US Bank or World Bank?

Alex Wilks
24 March 2005

Most people would be horrified if they went to vote and only saw one name on the ballot-paper. Yet this is exactly the principle behind the selection process for the world’s most powerful development organisation, the World Bank.

Last week the United States government nominated Paul Wolfowitz for World Bank president. The other 183 countries that are part of the Bank are in the position of the voters described above: they are supposed to vote Wolfowitz.

Perhaps conscious that both the process and the candidate are difficult to justify, US President, George W Bush got on the phone to the other G7 leaders this week to twist their arms to accept his man.

Since January Alex Wilks has been monitoring news and views about the World Bank presidency daily on WorldBankPresident.org

It’s not just radical protesters who disagree with the choice. The Financial Times said sending Wolfowitz to the World Bank was putting the “fox in charge of the chicken coop”, while German development minister Heidemarie Wieczorek-Zeul understatedly asserted: “enthusiasm in old Europe is not exactly overwhelming.”

Contesting Wolfowitz

Wolfowitz carries heavy political baggage. He is one of the architects of the controversial neo-conservative policy that urges pre-emptive strikes on other nations. As the American deputy secretary of defence he was one of the fiercest advocates for the Iraq war. He made incorrect projections to Congress about how many troops would be needed and what the costs of reconstruction would be.

It is not clear whether Wolfowitz’s public statements were impaired by ideology or not. But as head of the World Bank he would frequently be called upon to make economic forecasts and funding estimates. How is the world to trust him?

Two British members of parliament, David Drew (Labour) and Andrew George (Liberal Democrats) tabled a motion arguing that,

“as one of the architects of the invasion of Iraq, he is uniquely unsuitable to negotiate with the world’s poorest countries; he has no history whatsoever of demonstrating any understanding of the needs of those countries.”

My organisation, the European Network on Debt and Development, (Eurodad) initiated a petition airing concerns that under Wolfowitz, World Bank aid flows could become more dependent on US administration priorities. More than 1,300 civil society groups and individuals signed it within 48 hours of the nomination announcement. These include many well-known groups such as Action Aid International and Friends of the Earth International, plus smaller groups in more than sixty different countries.

Real concerns

During the cold war, the World Bank used to reward allies of the US like Indonesia (under Suharto) where Wolfowitz was ambassador from 1986-89, and Zaire (under Joseph Mobuto) where there was little or no real chance of the loans being used to assist poorer citizens. To this day, these and many other countries are still repaying those debts.

It is a great concern that a Wolfowitz-led World Bank might again try to allocate aid according to the US government’s views on “good countries” and “bad countries”. Bank staff have voiced fears that their credibility will be dramatically reduced. And former chief economist of the World Bank, Joseph Stiglitz, predicts street violence will accompany Bank country missions everywhere.

The Iraq experience does not bode well for what Wolfowitz’s economic policy approaches would be. Mohammad Al-Sayed Said of the Al-Ahram Centre For Political And Strategic Studies in Egypt said he expected Wolfowitz to bring

“an ultra-right wing philosophy based on imposing a fully free market with no adequate concern for the poor and basically a monetarist policy”.

Break with the past

In recent years the Bank, under pressure, has renounced its support for one-size-fits-all trade liberalisation and privatisation policies. It has been reluctant to implement this, but the fact that it has recognised previous mistakes and said it will listen to national governments and civil society groups has opened space for some countries to negotiate more flexibility. If Wolfowitz reinstitutes a command-and-control approach from Washington, this will not go down well.

Wolfowitz’s interest in democratisation is not as solid or consistent as he would have us believe. According to Abdul Hakim Garuda Nusantara, head of the National Human Rights Commission in Indonesia, when Wolfowitz was ambassador to Indonesia, “he never showed interest in issues regarding democratisation or respect of human rights”.

Even if the European and other governments concede to Bush’s push for Wolfowitz as World Bank president, as it seems they will on the condition that they get to choose the deputy, the fight will not end there. While the World Bank president does have a strong say in the institution, the resident board can block bad policies, projects and initiatives. And civil society groups - north, south, east and west - will be redoubling their efforts to challenge and check the Bank from the outside.

Next time a World Bank president is sought, world governments must insist on a selection process at least as open and transparent as the one that Kofi Annan announced this week for the United Nations Development Programme. The current process, which as Jesse Jackson has said “freezes out most of the world”, is farcical and unworthy of an organisation which claims to represent democracy and equality around the world.

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