide the institution through these tumultuous times while creating a space for greater collaboration and a vision of development that will benefit all members of the region—something that someone from the region will find easier to accomplish than a U.S. representative. They may even be able to encourage more membership and make the Inter-American Development Bank more inclusive of the Caribbean and their specific development needs. Increasing the role of the IDB in promoting development and cooperation will require a new vision. It will also require finding ways to increase support for the tenants of this vision among both the governments and peoples of the Americas.
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The IDB Should Return to its Roots to Empower Growth
Medellín, Colombia. Photo by Néstor Morales via Unsplash.
October 3, 2022
With the Latin American and Caribbean region facing various an array of political and economic challenges, the Inter-American Development Bank (IDB) needs to find a new leader that can help guide the Bank and the region through these tumultuous times, writes Adam Ratzlaff.
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ollowing an investigation into an alleged ethics violation, the executive directors the Inter-American Development Bank (IDB) voted unanimously to recommend firing IDB President Mauricio Claver-Carone on September 22, 2022. The board of governors followed through with that recommendation on September 26. With the Latin American and Caribbean region facing various an array of political and economic challenges, the IDB needs to find a new leader that can help guide the Bank and the region through these tumultuous times.
Claver-Carone was a controversial choice when elected as IDB President in September 2020. Claver-Carone’s election was a break with Bank tradition, as all previous presidents were from one of the Bank’s borrowing member states, all of which are in Latin America and the Caribbean. This break from tradition was made possible by a lack of consensus around an alternative candidate—as well as Claver-Carone’s support from some of the Bank’s largest shareholders, including Argentina, Brazil, and the United States. The region faces numerous economic and political challenges, so the choice of a new leader for the region’s preeminent development institution will have important implications for regional cooperation and development.
A Hemisphere in Disarray
The Latin American and Caribbean region is going through a particularly challenging economic period. The Americas—as a whole—were the hardest hit by the COVID-19 pandemic and the Latin American and Caribbean region saw GDP fall by 7% in 2020. While the region rebounded faster than initially forecast, it continues to face several ongoing economic challenges. The pandemic’s devastating impact on education will have long lasting growth implications and inflation continues to threaten the pandemic recovery. In addition these shocks, Latin America has long been considered the most unequal region in the world—a factor that only exacerbates these other economic challenges and is exacerbated by them. Furthermore, the impacts of climate change on the region continue to create additional challenges for development and threaten socio-economic gains that have been made.
These economic challenges come at the same time as the region finds itself at a political crossroads. The region’s voters are moving away from mainstream political parties toward outsider candidates in what some observers are calling a “Pink Tide 2.0”—with several left-leaning presidents recently coming to power. Rather than a true leftward shift, however, the pattern looks more like a rejection of the political and economic status quo.
The rise of new leadership and competing visions for the future of the region has also been evident in how Latin American leaders have engaged with regional and international forums. Disagreements over who should (and should not) be invited to the IX Summit of the Americas took away an important opportunity for governments of the Americas to develop a shared vision for hemispheric cooperation. Likewise, at the 2022 UN General Assembly, several leaders from across the region engaged in critiques of the political environment rather than proposing a shared path for addressing regional and global challenges. While many of these disagreements appear political, they also raise important questions about the development paths that the region will take—particularly around the importance of democracy to the development process.
These disagreements have also played out in the multilateral financial institutions’ relations with some of the countries in the region. Notably, the recent challenges faced by Argentina in reaching an agreement with the International Monetary Fund (IMF) and IMF’s concerns over El Salvador’s use of Bitcoin.
Shaping Latin America’s Development Future
Given all the challenges facing the region, the Inter-American Development Bank is well positioned to play a critical role in shaping the development trajectory of the region and in promoting more hemispheric cooperation. This is, after all, part of what the IDB was initially designed for. In the 1950s, Latin American leaders urged the United States to support the creation of the Bank—not only to increase development finance to the region. The United States’ commitment to the program was not only to promote development, but to promote a particular development vision—one that would counter the Cuban model. While the IDB is well placed to play a critical role in shaping the regional cooperation and the Hemispheric development trajectory, it does face one significant hurdle. It only represents 26 borrowing member states—along with the United States and Canada as non-borrowing regional members. Conversely, the Organization of American States represents all 35 sovereign nations of the Western Hemisphere—albeit with Cuba suspended from the organization since the 1960s. All of the countries not represented within the IDB are from the Caribbean.
Claver-Carone’s replacement for President of the IDB could play an important role in shaping the development agenda of the region and hemispheric cooperation. However, given the stakes and conflicting visions for the hemisphere, this election is likely to be contentious—not unlike the Claver-Carone’s own election or the election for OAS Secretary General in 2020. Hopefully, whomever takes over the IDB presidency IDB can help guide the institution through these tumultuous times while creating a space for greater collaboration and a vision of development that will benefit all members of the region—something that someone from the region will find easier to accomplish than a U.S. representative. They may even be able to encourage more membership and make the Inter-American Development Bank more inclusive of the Caribbean and their specific development needs. Increasing the role of the IDB in promoting development and cooperation will require a new vision. It will also require finding ways to increase support for the tenants of this vision among both the governments and peoples of the Americas.
