TOPICS : World Bank manipulation affects world’s poor?

Carol Graham:

There has been much debate in recent days about the Bush administration’s nomination of Paul Wolfowitz, the No. 2 man at the Pentagon, to head the World Bank. Outside the administration there are justified concerns that leadership of the world’s most important development bank would be coloured by ideological dogma and excessive focus on security issues. Within the administration, there is much logic to the appointment, ranging from strong confidence in the nominee to his commitment to democracy building to his experience as ambassador to Indonesia. This would be a president who can rely on the strong backing of an administration that has, until now, ignored international financial institutions.

A more pessimistic view is that the administration wants to steer the bank, best known for its support of economic development and poverty reduction, toward Bush’s democracy-building agenda. The problem is that it is an area where there are few proven prescriptions for reform and few success stories based on externally driven efforts to force democracy. There is one major danger that Wolfowitz must watch out for. That is, inserting a US political debate, sharply divided along ideological lines, into international development policy, where decades of progress have resulted in overcoming such divides.

There are two areas in particular where consensus has been established: population policy and the role of free markets. On population, the benefits of educating girls and of lower fertility rates for both maternal and child health are now well established: And the strong ideological divide in America over reproductive rights, and the translation of that divide into opposition to foreign assistance for countries that support abortion practices run counter to the established trajectory of success in this arena. On the role of free markets: Decades of experience with market reforms highlight their important role in poverty reduction. Yet we’re far from the heady days of the post-communist transitions when free-market euphoria reigned. Since then, even the most enthusiastic supporters of free-market policies have seen their enthusiasm tempered by crisis after crisis in international financial markets. At the same time, imposing market reforms on very different countries did little except to highlight that nations with better pre-existing institutions and resources and less poverty and social unrest to begin with fared better. In addition to the market, development economists rediscovered the public sector, governance, distribution of income and assets, among other factors. Debate has essentially come full circle, and both market enthusiasts and believers in the public sector recognise that they need one another to succeed.

There is agreement on the recipes for success such as market-friendly policies, clear property rights, sound public sector institutions, and safety nets for the poor and vulnerable. Injecting the often acrimonious ideological divide that characterises domestic American debates on population control and the regulation of markets into what is now a mature, non-ideological debate in the international-development arena would be a very costly step backward. And the world’s poor would be those who would pay most dearly. — The Christian Science Monitor