March 23, 2005
Wolfowitz nomination throws harsh spotlight on World Bank
Agence France Presse

The World Bank sees itself as standing on the frontlines of the war on global poverty. But to its detractors, the IMF's sister institution is part of the problem, not part of the solution.

WASHINGTON (AFP) - The World Bank (news - web sites) sees itself as standing on the frontlines of the war on global poverty. But to its detractors, the IMF (news - web sites)'s sister institution is part of the problem, not part of the solution.

By choosing Paul Wolfowitz to lead the World Bank, US President George W. Bush (news - web sites) will only fuel criticism of the liberal, free-market philosophy that underpins the Washington-based lending organisations.

Nancy Birdsall, president of the Center for Global Development, said that if confirmed in the post, the deputy defence secretary "will face the toughest job in the world".

"Being president of the World Bank requires a person with management experience, fire in the belly about the grand mission of the World Bank and an ability to set priorities," she said.

Both the World Bank and the International Monetary Fund (news - web sites) were created in 1944 as part of the post-war settlement that replaced the old ways of policing international finance.

By tradition, the World Bank is led by an American and the IMF by a European.

The initial role of the Bank, which is properly known as the International Bank for Reconstruction and Development, was to help in the reconstruction of Europe from the ashes of World War II.

But over the years the Bank has evolved to become the prime mover in international development with an annual budget of nine billion dollars consecrated to improving the lives of the world's poorest people.

Along the way, however, the Bank and the IMF have extended many more billions in loans to impoverished countries that now form part of a huge debt burden which, critics argue, is the biggest single block on development.

Outgoing World Bank president James Wolfensohn, who leaves in June, has done much to improve the organisation's standing after decades in which it stood accused of funding grandiose infrastructure projects of little economic worth.

Most recently, Wolfensohn has endorsed a campaign for debt relief in Africa, calling the West's lending policies towards the world's poorest continent "immoral and frightening."

His successor, Wolfensohn argued earlier this month, should be "passionate" about fighting poverty.

"It is crucial that the momentum on increasing spending on health and education that was gained during Wolfensohn's tenure is not lost," said Bernice Romero, advocacy director for aid charity Oxfam International.

But others argue that the World Bank has learned little from its past mistakes.

Conservationists are fighting hard for the institution to rethink its possible funding of a controversial hydro-electric dam in Laos.

Some 153 non-governmental organisations from 42 countries on Monday sent a letter to Wolfensohn urging the Bank not to support the dam, which would flood a pristine nature sanctuary and move at least 6,200 people from their homes.

The nomination of Wolfowitz set alarm bells ringing loudly among campaigners.

Njoki Njoroge Njehu, director of the 50 Years Is Enough Network, which campaigns for economic fairness, said one of the neoconservative architects of the war in Iraq (news - web sites) was "the most controversial choice Bush could have made".

"As the most prominent advocate of imposing the US's will on the world, this appointment signals to developing countries that the US is just as serious about imposing its will on borrowers from the World Bank as on the countries of the Middle East," he said.

But Wolfowitz's backers say the arch-hawk knows plenty about development policy from past stints in the State Department and as ambassador to Indonesia.

US Senate foreign relations committee chairman Dick Lugar said he would strengthen the World Bank's role in winning "more transparency and more effectiveness in fighting the effects of poor decision-making and corruption".

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