Stiglitz's views matter, says the London daily, because he previously served as the World Bank's chief economist under the current president, James Wolfensohn, and helped steer the organization away from "the discredited diet of fiscal austerity and rapid market liberalisation it had force-fed developing countries for years."
Stiglitz fears a reversal if Wolfowitz takes the helm.
Deputy Defense Secretary Paul Wolfowitz's nomination brought sharp criticism from some commentators in countries where the bank does most of its work.
(Yuri Gripas - Reuters)
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"In recent years, more moderate policies and an anti-poverty focus have won the bank much more respect across the developing world," he says. "That progress would be badly undermined by an extreme turn to the right."
One of Wolfowitz's few supporters says his pledge not to impose a U.S. agenda on the bank need not be taken too seriously.
Amity Shlaes, columnist for the Financial Times (subscription) of London, says the virtue of Wolfowitz's nomination is precisely that he will advance an American agenda of "muscular diplomacy." Shlaes laments that Wolfensohn has made himself popular at the bank by stressing poverty reduction and enlisting the help of nongovernmental organizations. The bank, she writes, "has become obsessed with the environment. And it has battled too little for the entrepreneur and too much against poverty."
Shlaes predicts that Wolfowitz will try to shift the bank's emphasis from poverty reduction to "nation-building and economic growth. His World Bank projects will reflect his experience in Indonesia where, as ambassador, he promoted stability and growth by promoting openness (read: democracy)."
One test of Wolfowitz's tenure at the World Bank will be Iran, which President Bush has described as part of a global "axis of evil." The bank says that it has $432 million worth of projects in the country, including a major upgrade of Tehran's water sanitation system.
The test is this: Does Paul Wolfowitz understand that part of his new job is cleaning the sewers for poor people in countries with unpopular governments?