Mexico has a defining role to play in the upcoming election of a new president for the Inter-American Development Bank (IDB). Mexico will be key in determining if the bank falls under the control of Donald Trump’s nominee for the foreseeable future.
The Bank is slated to elect a new leader in September when the current president, Luis Alberto Moreno ends his five-year term (he has served 3 terms). Established in 1960, the IDB has chosen its leadership under an unwritten rule. While the Bank would be located in Washington, DC, the president would be a Latin American. In the international banking work, the International Monetary Fund is run by a European, the World Bank by someone from the US and the regional banks, like the IDB, by someone from that region.
Bank watchers were stunned in June when President Trump broke with tradition and nominated Mauricio Claver-Carone, his Latin America National Security Adviser, as a candidate for the IDB’s top job. The precedent and the candidate are reasons for concern. Claver-Carone has been at the center of a decidedly unilateral approach to Latin America policy, the execution of “America First” on the regional scale. Remember the Trump administration’s aid cut-off to Central America to make countries stop migration, tariff threats against Mexico with the same goal, and unilateral sanctions against Venezuela?
The next IDB president will be chosen by the Board of Governors in an election expected to take place at the September board meeting. The weighted formula for calculating the winner is based on shareholder proportionality as well as a majority of the borrowing countries. The US is the largest contributor to the Bank and holds 30% of the shares, giving Claver-Carone a strong starting place. Additionally, Brazil and Colombia have agreed to back Trump’s candidate. This is a nail biter. The US is reportedly close to having the votes needed to win; but there are two other candidates, former Costa Rican President Laura Chinchilla and Argentina’s Secretary for Strategic Affairs Gustavo Béliz.
The logic of electing a man who has been at the right hand of Trump, just two months before a U.S. election that Trump might lose, is being called into question. If Claver-Carone is elected, he would serve for five years, potentially through a Democratic administration in the U.S. That sets up potentially serious conflict between bank leadership and the U.S. government at a time when Latin American countries need funds to deal with the impact of Covid-19, and the Bank needs a capital replenishment.
Argentina and Costa Rica support a delay and other countries are now quietly positioning in support of the same. The vote is a delicate subject in the diplomatic world. Politely, yet encouragingly, Mexico’s finance ministry recently said that the election should wait “until conditions were right.”
The IDB vote is a short-term/long-term test for the AMLO administration. As the date for the IDB election gets closer, pressure from the U.S. will no doubt grow for Mexico to back Trump’s candidate. Mexico needs to play the long game. If U.S. voters send Trump packing in November, why leave his man in charge of the IDB for the next five years? That’s just asking for trouble.
Let’s hope that Mexico holds steady, continues to support a brief delay in the vote, and ensure that the IDB remains under Latin American leadership.