Paul D. Wolfowitz, president of the World Bank, voiced concern yesterday about a plan unveiled amid much fanfare this summer to cancel the debts of the world's poorest nations, saying it could weaken the bank's finances.
Wolfowitz's comments underscored the depth of the controversy bedeviling the debt-relief plan, which faces a crucial test at this weekend's meetings of the World Bank and International Monetary Fund. The worries he raised also put him somewhat at odds with the Bush administration, which tapped him six months ago to leave his former post as deputy secretary at the Department of Defense to lead the World Bank.
At issue is a plan endorsed by President Bush and his counterparts from the Group of Eight major industrial nations at their summit in Scotland in July, following a high-profile campaign by rock stars and other celebrities demanding forgiveness of the debts that poor countries owe big international lenders, mainly the World Bank and the IMF.
The plan would cancel about $40 billion in debts owed to the IMF and World Bank by 18 impoverished countries, mostly in Africa, and possibly cancel the debts of 20 other countries as well. It has drawn criticism from countries that weren't part of the deal, whose officials are insisting that their objections must be addressed before the plan can be approved at this weekend's meetings.
Although Wolfowitz emphasized that he supports debt cancellation, he expressed sympathy for the complaints advanced by the Netherlands, Belgium and other nations. They say the plan must include strong commitments to ensure the bank's financial viability even after it loses the repayments on the loans being canceled. Their fear is that the commitments made at the G-8 summit to provide future contributions to the bank may be too flimsy and that the bank's ability to provide aid may thus be at risk.
"I share those concerns strongly, and I am glad they are raising them," Wolfowitz said at a news conference. "I think the way to address it is to get the strongest possible commitments from all the countries, including the G-8 but also other contributors."
Bush administration officials have expressed irritation over such objections, so Wolfowitz's remark was a noteworthy sign of his willingness to take an independent line from his former colleagues.
Wolfowitz tempered his comments, saying: "I think everyone agrees on the desirability of canceling these debts. . . . We are committed to getting it done, and we expect real progress at these meetings."
He also suggested that one way to bridge the dispute was passage of a pending Senate bill on debt relief, endorsed by the administration, that would pledge U.S. funding for the International Development Association, the World Bank agency that lends to very poor countries.
That bill "seems a promising vehicle for the United States," Wolfowitz said. "Each country is going to have to do it in its own way."
Wolfowitz, considered one of the chief architects of the ongoing U.S. war in Iraq, is presiding over the first annual meetings since his appointment to the World Bank. As in the past, he sought yesterday to defuse fears that his selection would turn the bank into an arm of U.S. foreign policy.
Reiterating praise for his predecessor, James D. Wolfensohn, he said: "I think this institution is much stronger now than it was when he took over 10 years ago, and I hope to strengthen it further and not to turn it on its head."