Global Policy Forum

By Shalmali Guttal*

When the Bush Administration nominated its Deputy Defense Secretary Paul Wolfowitz for the presidency of the World Bank in March this year, many World Bank watchers reacted with shock. Outrage against Wolfowitz's nomination was certainly to be expected from the left and the global peace and justice movement. But this was beyond the pale for even liberal academics, the international press and much of the leadership of "old Europe" (with the exception of Tony Blair), who found it inexplicable that the US would take the bold step of nominating one of the chief architects of the US war on Iraq as the head of the world's largest development financier.

The disqualifying marks against Wolfowitz's ability to lead the World Bank were many and included his reputation as a belligerent Pentagon hawk, his central roles in planning and overseeing the Gulf War and the invasion of Afghanistan and Iraq, his disregard for internationalism, human rights and democracy, and his proclivity to reward loyalty to the US' invasion of Iraq with lucrative commercial opportunities. His support for the military dictatorships of Marcos in the Philippines, Chun Doo Hwan in South Korea and Suharto in Indonesia is no secret. Renowned economists such as Joseph Stiglitz, Jeffrey Winters and even Jeffrey Sachs joined Bank watchers in decrying Wolfowitz's lack of training and experience in economic and financial policy, development planning, financial markets, trade, and social issues such as health, HIV-AIDS, education, water and sanitation, all of which are upheld by the Bank as central to the global fight against extreme poverty.

Widely regarded as one of the core members of the US neo- conservative intelligentsia and one of the most hawkish members of the Bush administration, Wolfowitz served in key political positions under the Reagan, Bush Senior and Bush Junior Administrations. Many voiced the concern that under Wolfowitz's watch, the World Bank would become an explicit instrument of US foreign policy and that it was only a matter of time before Wolfowitz started to steer the Bank in the direction of US interests through Bank policies, staff deployment and financing.

Amid the blaze of attention on how unsuitable Wolfowitz was for the job, a few voices pointed to a more fundamental issue: the fact that developing countries, who borrow from the World Bank and who have to bear the brunt of Bank policies and conditionalities, have absolutely no say in who heads up the institution. As the World Bank's largest shareholder, the US traditionally chooses the World Bank President while it allows the Europeans to nominate the head of the International Monetary Fund (IMF). Dismaying as the choice of Wolfowi tz was, it came as no surprise to most Southern analysts that the Bush Administration would exert i ts muscle to ensure tha t the Bank more increasingly and compliantly carry out American dictates.

The international press drew parallels between Wolfowitz and Robert McNamara, another erstwhile Pen tagon hawk, who was forced by the Johnson Administration in 1968 to relinquish his post as US Secre tary of Defense and put in charge of the World Bank. McNamara's transfer was widely regarded as a diplomatic manoeuvre by a beleaguered US President to deflect national and world attention away from McNamara's role in pl anning and leading the US' disastrous and unpopular war on Vietnam.

So why was Wolfowitz--the man most associated in the Bush Administration with spinning a phony case against Saddam Hussein and his supposed weapons of mass destruction, manipulating US public opinio n, poor judgment about how the Iraqi people would react to the invasion and occupation of their country, political and mil itary failures in Afghanistan and Iraq, and diminishing US credibility overseas--handed such a plum international position ? Well, for starters, Wolfowitz's nomination as World Bank President was not a face saving bid by the Bush Administration. Rather, it was a calculated move to ensure that the US is able to continu ally secure its economi c and geopolitical interests even as it plays the game of multilateralism. For what the US wants t he World Bank to do, Paul Wolfowitz is an eminently suitable boy for the job

US INTERESTS

Located a few blocks from the White House, the World Bank and IMF have long been Washington's prese rves in terms of economic and financial policy, operations, governance and management. US professi onals (approved by the US Treasury of course) account for at least a quarter of senior management and higher-level profess ional staff. Regardless of claims of autonomy and independence, the Bank and Fund have consistentl y proven themselves to be affiliated to US policies and interests. Since the early 1990s, these interests have come toget her in a global project that has been in existence for over 50 years, but has acquired a more ident ifiable shape since the collapse of the Soviet block at the end of the 1980s: post-war reconstruction.

The US's first official foray into external post-war reconstruction was through the Marshall Plan t hat came into effect immediately after the Second World War, and which laid out an elaborate plan, replete with financing, for the post World War 2 reconstruction of Europe. Since then, US talent and capacity for defining post-war reconstruction has expanded considerably, perhaps best showcased today in Afghanistan, Ir aq and Haiti. The Worl d Bank also got its head-start in post-war reconstruction in relation to World War 2 Europe as the International Bank for Reconstruction and Development (IBRD), charged with channeling the resources for and overseeing the reconstruction of war-torn Europe. Like the US, the Bank has also expanded its talent and capacit y for reconstruction through its "post-conflict reconstruction" programme, although the Bank's ambi t runs wider and includ es countries emerging from and/or in the grips of ongoing wars and violent conflicts (such as Rwand a, Afghanistan, Iraq, Haiti and Cambodia) as well as those "in transition" from communist to market economies (such as the Lao PDR, Vietnam, Kazakhstan and Azerbaijan).

