The future of the World Bank

This is an audio transcript of the FT News Briefing podcast episode: ‘The future of the World Bank’

Marc Filippino
Good morning from the Financial Times. Today is Monday, February 27th, and this is your FT News Briefing.

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You know that tight US labour market we’re always talking about? Well, it might be looser than we think. And the World Bank is moving fast to try to replace its outgoing president. Plus, the Chinese spy balloon saga is just the latest tit-for-tat between Washington and Beijing. But this one is a little different.

Demetri Sevastopulo
The thing about espionage is it’s only a problem when you get caught. And in this case, China got caught.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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US companies say that it’s actually getting easier to hire people. That’s despite data showing historically low unemployment rates. The FT looked at quarterly reports from the most recent earnings season and found that senior executives at S&P 500 companies kind of like the employment environment they’re in. Fast food executives, the CEO of the Hilton Hotel chain and Boeing chief executive David Calhoun, all have said in the past few weeks that things are getting better, that they’re seeing more people apply for jobs. Now, if you had just looked at the numbers, it would be a very different story. Strong US job growth figures at the start of February triggered a market sell-off. Investors are worried that more jobs mean higher interest rates from central banks.

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The Biden administration has nominated Wall Street veteran Ajay Banga to lead the World Bank. He would replace outgoing president David Malpass, who a few weeks ago announced that he’s stepping down. Banga is most recently the vice chair of the private equity group General Atlantic, and he’s the former CEO of Mastercard. His nomination to the World Bank, which focuses on alleviating poverty, comes as the multilateral lender tries to focus on climate change. Here’s the FT’s Aime Williams on what the US sees in Banga.

Aime Williams
So US officials have said that they are interested in his narrative. As someone born and raised in India, that means that he understands the needs of a developing economy. He gets what countries like that might want. But he also has a good background in financial companies. He’s been the chief executive of a big company. He’s overseen transformation there. So the White House is saying this guy has it all.

Marc Filippino
Does Banga have a background in developmental finance, though, Aime? You know, the skills of helping poor countries develop their economies?

Aime Williams
Here is his big weakness. No, he appears to have not very much or any experience actually, in development work. And so that is something that he, is raising eyebrows, shall we say, among climate finance folks, particularly here in Washington, who are concerned that simply working in finance and understanding financial markets does not necessarily mean you can run the World Bank.

Marc Filippino
One of the big criticisms of the previous president was that he wasn’t fully on board with the fight against climate change. How does the World Bank address climate change in the countries that it’s working with?

Aime Williams
He reportedly has quite a number of years of talking about sustainability and climate. He launched a couple of initiatives at Mastercard, including their Priceless Planet initiative, which seems to involve planting a lot of trees. But people who know him say that he really does seem like he genuinely has been thinking about sustainability and climate issues in business for quite some time and putting that at the forefront of his work in the private sector.

Marc Filippino
Has Banga shown that he would prioritise climate change?

Aime Williams
So at the moment one of the problems is that the World Bank doesn’t have tackling climate change really as a formal part of its mission. It’s focused on alleviating poverty and spreading prosperity in some of the world’s poorest countries. But increasingly, people like US Treasury secretary Janet Yellen are saying, well, hang on a minute, like climate change comes into this. And when she went to Zambia, she spoke to farmers in a rural part of the country and she said to them, we understand that climate change is obliterating your crops and increasing poverty. There’s this train of thought that says climate and development and alleviating poverty kind of all need to be dealt with in one go. So one of the things that Banga will have to do coming in is take a look at the way the bank thinks about climate change, the way it integrates that into its lending, into its processes and the way that it kind of spreads that around the various offices and internal lending arms that it has.

Marc Filippino
That’s the FT’s US climate reporter, Aime Williams.

