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Having the Best Man Wasn’t Enough for Brazil to Make the IDB Chief

On Wednesday, July 27, the Board of Governors of the International Development Bank (IDB) elected their new president. As predicted, Luis Alberto Moreno, the present Colombian ambassador to the United States, won the position.

Moreno beat out the most highly qualified candidate, Brazilian João Sayad, the current Vice President of Finance and Management at the IDB, as well as Peruvian Finance Minister Pedro-Pablo Kuczynski.


Mario Alonso, the head of the Central Bank of Nicaragua, and Jose Rojas, the former finance minister of Venezuela, pulled out of the race just before the tally.


Moreno has his work cut out for him. Replacing the current president, Enrique Iglesias of Uruguay, will be an immensely complex challenge that Moreno will be hard put to meet.


Iglesias, who has recently brought dramatic reforms to the IDB through the introduction of oversight, whistleblower protection, increased transparency and disciplinary measures for bank personnel who violate legal and ethical banking practices, demonstrated an iron-willed commitment to bringing credibility back to a bank which had been plagued by allegations of corruption, nepotism and non-stop office intrigue.


Part of the impetus for Iglesias’ reformations was an incident in 2002, when an IDB official attempted suicide in his office at the bank’s Washington D.C. headquarters.


Despondent over having been demoted, and both physically and psychologically ostracized by the bank’s senior officers in retaliation for his complaints of improprieties he had witnessed in the institution, the ill-fated official slashed his wrists and throat.


On the wall he had scrawled with his own blood, “The bank is corrupt.” While rather dramatic, episodes like this one illustrate the kind of internal problems that the bank chronically has had to face – problems that reflect the moral health of the often compromised institution.


Through legislation recently introduced by U.S. Senate Foreign Relations Committee Chairman Dick Lugar, Congress is putting pressure on multi-lateral development banks such as the IDB, calling for additional institutional reforms as well as effective oversight by the U.S. Treasury and Government Accounting Office.


By threatening to withhold funding, Congress is in a position to affect the policies of the bank, which receives 30 percent of its funding from the U.S. Thus, Moreno and the IDB could be under heightened scrutiny as this bill gains momentum.


A favorite of the Bush Administration, Moreno has extensive diplomatic experience as Colombia’s representative in Washington. However, as a principal architect of Plan Colombia – the U.S.’ largely ineffective, and now heavily militarized, multi-billion dollar aid package aimed at stemming the tide of drugs and rebellion in his country – Moreno’s credibility is in question.


The IDB, which distributes approximately US$ 6.5 billion a year in low-cost loans to Latin American countries, will need the kind of leadership experience that were not necessarily in evidence by those, like Moreno, who were heavily involved in piloting through a program like Plan Colombia. Some critics find the plan to be far more a controversial militarized strategy than one aimed at social reform.


Following Wednesday’s election, a ceremony was held to honor Iglesias’ 17-year tenure at the bank. Taking the opportunity to speak at the occasion, Moreno stated his commitment to fight corruption in the bank, as well as to bring transparency to its activities.


Unfortunately, Moreno has no particular track record in those areas. While these are laudable ambitions, they should be fundamental to any democratic institution. Moreno needs to go above and beyond rhetorical platitudes in order to competently run the oldest and largest regional bank in the world.


Since there is little in his background to suggest that he is the indispensable man for the job, his tenure will have to be closely watched for any indication that he might relapse into his adroit embassy-style wheeling and dealing.


While everyone is prepared to allow Moreno to demonstrate whether he’s up to the job, with former Colombian President Cesar Gaviria recently holding the position as Secretary General of the Organization of American States (OAS) and now Moreno being elected to lead the IDB, some in Washington feel that these regional positions are being used as a dumping ground for Colombian political figures whose shelf lives have expired, and are not particularly welcome in their home country.


This analysis was prepared by COHA Senior Research Fellow Joshua Soren Graae.


The Council on Hemispheric Affairs (COHA) – www.coha.org – is a think tank established in 1975 to discuss and promote inter-American relationship. Email: coha@coha.org.

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