VERTICAL INTEGRATION

The US approach towards post-war reconstruction can be summed up in a single phrase: vertical inte gration. The US either engineers a coup or invades a country, occupies it literally or by proxy, se ts up a government of i ts choice, makes into law policies that favour US commercial and political interests, and then hand s out plum contracts for "rebuilding" and "rehabilitating" the country to its most favoured private corporations. Ground for the vertical integration model is prepared well before invasion. By deploying spin doctors and the media, manipulating intelligence and security briefs, and creating public hype and hysteria ag ainst shadowy foes, a c ase is built to render invasion and occupation inevitable. Everyone comes away with a good chunk o f the post- war reconstruction pie, except of course those whose homes, families and live are destr oyed by the endless war that the model results in.

The World Bank has its own version of vertical integration, which complements the US model well. I n that the Bank has always been a proxy institution of the US through which the US imposes economic and financial conditio ns on capital needy countries, it flows naturally that when called in to co-ordinate the reconstruc tion of a war-torn country, the Bank will continue to defend the interests of the US and its allies , rather than respond t o the needs of the affected population. The Bank will first lay down the rules and policies under which aid for reconstruction is to be solicited and used, then it will bring in private sector acto rs to implement these r ules/policies while heaping the costs on the occupied, and when things go wrong-as they inevitably would under such circumstances-the Bank will declare the affected country to be a failed state that is in need of even mor e stringent application of the same rules and policies that keep it a state of continuing failure.

THE AMERICAN WAY

After the collapse of the Soviet Bloc, the US emerged as a relatively unchallenged global power, an d sought to secure its economic and political interests throughout the world through whatever means it could garner, wheth er military, commercial, political or institutional. The US economy is an oil and war economy; oil is necessary to fuel the high consumption that characterizes the American "way of life" and clearl y, the US will wage war to ensure control over oil reserves as well as to cement its position of global military and econo mic primacy. Economic globalization today is essentially American hegemony: over the clothes we we ar, the food we eat, th e beverages we drink, the machines and chemicals we use in our industries, the appliances we use in our homes, the drugs we need to save lives, the films we watch, and even the social and political values that many in our societies hold up as necessary for progress and modern advancement.

For the US, "reconstruction" involves setting up systems that advance US ideological and material i nterests. On the ideological end are promoting a market inspired articulation of "freedom and demo cracy," an individualiz ed interpretation of rights, US style "democratic" values and systems, and a US sense of "moral cla rity." On the material end are securing and consolidating US control over oil and other key resour ces, expanding US corpo rate power both, domestically and abroad, ensuring US hegemony in global consumption, and establish ing market and corporate friendly governance and legal processes and institutions.

For Wolfowitz, the end of the Cold War offered vast opportunities for spreading US ideology and ser ving US interests. The use of "American muscle to advance American values around the world" (1) wa s crucial to ensuring U S economic and political dominance globally. Use of the US' military forces and technologies are c entral to this strategy and Wolfowitz had no trouble reconciling military power and commercial/econ omic interests with mor al purpose. In a commentary on Wolfowitz's thinking on post cold war defense policy, Andrew Bacevi tch notes, "By taking advantage of vast new opportunities to put US military might to work protecti ng human rights and adv ancing the cause of freedom, the United States could actually cement its position of global primacy ."(2) In pursuit of achieving this primacy, the US has moved seamlessly from directly invading and occupy ing countries and engineering and financing political coups (as in Afghanistan, Iraq and Haiti), to promoting "freedom and democracy" (as in Cambodia, Timore Leste and Central Asia), and threatening to withhold financial contributions to multilateral bodies such as the UN system, the Asian Development Bank and even the World Bank, unless the y establish in aid recipient countries the policies and institutions that the US wants.

US thinking on post war reconstruction is clearly articulated in the mission statement of the Offic e of the Coordinator for Reconstruction and Stabilisation (S/CRS). Established in July 2004 in ord er to develop a more "r obust capability"(3) to prevent conflict and "manage stabilization and reconstruction operations in countries emerging from conflict or civil strife," (4) the S/CRS reports directly to the Secretary of State. The S/CRS m ission statement notes that:

"Until now, the international community has undertaken stabilization and reconstruction operations in an ad hoc fashion, recreating the tools and relationships each time a crisis arises. If we are going to ensure that co untries are set on a sustainable path towards peace, democracy and a market economy, we need new, i nstitutionalized foreign policy tools - tools that can influence the choices countries and people m ake about the nature of their economies, their political systems, their security, indeed, in some cases bout the very soci al fabric of a nation."(5)

