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AmericasApril 3 2005

Will Wolfowitz’s World Bank

As neoconservative and George W Bush ally Paul Wolfowitz takes the top job, the developing world is keeping its fingers crossed.
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While the liberal establishment worldwide is appalled that a US neoconservative ideologue and the architect of the US’ invasion of Iraq could be moving to the World Bank, the political reality is that few obstacles will be put in the way of Paul Wolfowitz taking the top job. Europeans and others may privately detest what is seen to be a unilateral White House appointment but this seems of little consequence. The real question is what a Wolfowitz World Bank will mean for the war on poverty and growth in the developing world.

Possible sea change

Many believe that, just like Robert McNamara’s move from the Pentagon to the World Bank in the 1960s, Mr Wolfowitz’s move from the Pentagon could herald a similar sea change at the bank. No doubt bank officials are nervous that well known White House cynicism towards multilaterals could mean major restructurings ahead. But few could argue that under incumbent president James Wolfensohn the World Bank has been so successful that no changes could be contemplated.

Question of policy

The issue is what such a high-profile political figure so close to the White House will mean for policy. Academics argue that Mr Wolfowitz’s background has shown a strong focus on development and democracy, and his time at the Pentagon took him away from his core interests. But how much will his outspoken views on democracy, which have guided US president George W Bush’s administration so far, dominate the Bank’s agenda on development?

This US administration, against established thinking, has pushed the World Bank hard towards using more grant aid than loans. A Wolfowitz Bank could continue to push this line (perhaps even harder) and it would seem natural for him to want to attach ‘democratic’ strings as well. More grants may be the way forward and it is clear that the eradication of poverty is far from solved. Vigorous bank policy, backed up by a muscular White House, could have a greater impact on the war on poverty than current strategies.

Unconvincing CV

The problem is that Mr Wolfowitz is neither an economist nor a banker, his management of affairs in Iraq is not encouraging and his ability to bring both countries and the bank’s staff on board is not convincing. On the other hand, he is bright and has both clout and connections.

Like it or loathe it, Mr Bush has put a close ally in charge of the bank. For the developing world’s sake, let’s hope this works better than his strategy in Iraq.

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