Wolf After Wolf

21 March 2005 by Abu Spinoza

President George W. Bush has designated Deputy Defense Secretary Paul Wolfowitz as a nominee for the president of the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

to succeed current World Bank president James Wolfensohn.

Wolfowitz, who is second in command to Defense Secretary Donald Rumsfeld, is widely regarded as a leading figure in the neo-conservative cult. He is an architect of the Iraq war. His arrogance, ignorance, and incompetence are unbounded. Wolfowitz & Co. predicted that the Anglo-American occupation armies would be greeted with flowers and sweets in the streets of Baghdad and Basra.

Wolfowitz’s succession to the World Bank presidency is likely to move the institution from bad to worse. In his years as the organization’s chief Jim Wolfensohn has paid a lot of lip service to “comprehensive development framework” and civil society but the bank remains a huge international bureaucracy that follows, by and large, the neo-liberal program. In recent years it has embraced dialogue with non-government organizations, the hype about knowledge-sharing, and empowerment.

The respected liberal economist Joseph Stiglitz did bring a fresh air of dissidence to the Bank, but he was quickly shown the door out. That became a typical play during Jim Wolfensohn’s regime at the bank. Other independent-minded people were kicked out or told to tone down their analysis. With Wolfowitz at the helm, the bank’s climate is likely to get worse, not better. It would stifle the scope of independent research, analysis, dialogue and dissidence in the institution.

The Bush administration’s decision to nominate Mr. Wolfowitz as the president of the World Bank is a clear display of its imperial arrogance as well as a show of contempt for international law, diplomacy and peaceful methods of resolving conflicts. This follows its earlier decision to appoint John R. Bolton as the new U.S. ambassador to the United Nations. The administration is dedicated to imposing its neoconservative program on foreign aid program and multilateral institutions with as much zeal as it is to dismantling Social Security domestically in the guise of reform. The U.S. and other advanced countries generally get what they want from international aid programs and multilateral agencies, but the appointment of Wolfowitz is an attempt to make the World Bank even more subservient instrument of the U.S. Treasury and State Departments than it is already.

The nomination of Wolfowitz as president of the World Bank will prove to be controversial, particularly among developing countries as well as America’s European allies. The staff of the bank, many of whom are competent professionals and functionaries and specialists, will be demoralized and insulted by this choice. It is no accident that the administration has picked Wolfowitz rather than an establishment figure or competent manager from the internationalist wing of the Republican Party. Even from the vantage point of narrow interests or conservative principles, it is a bad choice.

The United States is the World Bank’s largest “shareholder.” Unlike the UN General Assembly, where each country has one vote, voting power in the Bretton Woods institutions is allocated on the basis of economic power. The president of the World Bank has always been an American, whereas the managing director of the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

, has traditionally been an European.

The Bush administration’s decision to nominate Mr. Wolfowitz will need to meet approval of the executive board of the bank. The executive board usually rubber stamps decisions emanating from U.S. Treasury. The developing countries have limited clout: borrowers can’t have too much say. The Western Europeans tend to be more interested in sharing the pie. That said, on a few occasions disputes do arise, so it will interesting to see if the Europeans and the developing countries dare to reject Bush’s nominee.

President Bush described Wolfowitz at a press conference as a man of “good experience.” He certainly has a record of service to interests of the powerful and the rich. Wolfowtiz was the U.S. ambassador to Indonesia. The U.S. backed the Suharto regime right until its fall. Wolfowitz served as U.S. Assistant Secretary of State for East Asia. Note how the New York Times and other mainstream media mention how he served in that capacity “during the Philippines transition to democracy” without recalling that President Daddy Bush praised and supported dictator Marcos.

Talks about “Wolfowitz’s drive to spread democracy” should not go unchallenged. The U.S. has been a consistent supporter of tyrants and assorted dictators and monarchs, particularly in the Middle East and West Asia with greater zeal than any where in the planet, in countries like Morocco, Algeria, Egypt, Saudi Arabia, Jordan, and Pakistan. Wolfowitz berated Turkish military generals for the Turkish parliament’s firm rejection of endorsing U.S. invasion of the Iraq war and thus denying U.S. military access to invading Iraq from Turkish soil.

If the principles of law and justice are applicable for the masters of the universe then Wolfowitz, his boss, and his boss’s boss, are certainly international war criminals. They have used massive force against the territorial integrity and political independence of Iraq. They invaded the country and are responsible for killing thousands of civilians. They have endangered international peace and security and have conducted acts of aggressions. They have squashed peaceful Iraqi non-violent opposition to the occupation. They are indirectly responsible for torture and violations of the Fourth Geneva Convention relative to the protection of civilians in Iraq and elsewhere. Such persons should be surely subject to indictment, not election to high offices in international agencies and praise.

Paul Wolfowitz would not, however, be the first war criminal to have served as the president of the World Bank. That distinction belongs to Robert McNamara, U.S. Defense Secretary who went to head the Bank, after directing the slaughter of Vietnamese peasants, napalming that country, and bringing the world to brink of nuclear war during the Cuban crisis. Years later, McNamara apologized-but not to the Vietnamese, only to the Americans for causing them so much pain and suffering. With such distinguished pedigree, Wolfowitz cannot complain about the lack of outstanding role models.

Background Information about the World Bank and its Big Sister

The World Bank’s mandate is to reduce poverty in the developing countries through development assistance. But a large chunk of international aid is to promote rich country’s exports and push the services of high-flying rich country consultants on poor countries. Moreover the level of rich country foreign assistance provided to developing countries remains shamefully and abysmally low. Aid is not necessarily allocated in favor of those who need assistance the most. The high-income members devote on average less than 0.35 percent of their GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
to foreign aid. While some foreign aid programs do have positive effects and have improved the lives of the poor, a lot of foreign aid still goes to propping up favored dictators and corrupt regimes.

The IMF, located across the street from the World Bank headquarter on 18th Street in Washington D.C., is the Big Sister of the World Bank. The IMF is responsible for macroeconomic surveillance, instituting structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/
programs and loans. The World Bank supplements the IMF’s goals. Unlike the IMF, the Bank provides sectoral loans, project financing, and technical assistance to developing countries for all kinds programs, ranging from environment, health, infrastructure, energy, trade, information technology, private sector development, capacity building, and gender equality.

Though the critics of the World Bank are correct in many respects, the concept and the principle of genuine transfer resources and knowledge sharing among countries is not really disputed. The World Bank has to be fundamentally reformed to serve the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. of global communities and the poor. But the appointment of Wolfowitz, after Wolfensohn, is bound to do profound damage to the processes of unilateral transfer and the World Bank as a key institution. The Wolfowitz appointment needs to be widely resisted. The progressive community should voice its opposition not just to Wolfowitz but also the present international foreign aid regime.

Abu Spinoza is a pseudonym for an economist.

Source: Znet (http://www.zmag.org/).



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