Widely known as the architect of one
of the most controversial U.S. wars, he became a symbol of an aggressive
military approach to foreign affairs. Against widespread international
opposition, he pushed ahead with an essentially unilateral U.S. military
action in the name of "promoting democracy." Perhaps his most
lasting legacy will be the perverted concept of destroying a country in
order to save it.
After his stint at the Department of Defense, he was selected by the U.S.
president to head the World Bank. On the surface at least, it seemed a
strange appointment. Here was a man thoroughly identified with an aggressive,
unilateral approach to international affairs, a man who preached democracy
while perpetrating mayhem. How could he be an effective leader of an organization
that was supposed to provide multilateral support for economic development
in low income countries, an organization that was supposed to empower
the poor?
The man was Robert McNamara, U.S. Secretary of Defense during the Vietnam
War and president of the World Bank from 1968 to 1981.
So there was little reason to be surprised this spring when Deputy Secretary
of Defense Paul Wolfowitz was appointed president of the World Bank This
was merely history repeating itself. Yes, Wolfowitz, a principal architect
of the U.S. invasion of Iraq, is a man who seems to define democracy in
terms of a people submitting to U.S. military occupation, who advocated
the destruction of Faluja as the means to save it, and who sees the privatization
of the Iraqi economy-the opening of its oil operations to U.S. investors-as
laying the economic foundation for democracy. Yet the McNamara experience
had long ago established the link between U.S. military strategy as carried
out in the Department of Defense and U.S. international economic strategy
as carried out through the Bank.
True, the World Bank is not a branch of the U.S. government. It is, however,
thoroughly U.S.-dominated. Voting shares in the operation of the Bank
are divided as are the voting shares in a private corporation, in proportion
to the money that various members put in. Although it is only one of 184
Bank members, the U.S. government has 16.4% of the votes; Japan is a distant
second with 7.9%; Germany, France, the U.K., Canada, and Italy account
together for another 18.6%. As in a private corporation, holding 16.4%
of the votes provides effective control, especially when a large segment
of the other "shares" are controlled by close allies and small
states readily disciplined by the principal shareholder.
So what does the U.S. government do with its control of the World Bank?
And what can we expect Paul Wolfowitz to do as the bank's President?
What Does the World Bank Do?
Unlike a formal foreign affairs branch of the U.S. government, the Bank
does not provide direct support for U.S. businesses in their international
operations. The State Department and the international offices in the
Treasury and Commerce Departments take care of that. The role of the Bank
is broader, one of shaping the structure of the international economy
and the manner in which various countries organize their international
commerce. Working in parallel with its partner organization, the International
Monetary Fund (IMF), and the World Trade Organization, the Bank attempts
to establish the structure, the "rules of the game," of the
international economy.
The Bank's power comes through its role as a major aid-giving agency to
poor countries, channeling low-interest loans to support various development
programs-everything from education and health care to managerial training
and road building. But the loans come with conditions, general policies
that the recipient countries must adopt in order to receive funds from
the Bank, which employs a huge stable of advisors and researchers whose
job is to churn out studies that provide the rationale for these policies.
Generally, countries must privatize publicly owned firms and "liberalize,"
that is, remove barriers to foreign investment and foreign trade. When
countries' finances have become especially problematic and their creditors
are worried, the Bank works with the IMF to establish "structural
adjustment programs" that push governments to balance budgets, restrain
expansion of the money supply, eliminate government subsidies for particular
products (for example, subsidies on food grains), and reduce tax rates
on businesses.
These "structural adjustments" integrate the economies of low-income
countries more effectively into the world economy and provide opportunities
for U.S.-based businesses (and the businesses based in Europe and Japan)
to gain access to markets, labor, and natural resources. But the Bank
claims to carry them out in the name of promoting economic development
and fighting poverty.
As the Bank presents itself on its web page: "One of the world's
largest sources of development assistance, the World Bank supports the
efforts of developing country governments to build schools and health
centers, provide water and electricity, fight disease, and protect the
environment. The Bank's . projects . are as diverse as providing microcredit
in Bosnia Herzegovina and raising AIDS awareness in communities in Guinea,
supporting education of girls in Bangladesh and improving health care
delivery in Mexico, helping East Timor rebuild upon independence or India
to rebuild Gujarat after a devastating earthquake."
Especially in sub-Saharan Africa and some of the especially low income
countries of Asia and Latin America, many of the Bank's individual projects
undoubtedly make positive contributions. Similarly, during the 1960s the
U.S. government's malaria control programs in Vietnam's Mekong Delta probably
made positive contributions. The malaria control programs, however, were
not simply "individual projects"; they were part of the larger
context of the Vietnam War that Robert McNamara was guiding. Likewise,
the schools and health care centers supported by the World Bank are parts
of a larger context, namely the Bank's overall strategy of establishing
the "rules of the game" of the international economy.
Wolfowitz at the World Bank
So what is Paul Wolfowitz likely to do at the World Bank? On one level,
he will simply continue to do what his predecessors-McNamara and others-have
always done. He will use the financial power of the Bank, buttressed by
its bevy of advisors and researchers, to push governments of low income
countries to adopt programs consistent with the interests of U.S.-based
businesses and the foreign economic policy of the U.S. government. Nothing
new there.
On another level, just as the current Bush administration has pursued
a greater and more dangerous degree of unilateralism and aggressiveness
in foreign affairs than most of its predecessors, it seems likely that
Wolfowitz will carry this approach with him to the World Bank. Bank actions
under Wolfowitz are likely to be more closely tied to U.S. policy, more
clearly directed, for example, toward rewarding the friends of the U.S.
government. Also, projects are likely to be more closely tied to the "War
on Terror," designed to bolster governments that have cooperated
most fully in it. And the rhetoric of "democracy" will probably
reach a higher pitch in the promotion of the Bank's programs.
Paul Wolfowitz and his allies in Washington who designed the U.S. invasion
of Iraq took the U.S. on a more extreme course of action than has been
the wont of previous administrations. In doing so, they have brought death
and destruction to Iraq, and they have created a more unstable and dangerous
world situation. But they did not essentially depart from a long pattern
of U.S. foreign policy, a pattern that has involved dozens and dozens
of military operations-many small and some large-to protect U.S. business
interests and promote "democracy" (or, in an earlier era "Christianity").
Likewise, there is little reason to think that Paul Wolfowitz's World
Bank will depart from its long pattern of shaping the international economy
in line with U.S. business interests. More extreme and perhaps more dangerous
than his predecessors, he may be more of a zealot and less pragmatic.
But the World Bank under Paul Wolfowitz will be the same World Bank it
has always been.
* Arthur MacEwan teaches economics at the University
of Massachusetts-Boston. He is the author of Neo-Liberalism or Democracy?
Economic Strategy, Markets and Alternatives for the 21st Century (Zed
Books).