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President Bush Nominates Paul Wolfowitz to Lead World Bank

March 16, 2005 at 12:00 AM EST
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RAY SUAREZ: Secretary of Defense Rumsfeld’s right-hand man has been tapped to move across the Potomac from the Pentagon to the World Bank. At the White House today, President Bush said he’d explained his choice of Paul Wolfowitz to other world leaders in a series of recent phone calls.

PRESIDENT GEORGE W. BUSH: I said he was a man of good experience. He helped manage a large organization. The World Bank’s a large organization; the Pentagon’s a large organization. He’s been involved in the management of that organization. He’s a skilled diplomat, worked at the state department in high positions. He was ambassador to Indonesia, where he did a very good job representing our country.

And Paul is committed to development. He’s a compassionate, decent man, who will do a fine job in the World Bank. And that’s why I called leaders of countries, and that’s why I put him up.

RAY SUAREZ: The 61-year old deputy secretary of defense has earned a reputation as a foreign policy hawk. He was an architect of the 2003 invasion of Iraq and the postwar occupation. Wolfowitz advocated going to war shortly after the 9/11 attacks. Here he spoke to the Council on Foreign Relations two months before the invasion.

PAUL WOLFOWITZ: Disarming Iraq and the war on terror are not merely related; disarming Iraq of its chemical and biological weapons and dismantling its nuclear weapons program is a crucial part of winning the war on terror.

RAY SUAREZ: But Wolfowitz’s experience goes beyond the Pentagon. Earlier this year he revisited Indonesia, to survey the devastation wrought by December’s tsunami and discuss the American military contribution to cleanup efforts. Indonesia is a place he knows well. He served as U.S. Ambassador there during President Reagan’s administration.

Before that, he was Assistant Secretary of State for East Asian and Pacific Affairs and was instrumental in the diplomacy that led to the departure of Philippine President Ferdinand Marcos in 1986. If approved by the World Bank’s board of directors, Wolfowitz will replace investment banker James Wolfensohn, who has led the institution for the past ten years.

The bank was created at the Breton Woods Conference in New Hampshire in 1945. It’s always been headed by Americans, among them former Defense Secretary Robert McNamara, who went there in 1968 from the Department of Defense. The World Bank’s original purpose was to finance reconstruction of nations devastated by World War II.

Today it focuses on developing countries. The bank gives long-term loans for education, agriculture and industry at low rates. In return, developing countries are supposed to take measures to improve their economies, limit corruption, and foster democracy.

RAY SUAREZ: Is Paul Wolfowitz the right choice to head the World Bank? We get two views. Dennis Ross worked with Wolfowitz since the late 1970s in the State and Defense Departments. He’s now with the Washington Institute for Near East Policy. And John Cavanagh is director of the Institute for Policy Studies. He has been an economist for several international institutions.

Dennis Ross let’s start with you. Did the president make a good appointment?

DENNIS ROSS: Well, I think he’s appointed someone who is highly capable, very intelligent, very thoughtful, very committed, very energetic, and I think he will bring a passion and a sense of commitment to this. He has developmental experience having been in Indonesia, as your report suggests. And I suspect that in fact he will bring to the World Bank a kind of new intellectual energy and a new effort.

RAY SUAREZ: John Cavanagh?

JOHN CAVANAGH: It’s a terrible choice; on a scale of one to ten I would give it a minus ten. If the Bush administration had wanted to poke in the eye every country on earth with this nomination, they would have picked Paul Wolfowitz. He is almost universally despised around the world, both in capitals and among ordinary people, as the architect of Bush’s war in Iraq, a war which most people see as illegal, immoral and ineffective.

So he’s hated for that. He’s in some ways better known around the world than he is in the United States. And on top of that, he knows next to nothing about the mission of the organization he will head, the World Bank. It is an organization which now is supposed to be focused on reducing poverty. Paul Wolfowitz’s only credential in this respect is, as mentioned, former ambassador to Indonesia, where he brags his greatest achievement was protecting the property rights of large U.S. corporations. That may have been good for Disney and Nike; it certainly wasn’t so good for the poor people of Indonesia.

