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Board Approves Wolfowitz as World Bank Leader

By Paul Blustein
Washington Post Staff Writer
Friday, April 1, 2005; Page E01

The board of the World Bank unanimously approved Paul D. Wolfowitz yesterday as the bank's next president, a move that for the first time will put a Bush administration appointee at the helm of the giant anti-poverty institution.

The approval came two weeks after President Bush nominated Wolfowitz, the deputy defense secretary who played a central role in advocating and designing the invasion of Iraq. The move initially aroused shock abroad, especially in European countries opposed to the Iraq war.

Morrigan Phillips of Mobilization for Global Justice reviews her notes as costumed protesters object to a one-horse race for World Bank leadership. (Haraz Ghanbari -- AP)

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Speculation arose that some member nations of the bank would try to block the nomination on the grounds that Wolfowitz would make the institution an instrument of U.S. foreign policy. But talk of opposition subsided as foreign officials grudgingly accepted Wolfowitz's assurances that he would respect the bank's multilateral nature and was not coming armed with an agenda for turning the organization upside down.

In a statement after the board's action, Wolfowitz, 61, continued to stress his readiness to listen to a wide range of views. "Fortunately, I already know I will have a great deal of help from the many people who are deeply committed to the mission of the World Bank," he said. He noted that he had met with all 24 board members, flown to Europe to meet with top economic policymakers and spoken with "dozens" of other officials.

He also extended an olive branch to people who have been among the most uneasy about his appointment, including activist organizations that often tangle with the bank over its policies in the developing world. "I look forward now to deepening my understanding of the challenges facing the bank through exchanging views with two key groups: the civil society organizations whose advice and views have become increasingly important in bank deliberations; and the extraordinarily professional staff of the bank, who constitute the richest body of expertise in the world on the problems of economic development and poverty reduction," he said.

The installation of Wolfowitz as president -- his term is for five years, and begins June 1 -- will put the Bush administration's stamp on the World Bank's management much more firmly than before. The bank lends about $20 billion a year to developing countries for projects such as roads, ports, education and health systems, and in the process it exercises great influence over those countries' policies because of the conditions it sets for providing aid.

The United States traditionally gets to choose the bank's president. The current holder of the job, James D. Wolfensohn, was named by President Bill Clinton, first in 1995 and again in 2000. Wolfensohn, a charismatic crusader against global poverty, has clashed often with the Bush administration, which has tended to view his style of management as erratic and often wasteful of bank resources.

Wolfowitz has only hinted about how he would run the bank differently. In interviews and statements, he has emphasized the insights into development that he gained as ambassador to Indonesia in the late 1980s and as dean of Johns Hopkins University's School of Advanced International Studies in the 1990s. He has also expressed admiration for much of what Wolfensohn accomplished, particularly the bank's focus on reducing corruption and its movement of many staff members from the Washington headquarters to the developing countries that borrow its money.

In his statement, Wolfowitz said that Wolfensohn's "commitment to the bank's mission will be a hard act to follow and I will be counting on his continued advice and support." Wolfensohn responded in kind, predicting that Wolfowitz "will be an extremely dedicated and strong leader of the bank."

Still, many bank insiders and analysts expect Wolfowitz to shift the bank's direction in important ways, reflecting the complaints that administration officials have expressed about its shortcomings.

The administration has generally prodded the bank to be more hard-nosed toward countries that don't appear to be using its aid effectively. It has pressed for tighter monitoring procedures that are focused on results, to ensure that money lent for, say, immunization programs leads to more children receiving vaccines. At the same time, the administration wants more bank aid for very poor countries provided in the form of grants rather than loans. Administration officials contend that the bank too often ends up lending to impoverished nations just so they can pay back previous loans.

Because of the administration's recent emphasis on spreading democracy, especially in the Middle East, much speculation has arisen that Wolfowitz will use the bank's clout to prod governments to implement democratic reforms. He has sought to quash talk of a dramatic change in policy by stressing that he believes the bank should focus on economic development and alleviating poverty. But development experts who know him well expect him to place particular importance on encouraging the development of solid political institutions and the rule of law.

Many environmental and other activist groups, unassuaged by Wolfowitz's recent pronouncements, responded to yesterday's action with fresh attacks on his record. "Now the developing world has to live with Paul Wolfowitz, a man with no relevant experience but for his oversight of the reconstruction of Iraq -- a project beset by corruption, cronyism and incompetence," said Robert Weissman, director of Essential Action, an organization critical of the bank and the International Monetary Fund. Peter Bosshard, policy director of the International Rivers Network, accused Wolfowitz of having "shown disdain for international law and human rights."

Many of these activists have been scornful of the role played by European officials, who began engaging in horse-trading for other jobs after their initial surprise over the Wolfowitz nomination wore off.

Under the informal agreement that allows the United States to pick the president of the World Bank, the Europeans get to choose the managing director of the International Monetary Fund, and an American traditionally holds the No. 2 job at the IMF. That system reflects the dominant role the rich nations have as the largest contributors and shareholders of the two institutions, but it has long drawn criticism as unfair and undemocratic.

In recent days, some European officials have sought to extend the agreement further, by pressing for pledges that Wolfowitz would name a European as one of his top deputy. He has responded noncommittally, saying that he has "no problem" with the argument that top management should "reflect the diversity" of the bank's 184-member nations, including the Europeans.

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