RIP Wolfie — and European Deniability at the World Bank

I confess. I danced a little jig when the news broke last night that Paul Wolfowitz had been forced out as President of the World Bank. Blessed Art Thou, Lord Our God, King of the Universe, Who Has Given Paul Wolfowitz Your Holy Boot as President of the World Bank.

Not because I believed the myth that the World Bank was a “pro-poor” institution before Paul Wolfowitz came along and spoiled the party.

In this version of Little Red Riding Hood, the new Wolfie replaced the old Wolfie. To believe that Wolfowitz’ presidency threatened the credibility of the World Bank, you have to believe that the World Bank had some credibility that could be threatened.

No, I celebrated for two reasons. Of course, it was never all about the girlfriend’s pay raise. It was also about Iraq – not just Wolfowitz’ role before coming to the bank, but his attempt to use the Bank as a blunt instrument of Bush’s imperial foreign policy, even more so than had previously been the case. And since our prospects of seeing Paul Wolfowitz on trial at the Hague for war crimes in Iraq are remote – not that I’m ruling this out – his ouster provides a measure of what Palestinians, in their advocacy for statehood, call “rough justice” – that is, approximate justice. Not a full accounting, but at least a partial accounting. Our own “de-Baathification program” – the purging of the neo-cons from power in Washington – Libby, Rumsfeld, Bolton, and now Wolfowitz – stumbles fitfully forward.

But I hope the lasting legacy of Wolfowitz’ ouster as World Bank president will include the end of European deniability at the Bank. For far too long European governments have supported policies at the Bank that their domestic constituencies wouldn’t tolerate for one second if a foreign bureaucracy imposed them at home. Would social democrats in Denmark tolerate that the World Bank impose on them “education reforms” like the school fees that have blocked access to primary education in Africa? Would Labor Party activists in Britain tolerate that the World Bank impose on them “health sector reforms” like clinic fees blocking access to prenatal care? Would European social democrats have tolerated that the World Bank impose on them the corrupt privatization of the water utility in Bolivia, the corrupt privatization of public pensions in Chile and Argentina, the destruction of Mozambique’s cashew nut processing industry, the “labor sector reforms” that undermined the right to organize?

If one lobbied the European executive directors at the World Bank, and questioned them on why they supported the World Bank’s policies of reckless and dogmatic fire-sale privatization, the first line of defense was the mindless recitation of economic dogmas and jargon that they didn’t understand. The second line of defense was that the governments in question were hopelessly inefficient and corrupt and therefore privatization was the only hope for providing public services (neglecting the critical question of how hopelessly corrupt and inefficient governments are supposed to regulate privatized services.)

But the last refuge was a shrug of the shoulders: “What can we do? Go talk to U.S. Treasury.”

The ouster of Wolfowitz proves that the Europeans have more power at the World Bank than they have been letting on. The World Bank board “operates by consensus,” we are told, as if it’s a Quaker meeting. In fact the operation is designed to obscure accountability – if no-one has to vote, no-one is on the record for their position, and they can’t be held responsible for it. The Europeans pushed for a “consensus” resolution of the Wolfowitz issue – they forced him to resign, rather than have the board vote on his ouster – but the way they compelled this result was to demonstrate that they had the votes for his ouster, if push came to shove – and to threaten to withhold future contributions from the World Bank.

Of course the general issue is one of priorities. When they go into meetings, the European officials, like the American ones, have two file folders. In one folder, they have all the corporate demands – greater enforcement of patents and copyrights, privatization, greater access for multinationals that fly the flag of the home country when it suits them to do so. This file is stamped: “Priority – don’t leave meeting without resolution.” In the other folder, they have all the civil society demands – human rights, environmental protection, trade union rights, and human needs. This file is stamped: “Also try to mention this so you can claim that you raised the issue.” These officials don’t want to waste leverage on the second file that they could be using on the first file.

I hope that in the future, every time an environmental group, labor union, or human rights organization lobbying European officials about World Bank policies gets the poor-mouth story about the power of US Treasury at the World Bank, the civil society representative calmly replies:

“You took down Wolfie; you can take down this.”


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