[Mb-civic] Wolfowitz, the Bad Surprise

[Michael Butler]

    Wolfowitz, the Bad Surprise
    By Esther Duflo
    Libération

    Monday 28 March 2005

    It's practically certain that Paul Wolfowitz, the candidate proposed by
George W. Bush, will be approved by the World Bank's (WB) Board of Directors
next week and will become its new president.

    Wolfowitz's nomination has made many teeth grit, as much in Europe as
among intellectuals and the American left, right up to WB employees, who
console themselves by posting jokes on the Internet ("It will no longer be
necessary to prepare an action plan after signing a debt agreement with a
government: if an action plan wasn't necessary in Iraq, why would it be
anywhere else?"; "The WB's watchword will change
from: 'Our dream, a world without poverty' to 'Our dream, a world without
the poor ... we'll send them all to Guantanamo.'"). Joseph Stiglitz, Paul
Krugman and Jeffrey Sachs have all come out against this choice. In Europe,
an appeal launched by a group of economists, including Daniel Cohen, regrets
a choice that "at the very least, is contentious." The NGOs scream at the
provocation and developing countries worry.

    Wolfowitz, a former political science professor specializing in
international relations, is one of the "thinking heads" of American
neo-conservatives. At the end of the Cold War, with American preeminence
firmly established, the objective of foreign policy must be to maintain that
preeminence and seize all opportunities to consolidate it. Wolfowitz's
professional experience, consequently, does not make him an obvious
candidate for several reasons.

    The WB is a bank whose mission is, in part, to help developing countries
invest in profitable projects, even for very long terms. That presumes an
ability (and the will) of the organization to identify the most promising
projects in the perspective of long-lasting economic development. Wolfowitz
has neither an economist's training nor (unlike the departing president)
private sector experience. He acknowledges himself that he knows nothing
about Africa, undoubtedly the most important continent for the WB. His only
African experience was his support for American intervention in Somalia
during the Clinton presidency.

    Wolfowitz has in the past defended a more political vision of
international aid: aid is one of the tools in the arsenal available to the
United States to make, and keep, political friends. Europeans are not exempt
from such thoughts, and bilateral aid is highly politicized. It's precisely
for that reason that the WB has an essential role to play in a more rational
allocation of economic aid, one that takes into account the needs of the
developing countries rather than the ambitions of the rich countries.

    Even in the soothing statements Wolfowitz proliferates since the
announcement of his candidature, in which he insists on the importance of
these institutions, of transparency, of democracy, there are as many
references to the possibility of using the WB's aid as a lever to advance
"regime change."

    Now, with Wolfowitz at the head of the WB, these recommendations in
favor of regime change risk, whether rightly or wrongly, being seen as a
United States' maneuver to advance its own agenda. More generally, if the WB
is perceived as "the Americans' bank," WB advice may be received with even
more suspicion than is already the case today. Now the bank plays an
important role as advisor and also often serves as an alibi that allows
reforming governments to pass on difficult messages. Seen as an American
fifth column, the bank will go from alibi to rejection. If nothing changed
in WB practices, its effectiveness could, in consequence, be diminished.

    Nonetheless, the Europeans, who have the opportunity to vote against
Bush's choice on the Board (the new president needs 80% of votes and
Europeans hold 30%) are going to let it go, thus following a
well-established tradition according to which the WB president is chosen by
the Americans and the IMF president is chosen by Europeans. Since this pill
is particularly bitter, the Americans are helping it go down by promising
the WTO leadership to Pascal Lamy, and the replacement of the WB's present
number 2, a Chinese, with a European.

    Developing countries have no say in this horse-trading. It's not even
clear that a European veto would have led to a better choice: when Larry
Summers, then at Treasury, had opposed (probably with good
reason) his veto to Koch-Weiser's IMF candidacy, the replacement candidate
was still worse. Stanley Fischer, by far the best candidate for that job,
was never even considered because he is American. Americans have no monopoly
on bad candidates.

    Even if Wolfowitz were to turn out to be a "good surprise" as Schroeder
hopes, it's time to reform a system in which the president of an
organization supposedly representing 184 countries is elected in spite of
the contempt or the fear of the vast majority of them.
--------

    Esther Duflo is an economist, professor at the Massachusetts Institute
of Technology (MIT).

