USA/Africa Dialogue, No 500: Wolfowitz Picked for World Bank

Europeans Resist Wolfowitz for World Bank

By Paul Blustein and Richard Leiby

Battle lines hardened yesterday over President Bush's nomination of Paul D.
Wolfowitz to become president of the World Bank, as U.S. officials pressed for
swift approval by the bank's board and some European officials vowed to resist.

The deputy defense secretary's nomination, already hugely controversial because
of his role as a key architect of the Iraq war, drew fresh denunciations in
European capitals, where critics fumed that Washington had failed to consult
other member countries of the bank before springing its choice on them. By
tradition, the United States gets to pick the bank's president, but the decision
must be approved by the board, which has always operated by consensus.

Although many bank insiders and observers predict that the odds strongly favor
Wolfowitz eventually getting the job, the furor yesterday indicated that at the
very least a fight will rage for several weeks before the board approves him.

Adding fuel to the controversy is concern within the bank staff over
Wolfowitz's reported romantic relationship with Shaha Riza, an Arab feminist who
works as a communications adviser in the bank's Middle East and North Africa
department.

Both divorced, Wolfowitz and Riza have steadfastly declined to talk publicly
about their relationship, but they have been regularly spotted at private
functions and one source said the two have been dating for about two years.
Riza, an Oxford-educated British citizen who was born in Tunisia and grew up in
Saudi Arabia, shares Wolfowitz's passion for democratizing the Middle East,
according to people who know her.

Bank policy allows spouses and partners to work on the staff as long as
neither reports directly to the other, so the Wolfowitz-Riza relationship may
not run afoul of those rules. But some staffers, speaking anonymously for fear
of offending their prospective boss, said sentiment is running high that the
ethics requirements should be stricter in cases involving the chief executive.
Through a spokesman, Wolfowitz said in response to a query from The Post:
"Needless to say, if a personal relationship presents a potential conflict of
interest, I will comply with bank policies to resolve the issue."

On the more substantive question of Wolfowitz's qualifications, calls are
mounting in Europe for governments to challenge his candidacy. Among the
fiercest opponents is Clare Short, Britain's former secretary for international
development, who said on British television that the message of the Wolfowitz
nomination was "America is going to do what it likes or hard cheese." Luisa
Morgantini, head of the European Parliament's development committee, circulated
a statement saying, "We encourage European governments to ask the US to open up
the process to accept other candidates."

U.S. officials reiterated that the high-level conversations held by President

Bush and Treasury Secretary John W. Snow with their European counterparts had
been "encouraging." Moreover, Rob Nichols, the chief Treasury Department
spokesman, disputed complaints by European officials that they had not been
consulted. The department, led by Snow, reached agreement with policymakers in
other countries that the next World Bank president should have qualities such as
management experience, international diplomatic experience and commitment to
development, he said, adding: "Paul Wolfowitz meets and exceeds each and all of
these criteria."

U.S. officials said they hope Wolfowitz will be approved before the spring
meetings of the International Monetary Fund and World Bank on April 16-17,
allowing a transition of a couple of months before outgoing president James D.
Wolfensohn leaves on June 1. Past U.S. nominees to the bank have typically been
approved within a couple of weeks of their selection by Washington -- in
Wolfensohn's case, in three days.

But European officials made it clear they are in no mood to accede to that
schedule. "The Treasury Department is trying to give the impression that a deal
is done, but there is no deal done," said a source in one of the European
executive directors' offices at the bank who did not want to be identified
because the matter is highly sensitive. "No one has any question about
[Wolfowitz's] intellect, but the problem is, he's the face of a certain American
hegemony, in the opinion of many European directors, and that does not fit the
role of the bank."

A U.S. request to have Wolfowitz meet the board and answer questions on March
24 was rejected by other directors, this source said, because member countries
are still trying to decide what to do. Robert B. Holland III, the acting U.S.
director, denied he had made such a request but added, "It is not useful for me
to comment further than that."

The United States has a 16 percent vote on the board, and Europe collectively
has about 30 percent. A pitched battle on the consensus-minded board, however,
would be highly unusual. In the end, policymakers said, top leaders like French
President Jacques Chirac and German Chancellor Gerhard Schroeder will have to
decide whether they are prepared to reopen transatlantic rifts that have
recently started to heal.

"One would have to say, the more likely course is that Mr. Wolfowitz will be
confirmed," said Jeffrey D. Sachs, a Columbia University professor who considers
him a bad choice.

Wolfowitz Picked for World Bank

By Paul Blustein and Peter Baker

President Bush said yesterday that he has chosen Deputy Defense Secretary Paul
D. Wolfowitz, a key architect of the Iraq war, as the U.S. nominee to head the
World Bank.

The announcement was an aggressive move to put the administration's stamp on
the World Bank, the largest source of aid to developing countries, by installing
at the bank's helm a leading advocate of the U.S. campaign to spur democracy in
the Middle East. But it risked a new rift with countries critical of the U.S.
invasion of Iraq, especially since it came so soon after Bush's nomination of
John R. Bolton, another prominent hawk, as ambassador to the United Nations.

The nomination shocked many among the bank's 10,000-member staff and in many
capitals abroad, especially in Europe. When Wolfowitz's name surfaced a couple
of weeks ago as a possible nominee, many diplomats and bank insiders dismissed
his prospects as remote. Although the United States traditionally gets to choose
the World Bank chief, there was speculation that a Wolfowitz candidacy could be
torpedoed by the board of the bank, a 184-nation institution that has always
operated by consensus.

