Bush nominates hawk for World Bank

Paul Wolfowitz

WASHINGTON - President George W. Bush has nominated his Administration's leading neo-conservative hawk, Deputy Defence Secretary Paul Wolfowitz, to be the new head of the World Bank, a choice likely to exacerbate tensions between the United States and its key international allies because of Wolfowitz's central role in planning and executing the war in Iraq.

It was the second time in just over a week that Bush offered a hardliner to take up a sensitive international post, after his nomination of the hotly anti-United Nations State Department official John Bolton, to be US Ambassador to the UN.

Sources close to the World Bank board said Wolfowitz's name was informally circulated several weeks ago among the 23-member board, which represents the bank's 184 member countries, and the reaction was made clear to Treasury Secretary John Snow. "Mr Snow knows that the reaction from the board was unfavourable," one source said. "Mr Wolfowitz's nomination today tells us the US couldn't care less what the rest of the world thinks."

"The enthusiasm in old Europe is not exactly overwhelming," German Development Minister Heidemarie Wieczorek-Zeul said.

The World Bank presidency was the subject of furious speculation in recent weeks, as Wolfowitz's name was circulated alongside those of Carly Fiorina, the recently departed chief executive of Hewlett-Packard, and Bono, the lead singer of U2 who is an advocate for the poor and dispossessed.

Joseph Stiglitz, a former chief economist at the World Bank, now at Columbia University, suggested that there were a number of obviously outstanding candidates for the job, but that Wolfowitz was not one of them.

By tradition Washington selects the World Bank president while Europeans nominate the head of its sister organisation, the International Monetary Fund. The US is the bank's largest shareholder followed by Japan, Germany, Britain and France.

Wolfowitz, a life-long academic and diplomat with no direct experience of the financial world, is an incendiary figure in international circles because he has consistently pushed for an end to the US doctrine of containment in international affairs and argued that the US has the right to take pre-emptive action wherever it sees fit and extend what he has called a "benevolent hegemony" over the rest of the world.

The invasion of Iraq, which he had championed since the early 1990s, was the moment when his vision became reality and his view of international affairs became official White House policy.

Wolfowitz's views on questions of development and Third World lending - the bread and butter of the World Bank's activities - are not known, but he is much more likely to favour a return to the austerity of so-called "structural adjustment" programmes, advocated during the Reagan era, than he is to continue the softer approach taken by the incumbent, Australian James Wolfensohn.

The US Treasury has been pushing for a larger portion of World Bank lending to come in grants versus loans and for more "measurable results" - indications that the lending has had a clear impact.

In announcing his nomination, Bush tacitly acknowledged the contentiousness of his choice, telling reporters he had called up a number of world leaders to explain his decision before making it public. He described Wolfowitz as "a compassionate, decent man who will do a fine job" and a "skilled diplomat".

Much of Wolfowitz's credibility in the new job is likely to rest on his ability to bring the World Bank into America's ambitious programme of democratisation in the Middle East.

With his experience of six US presidential administrations and his management experience at the Pentagon, Wolfowitz has certainly had exposure to large public bureaucracies. He also served as US Ambassador to Indonesia. His intelligence and breadth of reading go unquestioned.

What remains to be seen is his view of the utility of the World Bank. Many of his fellow neo-conservatives have liked to deride it as an unwieldy obstacle to the proper functioning of global markets. Previous presidents nominated by Republican administrations have used it as a vehicle for imposing tight budget constraints and rigorous debt repayment programmes on impoverished countries - an approach attacked by World Bank critics as a recipe for deepening poverty.

"If the Bush Administration wanted to poke a finger into the eye of every nation on Earth, it couldn't have made a better choice," said John Cavanagh, director of the Institute for Policy Studies, a liberal think tank.

But Peter Timmer, senior fellow at the Centre for Global Development in Washington, said: "I honestly think he is going to surprise people and turn out to be quite effective."

Man of war

Iraq war architect Paul Wolfowitz is No 2 at the Pentagon.

The Deputy Defence Secretary has had three stints at the Defence Department.

He has also served as Assistant Secretary of State for East Asia and as Ambassador to Indonesia.

He headed the School of Advanced International Studies of Johns Hopkins University.

- INDEPENDENT, REUTERS