World News

Chile Slams World Bank Amid Charges of Political Bias

Posted January 14, 2018 12:14 a.m. EST

SANTIAGO, Chile — Chile’s outgoing president, Michelle Bachelet, criticized the World Bank on Saturday after an economist said that her country’s poor showing in an influential survey of global business conditions may actually have reflected a political bias against her left-leaning government.

The outcry came after the bank’s chief economist, Paul Romer, told The Wall Street Journal in an interview Friday that while Chile’s ranking had fallen in the bank’s yearly “Doing Business” report, which investors watch closely, “business conditions did not get worse in Chile” during the Bachelet era.

He added that he did not have “confidence in the integrity” of the data and methodology that led to Chile’s negative assessments and offered a “personal apology” to the country.

The statement started a political firestorm in Chile, where the candidate from Bachelet’s leftist coalition was defeated in last month’s presidential election, a race in which economic policy was a decisive issue. Bachelet, who leaves office in March, was barred by term limits from seeking re-election.

Romer’s apology also brought scrutiny to the political leanings of Augusto Lopez-Claros, a Chilean economist who until recently oversaw the team that produced the Doing Business report, which ranks countries based on factors like ease of paying taxes, credit availability and enforcement of contracts.

Jorge Rodríguez, Chile’s economy minister, called a politically tinted downgrading of his nation an “outrageous scandal,” reflecting a degree of “rarely seen immorality.”

Bachelet demanded that the bank carry out a “complete investigation” into the matter.

“Rankings provided by international institutions should be trustworthy, because they have an impact on a country’s’ investment and development,” she said in a statement posted on Twitter.

The World Bank said Saturday in a statement that it would “conduct an external review of Chile’s indicators” in the report “in light of the concerns expressed” by Romer. But the statement also defended the broad integrity of the ranking. “Objective data is not subject to political influence,” the statement said.

Lopez-Claros, a senior fellow at Georgetown University who is on leave from the bank, said in an emailed statement Saturday that the assertion that Chile had been unfairly graded was “wholly without merit.” He defended his team’s commitment to “exercise tight quality control on all the Doing Business data before it goes to publication” and said it had been especially careful in its collection of data in Chile, where the bank recently opened its first research hub in Latin America.

Since Bachelet’s first term in 2006, Chile’s ranking has fallen from 25th to 57th. During this period, it slipped consistently in the years when Bachelet was in power, but rose during the presidency of conservative billionaire Sebastián Piñera, who governed between 2010 and 2014.

Piñera will return to office this year after winning an election in which he campaigned as the candidate better suited to attract investment than his rival, Alejandro Guillier, a Bachelet ally.

Romer told The Wall Street Journal that changes to the methodology in recent years, including how the bank assessed the ease of paying taxes, contributed to Chile’s dip.

Lopez-Claros defended the changes as sound and said Chile’s standing fell in large part because other countries, including Mexico, took steps to attract investors.

Rodríguez, the economy minister, said he hoped the bank would conduct a prompt review to upgrade Chile’s ranking. “But the harm has already been done,” he said.