Removal of Paul Wolfowitz will change little at the World Bank

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The removal of Paul Wolfowitz from his position as president of the World Bank is in itself a welcome development. The mere fact that he refused to resign after his involvement in a well-publicised scandal, and that president George W. Bush, who had nominated him two years before, chose to back his refusal to leave are good enough reasons to celebrate his departure. But, given the fact that the world’s main development institution needs extensive reforms before it can rid itself of the crippling control and influence of the US over it, there is nothing to celebrate beyond the fact that we have seen the back of an arrogant neo-con who is the main architect of the war on Iraq. That control is consolidated by an arrangement between the US and Western Europe that the former has the right to nominate the head of the World Bank, while the latter selects the head of the International Monetary Fund (IMF), the other leading world development organisation.

But any agreement on meaningful reforms will take years to accomplish, so Washington’s control over the World Bank will remain in place for some time, as will Europe’s over the IMF. Consequently, when Wolfowitz leaves at the end of May he will be replaced by an American named by George W. Bush who is a neo-con hardliner like Wolfowitz and probably known to him. Likewise Zalmay Khalilzad, the new US ambassador to the UN, was a protege of Wolfowitz at the Pentagon in the early 1990s.

In the past, this control has been exploited to prevent developing countries from allying themselves to communist states or adopting communism. But now that the Soviet Union is dead and the spread of communism is no longer seen as an ideological threat to the West, the new enemy is ‘Islamic radicalism’ and countries, like Iran, that introduce Islamic rule. With such states categorised as terrorists bent on spreading terrorism –” particularly by the US –” it is not surprising that, in the eyes of the West, they are seen as having replaced the former communist enemy. So they must be denied any development funds from either the World Bank or the IMF. Equally, countries that support them must be targeted.

Certainly, when Wolfowitz became president of the World Bank, he began to preach openly that development funds must be withheld from those countries that support terrorism, extending to the institution Bush’s policy of ‘war on terrorism’. His wild rhetoric, and arrogance, offended the bank’s staff and board of directors, and also embarrassed Western governments despite their subscription to the US’s ‘war on terrorism’ and their knowledge that he had taken a leading role in developing this strategy. It became clear that Wolfowitz was not only a serious embarrassment to the World Bank but that he could no longer work with its staff. But these very grave problems have not been given as the real reason why he should resign.

Instead, he was asked to leave after a special committee found that he had violated ethics rules by arranging a promotion and large pay-rise for his partner, Shaha Riza, when she moved from the World Bank to the US state department in 2005. In fact it was he who arranged her transfer to avoid any suspicion of conflict of interest arising as a result of her continued employment at the World Bank. But World Bank officials said after the charge had been made public that they were also assessing possible conflicts of interest in 2003, when Ms Riza entered into a contract with a company that provides logistics, intelligence and advice to the Pentagon. There is evidence that the company entered into the contract at the direction of Wolfowitz, who was deputy secretary of defence at the time, and following a recommendation by state department officials, including Elizabeth Cheney, daughter of Dick Cheney, the US vice-president.

The involvement of senior US government officials and departments, including Wolfowitz, in securing for the company its contract with the World Bank shows how willing the US government is to use the development institution for its own ends. Another aspect of that willingness was revealed when US officials began to lobby the European, Asian and African members of the World Bank’s 24-nation board to secure the withdrawal of the demand for Wolfowitz’s resignation, although the Democrats in the US Congress had already called for him to go. The fact that Wolfowitz had lost even the support of his own parliament and that his reputation was very low in his own country was partly responsible for the refusal of the European members of the board to accede to Washington’s demand that he be allowed to remain in his post. Germany in particular, which chairs the World Bank’s board, insisted that he must resign.

But Germany and other influential European members of the board were also adamant that the US should retain its automatic right to nominate Wolfowitz’s successor. In fact, politicians in Europe even praised Wolfowitz for agreeing at last to resign voluntarily. The backing for the US’s right to nominate a successor and the praise for Wolfowitz were in direct contrast to the assertion by European commentators and non-governmental organisations that Washington should not have such a right. But clearly it will continue to retain that right and Bush will appoint the next president of the World Bank.

Hopefully, whoever is appointed will be less arrogant and more respectful, or at least courteous, to the World Bank’s staff, and will moderate his public statements on the need to withhold development loans from countries that practise ‘terrorism’ or are controlled by ‘Islamic extremists’. But he will also continue the loud, though false, statements made by his predecessor that the World Bank will devote its resources to the development of poor countries, mostly in Africa, and to the abolition of corruption worldwide. All this will, of course, be designed to enable him to carry out better than his predecessor the policy of the US government to starve Islamic states, like Iran, of development funds and to prevent others from having friendly ties with them or from adopting Islamic rule themselves. Clearly the World Bank must be reformed or abolished if it is to cease being a tool of the US’s foreign policy.

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