Bush said at a news conference that he chose Wolfowitz, 61, because he is
"committed to development" and is "a compassionate, decent man."

The president also said that as No. 2 at the Pentagon, Wolfowitz had
demonstrated skill for managing a large institution.

Other administration officials cited Wolfowitz's experience as ambassador to

Indonesia, assistant secretary of state for East Asian and Pacific affairs and
dean of the School of Advanced International Studies at Johns Hopkins University
as evidence of his expertise and involvement in development issues.

In a written statement, Wolfowitz sought to dampen fears about his candidacy by
stressing a desire to listen to a wide variety of views.

He also praised James D. Wolfensohn, the outgoing president, a Clinton
administration appointee who has run the bank since 1995 but frequently clashed
with the Bush team.

Wolfensohn "has deepened the Bank's commitment to poverty reduction,
emphasizing such key factors in development as education, health --
particularly HIV/AIDS, women, youth, and the environment," Wolfowitz said.

If approved by the bank's board, Wolfowitz would assume command of an
institution that lends about $20 billion a year to developing nations and often
plays an enormously influential role in shaping their policies because of the
conditions it sets for aid.

The World Bank in recent years has been a target of groups that consider it to
be an agent of Western corporate capitalism, especially the U.S. variety.
Sensitivities abroad are inflamed about the Bush administration's propensity to
throw its weight around the world.

Accordingly, the nomination was denounced by many of the groups that came to
regard the bank under Wolfensohn as more receptive to their concerns. "Wolfowitz
has shown nothing but disdain for collaboration with other countries," said
David Waskow, director of the international program at Friends of the Earth.
"How's he going to run the World Bank effectively, and to what end?"

Some others, even some who hold Wolfowitz in high esteem, worried that the
nomination would crystallize the impression that the bank is an instrument of
U.S. foreign policy.

The bank's loans were often used during the Cold War to support dictators
friendly to the United States, a reputation the bank has only recently begun to
live down.

The Wolfowitz nomination "has broken the myth that this is the World Bank --
it's the American Bank," said Moisés Naím, editor of Foreign Policy magazine and
a former representative of Venezuela on the World Bank board. Although he said
Wolfowitz is "a man of ideas" who has firsthand knowledge of Third World poverty
and can command support from the White House, Naím said Bush "has injected
America's image problem in an institution that already had a lot of its own
problems."

But Kenneth L. Adelman, a former Reagan administration official, described
Wolfowitz as "a perfect fit" who would bring a different philosophy to the World
Bank than his predecessors and would be more eager to bypass governments and
steer money to private organizations.

"I can't think of a World Bank president who would be as conservative as he
would be," Adelman said.

"Socialist governments are going to complain about him but socialist
governments don't have a track record of enormous success in helping developing
countries," Adelman said.

Some World Bank staff members speculated that Wolfowitz would use the bank's
financial clout to advance the goal of spreading democracy, especially in the
Middle East.

Wolfowitz, in a phone interview, rejected suggestions that he might change bank
policy by, for example, making loans contingent on democratic rule. "When the
bank sticks to its knitting and works on poverty reduction, that's just a huge
contribution to overall progress," he said. "You certainly don't want to say
that this institution, which plays such an important role in fighting the AIDS
epidemic in Africa, will have a different agenda" because of concerns about how
African countries are ruled.

"It's not a secret. I care a lot about the spread of freedom and democracy,"
Wolfowitz said. "But as I've said over and over again, I think there's a
political stream and an economic stream, and they flow together and reinforce
each other.

"If I'm president of the World Bank, I know which stream I'm focused on," he
said.

It wasn't clear yesterday whether Wolfowitz will be opposed by other bank

shareholders. No U.S. choice for bank president has ever been opposed, but in
2000 the Clinton administration effectively vetoed Europe's first choice to head
the International Monetary Fund, even though the IMF job is traditionally a
European preserve.

The 24 members of the World Bank's board represent member countries or groups
of countries, with voting power based mainly on their financial contributions to
the bank's capital, so that the United States has about 16 percent of the votes,
Japan 8 percent, Germany 4.5 percent, France 4.3 percent and so on. But
contested votes are almost unheard of because the board considers consensus to
be essential.

Carole L. Brookins, who resigned as the administration's representative on the
board a couple of months ago, said that because the bank operates by consensus,
"I can't imagine the U.S. putting up a candidate, especially someone of this
stature, without doing the homework to make sure he would be acceptable."

Administration officials said Treasury Secretary John W. Snow had contacted his
counterparts from a number of other nations in recent weeks, including France,
Germany and all the other members of the Group of Seven major industrial
countries, to discuss the bank presidency.

But until yesterday morning, his conversations concerned only the
qualifications a new president should have, not specific names, the officials
said. "The secretary was encouraged by his calls," a Treasury official said.
"We're optimistic about the dialogue that will occur within the World Bank
board."

European sources at the bank said yesterday that they were awaiting
instructions from their capitals about how to respond. A spokesman for French
President Jacques Chirac was noncommittal in describing Chirac's position after
a phone call from Bush.

"The president took note of this candidacy and will examine it in the spirit of
friendship between our two countries, bearing in mind the missions of the World
Bank," the spokesman said.

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