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A hawk to ruffle the World Bank's feathers
George Bush has nominated Paul Wolfowitz, one of the main architects of the Iraq war, to run the World Bank. Though this is normally America’s prerogative, Europeans and others may object to the candidacy of so hawkish a figure
FOREIGNERS can be forgiven for not knowing what to make of George Bush in his second term. On one hand, he and his secretary of state, Condoleezza Rice, have made mollifying trips to Europe, trying to reassure America’s oldest allies that despite the Iraq war, it wants to remain friends. On the other hand, contrition is not one of Mr Bush’s strongest characteristics. Last week he nominated John Bolton, one of the State Department’s leading hawks and an outspoken critic of the United Nations, to be America’s ambassador to the UN. With Europeans still scratching their heads about that choice, Mr Bush has surprised them again by nominating Paul Wolfowitz, one of the chief architects of the Iraq war, to head the World Bank.
By tradition, the Europeans name the head of the International Monetary Fund, and the Americans pick the boss of the World Bank. This arrangement worked well for some time, but five years ago America blocked the Europeans’ choice to run the IMF, Caio Koch-Weser, and the job eventually went to Horst Köhler (who has since become Germany’s president).
The World Bank posts George Bush's nomination of Paul Wolfowitz for the presidency of the bank. World Bank President.org covers the selection process.
Will the Europeans now block the controversial Mr Wolfowitz? Reuters news agency reported on Wednesday March 16th, the day the nomination was announced, that Mr Wolfowitz’s name had already been unofficially floated among members of the Bank’s board, and rejected. But Mr Bush has gone ahead with the nomination, and has begun consulting European leaders. At a press conference on Wednesday, the president described his nominee as “a compassionate, decent man” and a “skilled diplomat”. Mr Wolfowitz, who is currently America’s deputy secretary of defence, has had several stints in government, including in the administration of George Bush senior. In the late 1980s he was America's ambassador to Indonesia, where he came to love the culture of the world’s most populous Muslim country.
But Mr Wolfowitz is also a favoured bogeyman of critics of the Iraq war. He is the best known of the “neoconservatives”, a group of Washington policymakers who believe that American power must be used to spread democracy and American values. He was a passionate advocate of moving against Iraq soon after the terrorist attacks of September 11th 2001, believing not only that Saddam Hussein had weapons of mass destruction, but that the lack of democracy in the Middle East was a key reason why the region had become a breeding ground for terrorism.
If Mr Wolfowitz was controversial in the run-up to the war, he has become even more so since. In late 2003, he signed a memorandum banning Pentagon contracts for Iraq’s reconstruction being given to countries that had opposed the war (among which were France, Russia and Germany). Moreover, his pre-war estimates for how much the conflict would cost and how many troops it would require turned out to be wildly optimistic—as was his prediction that Iraqis would welcome coalition forces as liberators.
A revolution in development?
At the World Bank, Mr Wolfowitz will—if the Europeans accept him—be dealing not with tank divisions and theories of deterrence but rather with using America’s “soft power” to tackle poverty. Two well-known development economists, Jeffrey Sachs and Joseph Stiglitz, were quick to bemoan his nomination. But his lack of experience in the development community does not necessarily make him a bad candidate. Having served under Donald Rumsfeld during the controversial “Revolution in Military Affairs”, Mr Wolfowitz might, some argue, be well placed to bring radical change to an organisation sorely in need of it.
The World Bank has spent much of the past decade responding to charges that its funding did little to achieve its primary mission: helping developing countries to grow their way out of poverty. The conventional wisdom is that aid is of little benefit unless the recipient country is a model of political and economic rectitude. These are hard qualities to find in a developing nation, and many complained that the Bank wasn’t looking very hard, preferring the showy headlines of massive infrastructure projects to the tedious slog of gradual poverty reduction.
James Wolfensohn, the Bank’s outgoing president, has worked hard to ensure better allocation of its funds during his decade at the helm. More money now goes to countries with good policies than bad. And he has placed more emphasis on fighting poverty, less on dams and superhighways to nowhere. But the Bank still lends lots of money to middle-income countries that arguably don’t need it, and to poor ones that can’t use it because their governments will steal or squander any funds that come their way.
Mr Wolfensohn has fought the Bush administration’s attempts to fundamentally alter the Bank’s operations. Paul O’Neill, the former treasury secretary, met fierce resistance when he suggested that the Bank should get out of the business of making loans since many of the recipient countries had access to the capital markets. But there are worries that Mr Wolfensohn has been less tough when faced with demands by non-governmental organisations. Some of the Bank's loans have come with conditions that benefit small interest groups, rather than the population at large. This has improved the Bank’s public relations, but arguably at the expense of its mission. To build a really effective institution, it may take a man who is not afraid to be widely disliked.
Mr Wolfowitz has certainly demonstrated that he can live with being controversial, and that he can articulate and put into practice a bold vision. But some worry that his desire to push democracy sits uncomfortably with the Bank's mission. His belief in the power of political freedom will colour his views of economic development as well. But is this the right agenda for the Bank, whose job is to spread prosperity? And the relationship between democratic reform and poverty alleviation is complicated. The most successful poverty reduction in the past generation, after all, is in communist China.
A related worry is that Mr Wolfowitz will not be able to separate himself from the White House. It is perhaps instructive to look at the history of another man who came out of America’s defence department to head the World Bank: Robert McNamara, who as defence secretary was an architect of the Vietnam war. Steven Radelet of the Centre for Global Development, speaking to CNN, points out that Mr McNamara was accused of picking aid recipients based on their support for America’s foreign policy, rather than their suitability for assistance. Will Mr Wolfowitz be able to resist using his office to further his political aims?