Scott Bessent's clueless speech on the World Bank and the IMF

One might call Scott Bessent’s speech[1] to the Institute of International Finance before the Spring Meetings of the World Bank and the IMF many things. "Tone-deaf" is a durable expression, fit for purpose as the HR wallahs might say, because it is clear and simple, but it is too weak. "Oblivious" is not quite right (and the terrifying Fowlers would object). "Clueless" is, I think, best because Bessent is so obviously lost in unfamiliar terrain, something like Christopher Moltisanti and Paulie Walnuts in the Pine Barrens.

“A blueprint to restore equilibrium"

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Bessent’s “outline of a blueprint to restore equilibrium to the global financial system” begins, at least implicitly, with the imperial theme of his Commander-in-Chief—today is September 2, 1945, the day on which America humiliated an earlier Asian adversary and became master of all it surveyed. The Secretary’s audience, conscripted from those few Treasury staffers who have not (yet) been defenestrated, probably applauded (and they had better do so, because Musk's pimply gauleiters were surely watching) when he announced that the architects of the Bank and the Fund had laid the foundation for “Pax Americana”, though that is not an expression that should get much purchase after the forced retirement of President Ngo Dinh Diem in 1963. Anxious foreigners, hearing Bessent while scanning their burner phones for the command to “leave the country now" and sitting in the rear pews for quick escape, would have been puzzled to learn that the Bank and the Fund "were born after a period of intense geopolitical and economic volatility", which is an awkward description of a war that killed 80 million people and destroyed most of Europe's productive capital.^[2]

Bessent droned on in his description of the two institutions, defining the purpose of the Bretton Woods (BW) institutions as: " ... to restore and preserve balance". He identified, again implicitly, the origins of today’s imbalances in the frustration of Keynes and Harry Dexter White (the US delegate to BW) with the new Fund's incapacity, as the institution was constructed in 1944, to discipline the surplus countries^[3]. The Fund remains unable today to sanction the bulimic nations, beyond some occasional murmuring about exchange rates. Indeed, the Fund punishes deficit countries when its MD is required to act in favor of the lenders (as the US and Euro banks ordered Christine Lagarde to do on Greece) and rewards the banks of the surplus countries for their irresponsible lending to long-term deficit nations (Argentina, Pakistan, Egypt, Angola) when the vultures circle.

The Secretary argued that the basic imbalance is "... the stark reality of large and persistent deficits as a result of an unfair trading system" one in which "Intentional policy choices by other countries have hollowed out America's manufacturing sector and undermined our critical supply chains".

Bessent's just-so story has a few gaps:

• While the US party line has always been that the exorbitant privilege of the dollar (its position as the global reserve currency) is "fair", it ignores one manifestation of that privilege, which is the persistent overvaluation of the dollar; overvaluation is a subsidy to US imports and a tax on its exports, thereby contributing to the deficit on the trade account;

• If it is unfair that the US has a persistent BoT deficit (which began with soap-peddler Reagan's irresponsible tax cuts in 1981, long before China was a manufactures exporter) then why is it not unfair that the US should have a persistent surplus on its balance of services ?

• Bessent acknowledges that “The architects of Bretton Woods recognized that a global economy required global coordination”. Why then does he not demand the Bank and the Fund engage with the most complex and necessary coordination task today –arresting climate change[4] ?

• Bessent decries “wage suppression” in certain unnamed economies but overlooks the suppression of union rights and wage theft which are long standing domestic policies of the US;

• It is infantile for the Secretary to whine in public about the “unfair trading system” when the US led the creation of the global trading system after World War II, when the dollar is still the dominant currency for settling trades, and when the US is still the world’s largest economy; and

• It is grotesque for Bessent to say that the US is offering "security guarantees and open markets"—how does he have the balls to say this when the administration is killing Ukrainians to steal their minerals ? Or when US tariff policy changes twice a week ? Or when the US is imprisoning teenagers because they don’t have reservations at the Four Seasons ?

