Wolfowitz Is Not a Mistake But a Chance
by Adam S. Posen, Peterson Institute for International Economics
Op-ed in the Financial Times
March 18, 2005
© Financial Times
Many observers are treating George W. Bush's nomination of Paul Wolfowitz, the US deputy secretary of defense, as World Bank president as a strange departure for both men. Instead, this should be seen for what it is: pursuit of neoconservative foreign policy goals by additional means. The aim is still to make the world safer for the United States by confronting and transforming troublesome states on their home turf. Unlike the military misadventure in Iraq, however, such an effort through the bank stands a chance of working—and could do the developing world some good.
There is a consistent world-view underlying Mr Wolfowitz's prior efforts—that domestic change abroad can be attained through aggressive intervention and strong proclamation of American desires. As already displayed in Washington's recent shift in aid criteria, the Bush administration's approach to development means that US-set conditions will determine whether to reward or target any given country's regimes, and will be actively applied. In terms of poverty alleviation, however, concern among foreign policy realists—that such unilateral behavior will simply create more enemies, instability, or big-power rivalries—though valid in the military sphere, does not apply here.
As with US national security policy, a primary focus will be the Middle East. Economic integration of the region will be a major initiative of any longer-term western policy. The purchase of peaceable behavior from the Palestinians, although on the shopping list, is a minor aspect. America's main interests include: doling out economic rewards to regional states that make peace (the US-Jordan free-trade agreement, for example); the deeper integration of Israel with its neighbors; the gainful employment of restive young Islamic men; and, ultimately, the stabilization of prowestern regimes through expansion of the middle classes.
The World Bank is perhaps the only institution from which Mr Wolfowitz could pursue these foreign policy goals. It can provide experts to advise, financing for infrastructure, and technical assistance to create cadres of trained locals with stakes in maintaining the system (easier than training police in Iraq, if similar in the spirit of using local proxies). The bank has staff on the ground in the region and the "intelligence" network (in collaboration with the International Monetary Fund) to monitor developments. It can also only be seen as positive for the Bush administration to recognize that economic development has to be integrated into overall US foreign policy.
Yes, making Middle East economic integration a priority would mean overtly using the bank for US foreign policy goals, not for its own mission. And yes, that would reverse the recent trend to give more of a voice to developing countries in the bank's decision making and within the target economies to give civil society more input into the design of programs. No one should have illusions on those grounds. Unlike the appointment of John Bolton as US ambassador to the United Nations, however, the point of placing Mr Wolfowitz at the bank is to make use of the institution in question, not to make the institution useless.
Realistically, going along with such an appointment and its likely initial Middle Eastern emphasis is perhaps the one way at present to get the US government fully committed to alleviating global poverty—and make the US public supportive of the requisite expenditures. Concerted appeals by leaders from Europe and prowestern emerging markets could encourage a radical increase in the bank's provision of global public goods, if properly couched. And, unlike in Iraq, most bank shareholders can agree with the United States on the relevant principles.
Bank support for healthcare and the education of women could and should be cast as a way to cut extremist groups such as Hamas out of the social service business and thus diminish their support. Provision of vaccines, mosquito nets, and the like on a regional or universal basis is not only a way to improve health, but a means of side-stepping unsavory and inefficient regimes, to the benefit of the bank's image. The Bush administration, to its credit, has already supported swapping loans for grants to the poorest countries and increasing spending on AIDS programs in Africa.
Cheap comparisons to Robert McNamara's move from a US defense role to the bank aside, the Wolfowitz nomination has the potential to take us back to the early 1960s in two positive ways: first, the United States would perhaps be substituting economic largesse for military action in at least some of its security pursuits; and second, the US would view economic development as a foreign policy problem and priority. Anyone for a "war on poverty"?