Monbiot Welcomes Wolfowitz To The World Bank

George Monbiot says the problem with the World Bank is not the management, but the board, which is dominated by the US, the UK and the other rich nations.

The World Bank and the IMF were conceived by the US economist Harry Dexter White. Appointed by the US Treasury to lead the negotiations on post-war economic reconstruction, White spent most of 1943 banging the heads of the other allied nations together. They were appalled by his proposals. He insisted that his institutions would place the burden of stabilising the world economy on the countries suffering from debt and trade deficits rather than on the creditors. He insisted that "the more money you put in, the more votes you have". He decided, before the meeting at Bretton Woods in 1944, that "the US should have enough votes to block any decision".

Both the undemocratic voting arrangement and the US veto remain to this day. The result is that the body which works mostly in poor countries is entirely controlled by rich ones. White demanded that national debts be redeemable for gold, that gold be convertible into dollars, and that all exchange rates be fixed against the dollar. The result was to lay the ground for what was to become the dollar's global hegemony. White also decided that both the Fund and the Bank would be sited in Washington.

Given his dislike of the World Bank itself, Monbiot is unperturbed by the appointment of Paul Wolfowitz as its new head:

Wolfowitz's appointment is a good thing for three reasons. It highlights the profoundly unfair and undemocratic nature of decision-making at the Bank. His presidency will stand as a constant reminder that this institution, which calls on the nations it bullies to exercise "good governance and democratisation" is run like a mediaevel monarchy.

It also demolishes the hopeless reformism of men like George Soros and Joseph Stiglitz who, blithely ignoring the fact that the US can veto any attempt to challenge its veto, keep waving their wands in the expectation that a body designed to project US power can magically be transformed into a body which works for the poor.(16) Had Stiglitz's attempt to tinker with the World Bank's presidency succeeded, it would simply have lent credibility to an illegitimate institution, thus enhancing its powers. With Wolfowitz in charge, its credibility plummets.

Best of all is the outside chance that the neocons might just be stupid enough to use the new wolf to blow the Bank down. The former British minister Clare Short laments that "it's as though they are trying to wreck our international systems." Well, what a tragedy that would be. I would sob all the way to the party.

Monbiot says Wolfowitz's appointment to the World Bank illustrates a potentially fatal flaw in US neocon thinking:

They want to drag down the old, multilateral order and replace it with a new, American one. What they consistently fail to understand is that the "multilateral" system is in fact a projection of US unilateralism, cleverly packaged to grant the other nations just enough slack to prevent them from fighting it. Like their opponents, the neocons have failed to understand how well Roosevelt and Truman stitched up the international order in America's interests. They are seeking to replace a hegemonic system which is enduring and effective with one which is untested and (because the other nations must fight it) unstable. Anyone who believes in global justice should wish them luck.