“Their sprawling and unfocused agenda”

Bessent asserts that the "Bretton Woods institutions must step back from their sprawling and unfocused agenda, which have stifled their ability to deliver on their core mandates". It is undeniable that the Bank^[5] often lends with low or negative economic and environmental returns. Some of the Bank’s carbon finance operations do not disburse and the impacts of others are exaggerated; the Bank’s capacity development portfolio, to take another instance, has long failed to achieve its objectives; much of the Bank’s budget support is a back-door subsidy to the Chinese SOEs and to private banks who have lent hastily to illiquid borrowers; much of the Bank’s agriculture and rural development agenda is ill-conceived. Many Fund programs fail (Pakistan, Egypt, Argentina, for decades). Fund staff consistently overlook lack of compliance with agreed programs in the franc zone under pressure from major shareholders (les cousins blancs).

Having said this about the weaknesses of the BW institutions, if Bessent had wanted to make a serious critique, he should have tried to understand how the World Bank works.

• The World Bank's agenda, procedures, project approvals, and evaluation scorecard are^[6] set by consensus;

• The consensus is achieved through internal and external consultations among national representatives on the Board of Executive Directors^[7], with officials of borrowing countries, across national and international civil society, and with staff and management of the Bank;

• Preparation of the current WB scorecard took more than a year of global consultations;

• Every Bank-financed operation is evaluated by an Independent Evaluation Group (IEG) that reports directly to the Board of Executive Directors; and

• If Bessent had any real interest in “leverag[ing] US leadership and influence at those institutions” he could appoint US Executive Directors to the IMF and the World Bank^[8].

Bessent claims that the Bank’s agenda covers the wrong terrain in energy, climate, and gender while not insisting enough on accountability.

Energy. Bessent asserts that the Bank “can use its more resources more efficiently now by focusing on increasing energy access”. What this means is — the Trump administration, having been purchased by the US fossil fuel industry, is now insisting that the World Bank be “tech neutral and prioritize affordability on energy investment.” Bessent continues with a fairy tale about new investments in energy: “In most cases, [new investments in energy mean] investing in gas and fossil fuel-based energy production”. This in “most cases” is false in the largest economies (the US, China, and India) with the highest growth in new generation and storage capacity and where renewables (solar, wind, and battery) have had faster growth in recent years than dirty fuels. Bessent, who has evidently learned the expression “base load” from the fracking industry’s representative in the US Cabinet, ignores the reality that many large World Bank borrowers (Ethiopia, Nigeria, Ghana, Turkey, and Brazil) have more than 30% of their electricity from hydro power as “base load” and therefore need little, if any, fossil fuels as base load.

It is undeniable that the Bank can do more in renewable energy and it is inexcusable that Bessent does not insist on this. The Bank should offer cheaper terms to countries that want to replace planned coal investments with renewables-plus-batteries because the levelized cost of energy ( LCOE) from renewables are the same as those of coal and gas, the cost advantages of renewables plus batteries will grow, and, of course, LCOE estimates never include the health costs of emissions from burning fossil fuels and wood because those costs tend not to fall on wealthy currency speculators. If Bessent wants to complain about the Bank not doing enough in energy, he can start with the Inspection Panel which blocks dam development or with the Bank managers who are afraid to defend hydro power.

When the Secretary remarks—“We encourage the Bank to go further in giving countries access to all technologies that can provide affordable baseload generation”—he is shilling for US nuclear. As I wrote earlier ^[9] about the Bank’s ban on lending for nuclear energy—“[there is an] obdurate belief that international competitions are ‘unfair’ to US interests. It follows from this belief that independent financing will eliminate such bias and allow US firms to compete on a fair basis. Now, from what we know of the competitiveness of the US nuclear industry compared to those of Japan and Korea-- this is bullshit. The US nuclear industry is not competitive and adjusting the terms of finance in greenfield countries will not make it so.”

Climate. Bessent snipes at “distortionary climate finance targets” in the Bank but again he has no idea what he is talking about. Part of his myopia on climate is that he cannot distinguish between mitigation and adaptation. The poorest Bank member countries generate ^[10] small amounts of greenhouse gas (GHG) emissions per capita; their capacity to absorb mitigation investments, with public or private finance, is small^[11]. The same low-income countries, especially those in the tropics where temperatures and floods will increase the most under global heating, will require heavy international support for large-scale adaptation investments ^[12] (dams for hydro power and flood control) and local finance for smaller investments (soil conservation, construction standards). There is much that the Bank could do to be more effective in mitigation and adaptation finance, but it is less able to do better work when the representative of its principal shareholder is so poorly informed about the problems.

