The Telegraph
Since 1st March, 1999
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- Wolfowitz as World Bank president may not be too bad

Wolfensohn's successor at the World Bank will be Paul Wolfowitz, the deputy secretary of the American department of defence, if the nomination of the American president, George W. Bush, goes through as expected. There has been a cacophony of protests against this nomination, mostly on the grounds that Wolfowitz is a declared neo-conservative who holds a strong ideological rightist position and has no experience of development. While everyone seems to concede the United States of America's right to nominate the head of the World Bank, Europe has expressed its shock at the absence of consultation, even the courtesy of an advance mention of the name. This is in spite of Europe having a higher voting strength at the World Bank.

Europe also recalls with considerable anger that the US had blackballed its choice of Caio Kochweiser, Germany's minister of finance, for the post of managing director of the International Monetary Fund last year. But, as matters stand, the objections are likely to be merely proforma. Bush will see his nomination pushed through.

That Wolfowitz does not have strong credentials in development is only one of the arguments against him. That could be urged against many of his predecessors at the World Bank. The education of Wolfowitz in development matters may not be more difficult than that of predecessors like John J. McCloy, George Woods, Lew Preston or Barber Conabee, who also filled the office of president, World Bank, with different records of success. A distinguished predecessor, Robert McNamara, had also come from the department of defence, where he had been secretary at the time of the Vietnam war and debacle.

That McNamara turned out to be a brilliant president of the World Bank in spite of his Vietnam record may be the Bushes' riposte to the criticism of the nomination of Wolfowitz. McNamara's failure as leader of the department of defence's misadventure in Vietnam could not be considered more disgraceful than Wolfowitz's, who at least managed the capture of Saddam, the conduct of elections in Iraq and all the trappings of victory notwithstanding the non-discovery of even a single weapon of mass destruction. Wolfowitz was perhaps performing his dharma, as a chosen bureaucrat loyal to the Bushes' White House and this cannot be held enough to disqualify him for the World Bank chief's job.

As a neo-conservative, Wolfowitz shares the hegemonic view of all rightists and Bush himself in the Republican camp. The rest of the world is a mass entitled to lesser consideration. The neo-conservative Right in the US believes that all 'aid' is wasted and poor governance is what is responsible for the developing world remaining poor. Given this world view, which Wolfowitz may share, it would be a contradiction to expect him to head the World Bank, the world's principal aid-giver. But that is to be expected of any neo-conservative member of the Bush establishment. There have been suggestions that Wolfowitz be interviewed by the bank's board of executive directors and the European Commission's top brass. But, so far as the nomination is concerned, it is a done deal and the rest of the world has no option but to swallow Wolfowitz.

McNamara's tenure in the World Bank does, however, offer a glimmer of hope that Wolfowitz may yet turn out to be a success, though not in the same league as McNamara. The challenges of today's developing world are more multi-dimensional that those of McNamara's days. The problems of disease and deprivation loom much larger due to AIDS and other pestilence. Policies like investment in more infrastructure and education, which Robert McNamara pioneered, may not be the solution for today's globalized poverty.

But the job of president. World Bank, has become less relevant in these days than in McNamara's time. These are days of increased private sector flows ' both in the form of foreign institutional investors and foreign direct investment. Indeed, the total of these global flows to developing countries is a substantial multiple of the gross aid that the World Bank offers. Particularly is this so in respect of countries, like China and India, which are, in fact, directing huge flows in the reverse direction to the US ' a flow of 'aid' to the rich from the poor. Nonetheless, the World Bank remains an important institution, in the sense of its being a clearing house for development techniques, a 'rating' institution for the absorption capacity of different countries and a catalyst of development ideas in general. The World Bank chief is expected to be an evangelist of development, not a sceptic. He needs this quality more than that of a practitioner. Whether Wolfowitz will fill this new role, given his immediate past as deputy secretary of the department of defence, while the US dispenses death and torture in Iraq, is debatable, but not entirely impossible.

While Bush could have chosen other more worthwhile candidates, including those from Mexico or India or southeast Asia, it is also undeniable that given his ideological professionals and the commitment to those in the US, he could have chosen worse. What could the world have done if, for instance, Bush had chosen his error-prone secretary of the treasury, John Snow, who is neither knowledgeable nor a willing learner' Given this frightening prospect, Wolfowitz may perhaps turn out to be the lesser of many possible evils.

Wolfowitz has at least a reasonable background of management, albeit in an evil chore ' that of managing his troops from the Pentagon in Iraq. He has accomplished his stated goals with reasonable success. The problem, which critics see in his track-record, lies more with the policy that guided it than with his own vision. It has to be granted that Wolfowitz, like McNamara, does bring the much-needed capacity for management of a diverse task force. This is sorely needed in the World Bank, which has suffered lately from a lack of leadership. Wolfensohn himself was a man known for his plethora of ideas, but marked by less than the needed capacity for implementation. Maybe Wolfowitz will make up with his capacity for management what he lacks in ideas of development.

Given all its faults, the World Bank has a distinguished track record of generating new ideas and initiatives with regard to development policy. Its world development reports have become a Bible for global development. While its association with the Washington Consensus did diminish its record in the aftermath of the Asian crisis, it must be admitted that the World Bank was the first to review the consensus in its elaborate and seminal studies of the Asian miracle, albeit at the prompting of the Japanese government. It admitted in this study that the 'State' as such had played a beneficial role to correct market failures in the emerging east Asian countries.

To sum up, Wolfowitz may very well turn out to be a better fit than feared by many. It is also appropriate to recollect that the World Bank bureaucracy, like other similar establishments, can do a good job of reformulating its newly-found head honcho. All establishments make captives of their leaders whom they try to refashion in their own image. Wolfowitz's re-education may turn out to be a costly but necessary consequence of Bush's decision nominating an new-conservative for the job.

Given the inevitability of Wolfowitz, the time has obviously come for the executive directors of the World Bank to address themselves to the task for managing the education of the new president. The EDs form a highly-paid, but so far managerially effective, governing board of the bank. But, as the example of late S.R. Sen and C.R. Krishnaswami Rao Saheb in the Eighties showed, there have been EDs before, who have more than pulled their weight with the presidents of the bank. The choice of EDs, therefore, becomes critical if the developing countries wish to effectively exert their influence on the neo-conservative head of the bank. A responsible and responsive board of the bank can succeed in turning Wolfowitz into a successful CEO with a focus on global development, rather than a neo-conservative failure.

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