RAY SUAREZ: Amb. Ross, you talked about his skills and temperament making him suitable for the job. Politically, as John Cavanagh suggests, might the picture be a little bit more problematic than that?

DENNIS ROSS: You know, I think what you just heard was a caricature of Paul Wolfowitz. Has he in many respects been a lightning rod for some? You bet. But the reality is he’s also close to an administration that can play a much more active and supportive role of the World Bank and is likely to do so now.

And the notion that somehow he is hated around the world, I think, is probably an exaggeration. We are seeing change right now in large parts of the Middle East, and I think a lot of the people who are in the forefront going on the streets in Lebanon right now are not out there somehow saying, “Gee, Paul Wolfowitz is a problem.” I don’t think that’s the case at all.

He’ll be judged by what he does in the World Bank. He will have to bring the kind of energy that I’ve known him to have to the task. There’s a lot of different things he’s going to have to do. He’ll help with tsunami relief; he’s going to have to help in an area that I know a great deal about, which is what’s going on with the Palestinian Authority.

There are things that you do in the World Bank that have a political character to them; he will be judged by what he does there. People will look to see how he performs and they’re not going to say, “Gee, because he played a certain role in Iraq we should basically make the judgment; we shouldn’t do anything and we should make the judgment that prejudged this.”

RAY SUAREZ: John Cavanagh, you note that Secretary Wolfowitz has little background in development economics. But as the president noted in his news conference today, this is also a managerial job, and he’s run a large public sector institution, rather than a corporation.

Don’t the skill sets match? Doesn’t running the Pentagon day-to-day help you understand how to get your arms around some place like the World Bank?

JOHN CAVANAGH: Well, many people who know Paul Wolfowitz say that one of his biggest problems is the echo chamber problem, which is that he has surrounded himself, as the Iraq policy makes clear, with people who say what he wants to hear. He does not have good marks in terms of being an independent manager in that sense.

And I think the fact that he knows so little about the subject means he’s going to have a major morale problem with the staff, the 10,000 people at the World Bank, if he is appointed. And on top of that, he has a bad reputation in another area that is related to the bank’s mission. Wolfowitz’s name, his hands are all over the so-called reconstruction of Iraq, which again most people in the world view as a failed effort, one that is filled with corruption, of giving contracts to companies like Halliburton who then overcharge taxpayers and don’t deliver the services.

At the World Bank he will also be overseeing large loans that go to big U.S. corporations, and again his reputation is not good on this set of issues.

RAY SUAREZ: Dennis Ross, what about that?

DENNIS ROSS: Well, you know, I want to pick up on some of what was said. I heard the point that he operates as an echo chamber. I worked for him twice; I have not been a part of this administration. I can tell you from my experience in working with him he surrounded himself at that time with people who represented a spectrum of views, and he listened to them.

Now when he goes into the World Bank precisely because he’s coming from a different discipline, he will go in and he’s going to have to listen. He will have a role in the World Bank that is very different in some respects. Managerial, the managerial responsibilities may be similar, but one thing that’s very different is he’s going to have to focus on how he gets along with the donors.

The World Bank isn’t an independent entity; he’s going to have to work with a lot of different types of groups, a lot of different constituencies, the staff that he inherits obviously comes with an accumulated set of experiences. He’s going to go in there and he’s going to listen and he’s going to have to focus on what does he have to do to make his mark, what does he have to do to have the bank succeed in a world where the challenge of poverty, the challenge of health, the challenge of bad water, all these things that that have to require a systematic effort are going to require someone who comes in there and can show he can make a difference. I suspect that Paul will listen and then find ways to make it work.

RAY SUAREZ: Is having the Iraq reconstruction as one of your more recent resume credits problematic for someone who has to get the vote of a board now for this new job?

DENNIS ROSS: I don’t know if it’s going to be problematic or not. I think it’s fair to say that the reconstruction effort has not gone the way it should have gone. But is he the one who holds the responsibility for it, I don’t know. I think what’s going to matter for the board is what does he bring to the bank, and one of the things he does bring to the bank is a relationship with the administration that is important to the bank to have.

