In case we have forgotten the tragedy, United States President George W Bush has cooked up a farce to remind us that reforming the Bretton Woods institutions is just like building democracy in hot countries. It isn’t a job for the natives.
Paul Wolfowitz, the Assistant Secretary for Defence, is Bush’s nominee for the presidency of the World Bank. Since Europe appoints the head of the International Monetary Fund (IMF), it effectively means he’s got the job.
Old Europe is aghast, and has said so fairly bluntly, but will do nothing about it. The poor countries for whom it really matters have no say in the matter at all. They will simply have to bid farewell to James Wolfensohn — whose tenure was marked by steady reform in the bank’s approach to governance and the environment — and welcome his more genuinely vulpine successor
South African Finance Minister Trevor Manuel, who chairs the bank’s development committee, is not commenting on the nomination, but it is a safe bet that he is biting down hard on his tongue. He has spent time, resources and what Bush calls political capital pushing for reforms at the Bretton Woods institutions.
He — and his allies in this emerging consensus — have now been delivered a swift kick in the guts by the Americans. They thought it was 2005; instead it looks more like 1967.
That is when Lyndon B Johnson’s defence secretary, Robert S McNamara, laid down his arms and slouched across Washington to the corner office at the bank, weighed down by doubt and disappointment over the Vietnam War.
His harshest critics say he translated his mania for military planning into a quasi-Stalinist mode of development thinking, foisting ludicrous, and largely unsuccessful five-year programmes on client states.
He also lent money with extraordinary zeal, and very little attention to where it was going. World Bank loans literally bought time for several dictatorships in the 1970s.
So much for the tragedy.
Wolfowitz, we are told, is different, not least because there are signs in Iraq and the Middle East that democracy can flow from the barrel of a gun.
”There is a logic to it, though it’s not the McNamara logic,” Stephen R Sestanovich, a senior fellow at the Council on Foreign Relations and former Wolfowitz staffer, told The New York Times.
”McNamara took the job to expiate, and Wolfowitz is taking the job to vindicate. That’s a big difference. For Wolfowitz, it’s meant to be going from strength to strength.”
Others, including The Economist, think that despite his lack of development experience, the man Bush calls ”Wolfie” may accelerate the pace of reform at the bank and bring to bear the force of his belief that international institutions really can bring change.
Apparently he is a big admirer of Wolfensohn’s determination to limit the flow of assistance to corrupt and undemocratic regimes.
Of course, the reconstruction of Iraq has been a real model of probity, so we have nothing to worry about on that score. And during his time as Ronald Reagan’s ambassador to Indonesia, he managed the provision of aid and succour to the venal and thuggish General Suharto, helping Indonesia to generate rapid economic growth.
So much for the farce.
Bush has just sent another hardliner, John R Bolton, to represent him at the United Nations. The message is clear: he wants to seize the momentum that has developed around reforming the multilateral institutions, and put it to work on his own terms.
Wolfowitz may want to fight certain kinds of corruption, and certain kinds of despotism, in certain kinds of country. But he will not be making the bank itself more democratic. He truly believes that the US should project its power, unilaterally if necessary, to achieve its foreign policy objectives.
Some say that those who have pushed for governance changes at the World Bank and the IMF are simply tinkering at the edges, lending spurious legitimacy to deeply compromised institutions.
They will feel vindicated by Wolfowitz’s advent. There is, however, a slender hope that they are wrong. Wolfowitz may feel that he needs to bring people such as Manuel on board to strengthen his hand as he pushes for more aid to Iraq and the Middle East. If that is the case, he may just be prepared to bend on the International Finance Facility and the debt write-off plans of the Commission for Africa. Scraps from the feast perhaps, but that is probably all that is on the table.