March 17, 2005
Occupied Iraq represents Paul Wolfowitz's main “development” experience—where he ensured billions of dollars of oil export revenues flowed into the Bush administration’s favored corporations. Jim Vallette of the Institute For Policy Studies reviews Wolfowitz's resumé and sees that all his paths have led to oil.
Jim Vallette is the research director for the Sustainable Energy & Economy Network at the Institute for Policy Studies. He is the co-author of numerous reports on the World Bank, including most recently Wrong Turn from Rio: The World’s Bank Road to Climate Catastrophe.
President George W. Bush has shocked the international development world by announcing that he wants Assistant Secretary of Defense Paul Wolfowitz to be the next president of the World Bank. Choosing Wolfowitz for this job makes perfect sense if the Bush administration intends to completely alienate the world community. It’s the worst presidential nomination since Ronald Reagan picked James Watt to head the Interior Department, and it betrays the government’s practice of putting business and geopolitical interests above all else.
The U.S. government has selected every World Bank president in the “development” institution’s 60-year history, and alone holds de facto veto power on its executive board. Through this dominant position, U.S. administrations have long used the Bank to pry open developing countries’ economies and resources—to satisfy the insatiable appetites of U.S. corporations. This primary objective of Washington’s policy at the Bank has been threatened in recent months and years by calls to democratize the institution, and to end its support for export-oriented oil projects.
At the past two World Bank annual meetings, ministers and lawmakers from Africa, Latin America, Asia and the Pacific pointedly demanded that the democratically elected representatives of borrowing nations be the final arbiters of all economic policies in their countries. They are challenging the very structure of the Bank—which would entail taking voting power from the wealthiest nations. Also, a Bank-commissioned study last year recommended that it phase out all financing of oil projects, because the exhaustive investigation found no examples where such projects alleviate poverty. The Bank itself has rejected its own commission’s recommendations.
The United States fears democracy and reform at the Bank. In a confidential June 2003 note to the World Bank board, then-Executive Director for the United States Carole Brookins wrote a terse rebuttal. “Giving population and other factors a weight in voting strength would create a radically different, less desirable and non-financial structure for the Bank,” she said.
Bush and Vice President Dick Cheney are now striking back with another demonstration of “shock and awe,” by nominating Paul Wolfowitz, a primary architect of the Iraq invasion and the botched reconstruction efforts thereafter. Wolfowitz must be approved by the World Bank’s executive board to get the job. For the sake of the world’s poor, let’s hope that the board rebuffs this nomination.
Over decades of political work, Wolfowitz and longtime buddies Donald Rumsfeld and Cheney have mastered the art of packaging raw geopolitical and corporate objectives into initiatives named otherwise. Strategic oil fields have preoccupied them in and out of office.
It is almost a natural progression for the Bush/Cheney administration to want someone this steeped in blood and oil in charge of the World Bank. He was a weapon of mass deception for corporate quests in Iraq. At the Bank, he can serve the same function under the cloak of poverty alleviation.
Wolfowitz long advocated for the Iraq invasion, partly on the basis that Saddam Hussein controlled a lot of the world’s oil. In 1998, he advocated the creation of a “liberated zone” in Southern Iraq, and the creation of a “provisional government to control the largest oil field in Iraq and make available to it, under some kind of appropriate international supervision, enormous financial resources for political, humanitarian and eventually military purposes,” in testimony before Congress. “Saddam’s supporters in the Security Council—in particular France and Russia—would suddenly see a different prospect before them. Instead of lucrative oil production contracts with the Saddam Hussein regime, they would now have to calculate the economic and commercial opportunities that would come from ingratiating themselves with the future government of Iraq. “
With the invasion of Iraq, Wolfowitz executed a similar agenda, using oil resources as a lever for economic, military and commercial opportunities. Occupied Iraq represents the main “development” experience of this would-be World Bank honcho.
Wolfowitz helped orchestrate the U.S. reconstruction agenda, first by trying to strong-arm non-coalition Europeans into canceling Iraq’s debt. “I hope they [Paris, Moscow and Berlin] will think about how they can contribute to helping the Iraq people get on their feet,” he told an April 2003 Senate hearing. “I hope, for example, they'll think about the very large debts that come from money that was lent to the dictator to buy weapons and to build palaces.” He has never vocalized opinions on debt cancellation accumulated by other odious regimes, as far as the public record reveals.
After the Europeans did not fall in line, Wolfowitz said the spoils of war—er, reconstruction contracts—should go only to those countries that supported the U.S. invasion. In a Dec. 3, 2003, memo, Wolfowitz limited the use of Iraq development funds to only those companies that are based in coalition countries. “Coalition partners share in the U.S. vision of a free and stable Iraq. The limitation of sources to prime contractors from those countries should encourage the continued cooperation of coalition members,” he wrote.
Over the ensuing months, billions of dollars of oil export revenues flowed through the Coalition Provisional Authority-controlled Development Fund for Iraq (DFI)—and into the Bush/Cheney administration’s favored corporations.
An investigation by the agency’s inspector general hardly reads like a recommendation for a would-be president of the world’s largest development institution. The January 2005 audit found: “The CPA provided less than adequate controls for approximately $8.8 billion in DFI funds, provided to Iraqi ministries through the national budget process. Specifically, the CPA did not establish or implement sufficient managerial, financial, and contractual controls to ensure funds were used in a transparent manner. Consequently, there was no assurance the funds were used for the purposes mandated by” the United Nations.
As with the Europeans, the Bush administration had a difficult time in getting the World Bank to walk in lock-step on Iraq. Outgoing World Bank President James Wolfensohn did not back Wolfowitz’s call for total debt cancellation, nor did he rush his employees into the country after the invasion. With many European powers locked out of reconstruction contracts, he had little chance of reaching a consensus on the Bank’s executive board.
The Bank’s reticence to finance projects in Iraq may have pushed Cheney and gang over the edge, ushering the embodiment of U.S. unilateralism into his anointed role. With Wolfowitz in charge, the World Bank may be able to complete what the Iraq invasion started two years ago: U.S. corporate control over the world’s second-largest oil reserves.