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The infamous Chinese spy balloon that was spotted and shot down over the US earlier this month is now being picked apart at an FBI lab. This wasn’t the only Chinese plume spotted over North America, and the incident sparked a media storm. But this is not the first time these kinds of balloons have floated over the US. To talk about the broader spying relationship between Washington and Beijing, I’m joined by the FT’s US-China correspondent, Demetri Sevastopulo. Hey, Demetri.

Demetri Sevastopulo
Hey, how are you?

Marc Filippino
I’m doing well. So, Demetri, what do we know about China’s spy balloon program?

Demetri Sevastopulo
What we know is that this balloon program has been in existence for several years. The US and its allies say that China has been flying these balloons over five continents, over 40 countries for some time. What we don’t know yet is: what exactly were they doing over North America? The balloon loitered over Montana and was looking down at a site where the US houses nuclear intercontinental ballistic missiles. And some of the things that we think the balloon can do or the sensors and the different electronic components that were carried in a kind of a bus underneath the balloon is they can eavesdrop on certain conversations that are harder to do from space. They can take photographs at a closer distance so you can get better resolution. And then other things which are really interesting, which is they can try and work out how US weapons systems communicate with each other, which is really important if you ever had a conflict. So there’s a whole range of different intelligence-gathering capabilities that the balloon potentially has. But until, you know, the US authorities have actually looked at all the components that they’ve retrieved from the Atlantic, I don’t think they’ll be able to say definitively what it is they think the Chinese balloon was doing. So right now, we have lots of theories, but we don’t really have any solid answers.

Marc Filippino
So it sounds like because balloons are, you know, relatively close to the ground, they can be better than satellite surveillance.

Demetri Sevastopulo
In some ways, they’re more effective. And one thing that can happen, it’s called “tip and cue”. The balloon sensors notices something interesting that it picks up again from a kind of a wide span. It then sends those co-ordinates back up to space to a satellite and essentially says, hey, satellite, focus your really high-tech capabilities in on this location or in on this cell tower. So the balloon can almost act like a signalling mechanism that allows the satellites then to do more advanced capabilities. You know, my colleague Kathrin Hille in Taiwan did a really good piece where she looked at some of the things that China had actually itself publicly said online about its balloon program. And, you know, there were images of balloons carrying baskets of hypersonic weapons. So potentially balloons can be used for a whole range of things, not just espionage. And I think that’s why it’s become such a big concern here, is that this is the first time that China has done it right over the US. These balloons could be used to do other things. And so the US is gonna have to start thinking about this threat in a way that it hasn’t really done in the past.

Marc Filippino
Does the US have equally sophisticated balloons that they send over China?

Demetri Sevastopulo
So as far as we’re aware, the answer is no. I mean, of course, there could be a US intelligence program that’s highly classified that we don’t know about. But there’s no evidence so far that the US actually really has developed these balloons and deployed them in an operational way. There has been some research and development and some test balloons or trial balloons, to use a terrible phrase. But the Chinese, after the Americans shot down their balloon, the Chinese accused America of flying, I think it was 10 balloons over Chinese airspace. But there’s no evidence of that, there’s no imagery. And the US government says that’s totally false and they don’t do that.

Marc Filippino
So what does this balloon incident say about the US-China spying relationship? You know, what’s your takeaway here?

Demetri Sevastopulo
One of the things that’s happening here is that China is catching up with the US and is developing new capabilities. And you know that the US is having to react to that. So back in the ’60s, when the US was flying different kinds of spy planes over China, you know, China was a very, very poor country and didn’t have any of those capabilities and certainly couldn’t do it over the US. You know, the gap between the US and China is shrinking. And I think increasingly, when you look at relations between the US and China, whether it’s in the military area or in the intelligence area, one of the overarching stories is that China just gets really good at doing things at a much quicker speed than most people expect. And that constantly or continuously surprises the authorities in Washington.

Marc Filippino
Demetri Sevastopulo is the FT’s US-China correspondent. Thanks, Demetri.

Demetri Sevastopulo
Thank you.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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