Having an administration that’s prepared an American administration that is prepared to support the bank is critical for how the bank functions.

RAY SUAREZ: Well, how about that point, John Cavanagh, that having someone who is close to where the administration’s heart is only helps when you’re an institution like the Word Bank?

JOHN CAVANAGH: I disagree completely. The World Bank is a global institution; it’s not a U.S. institution. And this is one of the problems, there is this horrendous policy, which Paul Wolfowitz should oppose in his great pronouncements about democracy, which is that the U.S. simply appoints the head of this global agency, and it is supposed to be an American by tradition.

What about the other 96 percent of the world? I think he starts with a democracy deficit in that respect. He will be brought in under a process which is increasingly questioned around the world as undemocratic. In terms of his ties to the Bush administration, I think the key point is the Bush administration has not embraced the mandate of the World Bank, which is to reduce poverty.

It has embraced another mandate, which is to give large loans for energy, for agribusiness, that largely repay and benefit large corporations. Yes, he will be helped in that by having the backing of the Bush administration. Whether that’s good for the people of the world is another thing.

RAY SUAREZ: But your mention about the other 96 percent of the people in the world, the World Bank, though, is also a weighted place and the United States is the largest single shareholder and funder in the World Bank, isn’t it?

JOHN CAVANAGH: It certainly is, it has the largest vote. It’s around 17 percent; however, this is a global institution. And should not the question before the world’s public today be: Who is the best qualified person in the world to head the global agency that’s supposed to deal with poverty?

There are thousands of people from developing countries, from Europe, with great experience in those issues. They were all bypassed. There was no election. Where is the democracy in this? He is a terrible choice in terms of a big institution, which is supposed to play a role in reducing poverty, at a point when poverty around the world is worse than it’s ever been.

RAY SUAREZ: How do you respond to that, Amb. Ross?

DENNIS ROSS: Well, I think first of all the description of the mission is right. It does have to be poverty reduction; it does have to deal with health; it does have to find a way to uplift most of the world. Otherwise we’re going to face a basic problem. So I think that as a mission is exactly right.

The question is: Can Paul Wolfowitz deal with it? And I think he will. I think in fact he understands that’s the nature of the mission; look at what he himself said publicly today, that’s precisely the issue he focused on. So I think in fact he is someone who will go there, understand what the mission is, and probably also understands that he comes in at a time when many people will question whether he is the right person to be there or not and he will, I think, endeavor to prove that he is.

RAY SUAREZ: Well, given that he has to pass not a vote among United States senators or even all of Americans, might he have some of the political problems that John Cavanagh suggests, having to face an international body in order to win this job?

DENNIS ROSS: It is an interesting question, and it could be something that crops up now, especially because I think the way much of the rest of the world still looks at the administration is such that you could in fact have some people decide this is the time to challenge the American prerogative in terms of appointments. In the end that could happen, in the end I suspect he’ll still be appointed.

RAY SUAREZ: And John Cavanagh the United States helped nix a European appointment to the International Monetary Fund. Does that change the calculus?

JOHN CAVANAGH: Exactly, yes. There is a precedent for other countries standing up to the United States, or standing up for the choice of the head of one of these agencies. It did occur last year, the sister institution of the World Bank is traditionally — the head is chosen by Europeans.

The U.S. objected and they had to then work, Europe had to work with the U.S. to come up with a different candidate. It will be fascinating — it’s a moment of truth for the World Bank over the next five weeks, whether the countries of Europe and of Latin America, where there will be many citizen protests against this appointment, whether they stand up and do the same to the United States — not only question Paul Wolfowitz, but question a process which is the antithesis of democracy.

And I think if the Bush administration is true to its word on democracy, it will wake up tomorrow morning, pull Paul Wolfowitz’s name out of the running and say let’s have an election, let’s have an open process to get the right person to head this institution.

RAY SUAREZ: John Cavanagh, Dennis Ross, gentlemen, thank you both.

JOHN CAVANAGH: Thank you.

DENNIS ROSS: You’re welcome.