I'm with Wolfowitz

Liberal handwringing over the World Bank simply reflects a failure to recognise the role it exists to fulfil

George Monbiot
Tuesday April 5, 2005
The Guardian

It's about as close to consensus as the left is ever likely to come. Everyone this side of Atilla the Hun and the Wall Street Journal agrees that Paul Wolfowitz's appointment as president of the World Bank is a catastrophe. Except me.

Under Wolfowitz, my fellow progressives lament, the World Bank will work for America. If only someone else were chosen, it would work for the world's poor. Joseph Stiglitz, the bank's renegade former chief economist, champions Ernesto Zedillo, a former president of Mexico. A Guardian leading article suggested Colin Powell or, had he been allowed to stand, Bono. But what all this hand-wringing reveals is a profound misconception about the role and purpose of the body Wolfowitz will run.

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The World Bank and the IMF were conceived by the US economist Harry Dexter White. Appointed by the US Treasury to lead the negotiations on postwar economic reconstruction, White spent most of 1943 banging the heads of the other allied nations together. They were appalled by his proposals. He insisted that his institutions would place the burden of stabilising the world economy on the countries suffering from debt and trade deficits rather than on the creditors. He insisted that "the more money you put in, the more votes you have". He decided, before the meeting at Bretton Woods in 1944, that "the US should have enough votes to block any decision".

Both the undemocratic voting arrangement and the US veto remain to this day. The result is that a body that works mostly in poor countries is controlled by rich ones. White demanded that national debts be redeemable for gold, that gold be convertible into dollars, and that exchange rates be fixed against the dollar. The result was to lay the ground for what was to become the dollar's global hegemony. White also decided that the IMF and the bank would be sited in Washington.