Gender. Bessent’s sneer at the gender work of the Fund shows who he is. The comment reveals that he does not understand that the returns to investments in women and girls—political power, health, education, training for and access to jobs, freedom from violence and harassment—are high. Such investments can help, modestly, to fix the world’s longest-standing, most important, market failure: discrimination against women. The obvious thing for Bessent to have done would have been to tell the US representatives in the Fund and in the Bank—we are concerned that the Fund is trying to do things in which the Bank has a comparative advantage; please express firmly the administration’s concern to Bank and Fund management that while the US supports this agenda and wants it to be extended, it insists on more effective collaboration between the two institutions on their respective programs to strengthen the rights, status, capacities and welfare of girls and women.

Accountability. It is not a secret in the Bank that IEG inflates ex-post project ratings. The Bank’s Board, stuffed with political appointees who know little of projects or of evaluation, accepts this inflation as the price of keeping their pleasant sinecures while playing their assigned roles in making the Bank look more effective than it really is. If Bessent wanted to impose more accountability on Bank staff, management, and Board, he could instruct the US ED to demand external audits of IEG work. That is, if we had a US ED.

I close on the most farcical bit of Bessent’s address. He claims: “The IMF must hold countries accountable for implementing economic reforms”. He goes on to praise Argentina (the farthest over quota of any Fund member), as an example of accountability , for “real progress toward meeting financial benchmarks.” Bessent (and Georgieva too, with her tasteless chainsaw pin) seem to have fallen for what the other Latinos say about Argentina: “Cuál es el negocio mas lucrativo del mundo ? Comprar un argentino por lo que vale y vender lo por lo que piensa vale.”

* * *

[1] https://home.treasury.gov/news/press-releases/sb0094. April 23, 2025.

[2]. Only 44 nations participated in the BW Monetary Conference of 1944; many others lived under the boot of the imperialists for another 10-20 years, a form of imbalance of which Bessent is probably unaware.

[3]. Brad De Long's review (https://web.archive.org/web/20091014073814/http://econ161.berkeley.edu/Econ_Articles/reviews/skidelsky3.html) of Skidelsky's 3rd volume of the life of Keynes insists that Skidelsky did not understand the technical differences between Keynes and White on the surplus country question and, by not understanding those differences, exaggerated them.

[4] I thank a friendly commentor for making this point.

[5]. The Fund does almost nothing, except talk, on climate or gender or anything else of which Bessent complains (though one supposes that he is reading from a script that the White House wrote for him). While most Fund member countries pretend that having a female CEO for the past 15 years is doing something for poor women, this is not really the case and those who believe in this little fairy tale are showing us their true commitment to women’s equality.

[6]. https://scorecard.worldbank.org/en/home

[7]. I have written about how the Bank’s Board should do better work in https://johnmcintire.substack.com/p/the-world-bank-must-improve-accountability?r=lxiat

[8]. The US has no ED in the Fund. The US has an Acting ED in the Bank.

[9]. My Substack on the Bank and nuclear power is: https://open.substack.com/pub/johnmcintire/p/nuclear-power-and-the-world-bank?r=lxiat&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

[10]. It is of course true that middle-income countries with tropical forests—Brazil, Indonesia, Malaysia, Colombia—all have heavy mitigation potential in reforestation and in preventing deforestation.

[11]. The Bank’s recent paper “Recipe for a Livable Planet” shows the distribution of food system GHG emissions by low-income, middle-income and high-income countries.

[12]. I have written on Bank support for one such adaptation operation in Nigeria: https://open.substack.com/pub/johnmcintire/p/climate-finance-and-the-world-bank-de8?r=lxiat&utm_campaign=comment-list-share-cta&utm_medium=web&comments=true&commentId=86109879

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