 

    By Esther Duflo
    Libération

    Monday 28 March 2005

    It's practically certain that Paul Wolfowitz, the candidate proposed by
George W. Bush, will be approved by the World Bank's (WB) Board of Directors
next week and will become its new president.

    Wolfowitz's nomination has made many teeth grit, as much in Europe as
among intellectuals and the American left, right up to WB employees, who
console themselves by posting jokes on the Internet ("It will no longer be
necessary to prepare an action plan after signing a debt agreement with a
government: if an action plan wasn't necessary in Iraq, why would it be
anywhere else?"; "The WB's watchword will change
from: 'Our dream, a world without poverty' to 'Our dream, a world without
the poor ... we'll send them all to Guantanamo.'"). Joseph Stiglitz, Paul
Krugman and Jeffrey Sachs have all come out against this choice. In Europe,
an appeal launched by a group of economists, including Daniel Cohen, regrets
a choice that "at the very least, is contentious." The NGOs scream at the
provocation and developing countries worry.

    Wolfowitz, a former political science professor specializing in
international relations, is one of the "thinking heads" of American
neo-conservatives. At the end of the Cold War, with American preeminence
firmly established, the objective of foreign policy must be to maintain that
preeminence and seize all opportunities to consolidate it. Wolfowitz's
professional experience, consequently, does not make him an obvious
candidate for several reasons.

    The WB is a bank whose mission is, in part, to help developing countries
invest in profitable projects, even for very long terms. That presumes an
ability (and the will) of the organization to identify the most promising
projects in the perspective of long-lasting economic development. Wolfowitz
has neither an economist's training nor (unlike the departing president)
private sector experience. He acknowledges himself that he knows nothing
about Africa, undoubtedly the most important continent for the WB. His only
African experience was his support for American intervention in Somalia
during the Clinton presidency.

    Wolfowitz has in the past defended a more political vision of
international aid: aid is one of the tools in the arsenal available to the
United States to make, and keep, political friends. Europeans are not exempt
from such thoughts, and bilateral aid is highly politicized. It's precisely
for that reason that the WB has an essential role to play in a more rational
allocation of economic aid, one that takes into account the needs of the
developing countries rather than the ambitions of the rich countries.

    Even in the soothing statements Wolfowitz proliferates since the
announcement of his candidature, in which he insists on the importance of
these institutions, of transparency, of democracy, there are as many
references to the possibility of using the WB's aid as a lever to advance
"regime change."

    Now, with Wolfowitz at the head of the WB, these recommendations in
favor of regime change risk, whether rightly or wrongly, being seen as a
United States' maneuver to advance its own agenda. More generally, if the WB
is perceived as "the Americans' bank," WB advice may be received with even
more suspicion than is already the case today. Now the bank plays an
important role as advisor and also often serves as an alibi that allows
reforming governments to pass on difficult messages. Seen as an American
fifth column, the bank will go from alibi to rejection. If nothing changed
in WB practices, its effectiveness could, in consequence, be diminished.

    Nonetheless, the Europeans, who have the opportunity to vote against
Bush's choice on the Board (the new president needs 80% of votes and
Europeans hold 30%) are going to let it go, thus following a
well-established tradition according to which the WB president is chosen by
the Americans and the IMF president is chosen by Europeans. Since this pill
is particularly bitter, the Americans are helping it go down by promising
the WTO leadership to Pascal Lamy, and the replacement of the WB's present
number 2, a Chinese, with a European.

    Developing countries have no say in this horse-trading. It's not even
clear that a European veto would have led to a better choice: when Larry
Summers, then at Treasury, had opposed (probably with good
reason) his veto to Koch-Weiser's IMF candidacy, the replacement candidate
was still worse. Stanley Fischer, by far the best candidate for that job,
was never even considered because he is American. Americans have no monopoly
on bad candidates.

    Even if Wolfowitz were to turn out to be a "good surprise" as Schroeder
hopes, it's time to reform a system in which the president of an
organization supposedly representing 184 countries is elected in spite of
the contempt or the fear of the vast majority of them.
--------

    Esther Duflo is an economist, professor at the Massachusetts Institute
of Technology (MIT).