Wolfowitz at the World Bank: A Perfect Fit

21 March 2005 by Jude Wanniski

If you really don’t know what the “World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

” is all about, you would think that President Bush was joking in nominating Paul Wolfowitz to be the new president of the Bank, replacing Jim Wolfensohn. One of the chief architects of the Iraq war, Wolfowitz is a political theorist, a 61-year-old man who spent most of his adult life at blackboards and lecterns teaching students about international politics. He may know how to operate an Automatic Teller Machine when in need of ready cash, but he knows absolutely nothing about banking. Wolfensohn, who was a New York investment banker before President Clinton named him to the post a decade ago, at least knows something about banking. His partner in New York, to which I suppose he will return, is Paul Volcker, the former chairman of the Federal Reserve FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/
, our nation’s central bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx
. Wolfie the Warrior, by contrast, is the lifetime sidekick, even protÈgÈ, of Richard Perle, probably the most important intellectual in the service of the military-industrial complex. If you want to know how Professor Wolfowitz got the job, follow the money.

That’s what the World Bank is all about. It was created as an adjunct of the United Nations at the end of World War II, along with its brother institution, the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

. On paper, its function was to lend money to developing countries to help them grow. Its real job has been to serve the interests of the major money-center banks and the multinational corporations who make the big bucks in World Bank development projects. The Bank, which is really a “fund,” persuades a poor country like Ghana, for example, to build a new industrial complex in order make stuff for export. It will lend the money to Ghana — which it gets from global taxpayers including you and me — and arrange for the complex to be built by one of the favored corporations in the military-industrial complex. The list always includes Bechtel Corporation, Halliburton, and Kellogg Brown & Root, a division of Halliburton. These outfits go in and build the projects because the locals have no expertise.

In “Confessions of an Economic Hit Man” John Perkins explains in some detail the mechanics of this gigantic money machine. It not only promotes unnecessary industrial complexes in Ghana, which rust away in bankruptcy when they prove to be uneconomic. The aim of the military-industrial complex is not only “industrial,” but also military. The name most closely associated with Halliburton, of course, is Vice President Cheney, who was Defense Secretary in the first Gulf War, with Paul Wolfowitz even then at his side (urging all-out war with Iraq even after Saddam put up the white flag and retreated to Baghdad before the war began!!) Rats.

The name most associated with Bechtel is George P. Shultz, once its top dog, now a mere director. Shultz was Treasury Secretary under Richard Nixon (helping talk him into floating the U.S. dollar), Secretary of State under Ronald Reagan, and currently a member of the Defense Policy Board, which until last year Richard Perle chaired.

Shultz also introduced Governor George W. Bush to Condoleezza Rice, who in turn introduced Paul Wolfowitz to Governor Bush back in 1999. Shultz of course knew at the time that Wolfie and Perle and their neo-con Cabal were planning a war in Iraq, and we know nice, little “doable” wars (Wolfie’s word), are meat and potatoes for the military-industrial complex. Instead of squeezing nickels and dimes out of the taxpayers to persuade Ghana to build a steel mill it doesn’t need and can’t run, even little wars run into the billions. And everyone gets into the act. The arms makers who produce airplanes, tanks, guns, jeeps and humvees get to blow up a country (like Iraq) and Bechtel and Halliburton come in right behind to rebuild it. In announcing the Wolfowitz appointment today, President Bush said the World Bank is a big organization and Wolfowitz has experience running a big organization, the Pentagon!! As far as the military-industrial complex is concerned, Wolfowitz did a FANTASTIC job. He was only expected to plan for a $30 billion war and he screwed up so badly that it is now a $200 billion war, and counting. Anyone who can screw up that badly deserves a promotion, to the World Bank.

So you see it doesn’t really matter that Wolfowitz doesn’t know the first thing about banking or the economics of development projects. He will sit behind the biggest desk at the Bank and take the telephone calls from the Big Banks and the Multinationals, telling him what to do, and providing him with experts like John Perkins, who did the actual dirty work as an economic hit man, and now writes his confessions. When the White House needs a big favor for one of its big hitters, it need only put in a call to Wolfie, who will throw the right switch. That’s exactly the way it worked with Jim Wolfensohn these past ten years, and if you don’t believe me, look around and you will note how many poor countries got poorer during his reign, and how many big bucks were made at Bechtel and Halliburton.

There will of course be complaints from various global diplomats about the obvious incompetence of Wolfowitz, just as there were puzzled head-scratchings around the world about the incompetence of Condi Rice as Secretary of State or John Bolton as UN Ambassador. But money talks in all the places where the directors of the World Bank live, and they will be advised to clam up by the local military-industrial money machines. Perle will also have his pals at The Weekly Standard and Fox News speculate that when Condi is President, Wolfie will be her veep (which is how it happened we`ve seen talk of Condi for President in 2008). Nor can we expect any complaints from Congress, because in one way or another there is too much money at stake, too many reputations looking toward bigtime lobbying jobs when its time to give up a seat in Congress.

If this seems harsh, as if I’m writing about something new under the rocks on which our Uncle Sam perches, I suggest you read my 1978 book, “The Way the World Works,” which describes how the British Empire worked in exactly this fashion. My best example was the first multinational corporations, the British railroad builders. Once they ran out of places to build rail lines in the U.K., they persuaded Parliament to promote railroads in the colonies, and were enormously successful in talking the Raj into criss-crossing India with railroads in the mid-19th century. It was one thing in England, where the companies could only build where there was a clear sign the line would be profitable, because it was their own money at risk. In India, the locals borrowed the money from the Bank of England and hired the builders to put in rail lines that couldn’t possibly be profitable. India was burdened with debts from these schemes well into the 20th century.

Even after it gained independence in 1948, India was persuaded by British and American economists to keep tax rates high and to devalue the rupee, to keep them poor and unable to compete with the big guys. Who did the British and American economists work for? Why the World Bank, of course, and also the IMF, whose job is to go into the poor countries when they can’t pay back their loans, and lend them the money to do so — as long as they agree to raise taxes again, devalue their currency, and build new industrial complexes that are constructed by Bechtel and Halliburton.

So you see why it makes perfect sense to have Wolfowitz at the World Bank. He’s terrific at doing wars, and wars are much more profitable than nickel-and-dime industrial projects. That’s the way the world works. Always has been.

Jude Wanniski is a former associate editor of The Wall Street Journal, expert on supply-side economics and founder of Polyconomics, which helps to interpret the impact of political events on financial markets.

Source: Counterpunch (http://www.counterpunch.org).



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