The Bush administration has requested $124.1 million from US Congress to jump-start S/CRS operation s and has asked for 'flexible spending authority' in order to allow resources to be used to "maximu m effect."(6) Despite r hetoric about fostering peace, harmony and democracy, securing economic gains rank high in S/CRS pl anning. According to Carlos Pasqual, the Coordinator of the S/CRS, the office will build inter-age ncy, inter-sectoral and military-civilian teams that can move into conflict situations early in the process and take on bu lk of the reconstruction work:

"To support the larger and longer-term program requirements, the coordinator's office is assessing and filling gaps across government agencies in contracts and more informal arrangements with organi zations that specialize in various aspects of stabilization and reconstruction: mobilizing international civilian police, training indigenous police, developing systems of justice, providing fiscal and monetary advice, st imulating the private s ector, and supporting civil society. S/CRS is also assessing the feasibility of a civilian reserve corps that could tap individuals with key skills. The goal is to organize all of these resources so that they can mobilize quickly and efficiently after a conflict to fill all the needed functions and skills."(7)

Pasqual is clear that S/CRS's work would focus on creating laws and institutions for a "market demo cracy," and that it will devise reconstruction contracts well in advance with private companies and NGOs. (8) "And so we've begun a process of ensuring that we have a global network of contracts and grants and cooperative agreements with firms and individuals and think tanks and universities and NGOs so tha t these are pre-compete d in advance in core skill areas so that individuals are identified and when, indeed, it is necessa ry to deploy a team of individuals to the field that you can go to those contracts and, perhaps, cu t off three to six mont hs in your response time by having these activities pre-competed in advance."(9)

The US's reconstruction ambitions are perfectly reflected in the case of Iraq. Between May 2003 an d June 2004, Lt. Paul Bremer, the Head of the US-established Coalition Provision Authority (CPA) wh ich served as the first occupation authority in Iraq, fired 500,000 state workers (including soldiers and civilians), open ed the country to unrestricted imports, started to privatise state enterprises, and enacted a radic al set of laws to entic e multinational corporations to set up operations in Iraq. In her research on Iraq's reconstructio n, Naomi Klein noted that, "Overnight, Iraq went from being the most isolated country in the world to being, on paper, its widest-open market." Klein reported that according to Joseph Stiglitz, former chief economist at the World Bank, Bremer's reforms were "an even more radical form of shock therapy than pursued in t he former Soviet world. "(10)

Contracts worth millions of dollars were routinely handed out by the CPA to favoured US corporation s while top posts for shaping Iraq's future "sovereign" government and Iraqi civil society were far med out to highly paid and ideologically motivated professionals from the Bush Administration's pet think tanks and invest ment banks. Prominent among them are the Research Triangle Institute (RTI), the National Endowment for Democracy (NED) an d Bearing Point, all of whom were tasked with constructing economic, social and political structure s and institutions most conducive to US corporate interests even after direct occupation ends.(11)T he bulk of the contract s for civilian construction, maintenance of the oil fields and procurement went without open compet itive bidding to Halliburton, former home of Vice President Dick Cheney, and Kellog Brown and Root (KBR), a subsidiary of Halliburton. (12)

In an analysis of the final draft of the Iraqi Constitution, Herbert Docena shows how the Constitut ion has written into law provisions for private ownership of Iraqi assets, including foreign owners hip, and binds Iraqis t o enforce the neo-liberal policies laid down in the Bremer decrees. Docena notes that, "The conten ts of Iraq's permanent constitution are of critical interest to those committed to reconstruct Iraq 's economy along neo-li beral lines."(13) Particularly important among these are the provisions that govern Iraq's oil asse ts in reference to which, Docena notes, Adil Abdel Mahdi, Iraq's vice president, told an audience i n Washington, just befo re the Iraqi elections: "[T]his is very promising to the American investors and to American enterpr ises, certainly to oil companies." (14)

AT HOME AS ABROAD

US companies that have benefited from lucrative reconstruction contracts abroad also benefit at hom e as is evident from the rush towards reconstruction in the US' southeastern Gulf Coast after it wa s ravaged by Hurricane Katrina. And here too, we see the vertical integration model at work. In early September, the US Federal Emergency Management Authority (FEMA) and the Army Corps of Engineers awarded at least seve n no-bid contracts, mos t for up to $100 million, for post-Katrina clean up, emergency housing, repair of public works and provision of basic services. Many of these companies also received no-bid contracts for work in Ir aq, including KBR. KBR is a client of Joe M. Allbaugh, the former head of FEMA from 2001-2003, who now has a private lobb ying and consulting firm. (15) Mr. Allbaugh is also a close friend of President Bush and was his ca mpaign manager in 2000. (16)

Bechtel, with $17.4 billion in annual revenues globally, is working under an informal agreement set ting up housing in Mississippi, with no set payment terms, scope of work or designated total value. It is also performing reconstruction work in Iraq under a large federal contract. (17) Many of the normal contracting sa feguards that should accompany contracts of such sizes have been temporarily suspended in post Katr ina rehabilitation in a n apparent bid to ensure that emergency federal aid gets to victims as soon as possible. Also, the Bush administration has waived prevailing wage requirements that ensure government-contracted work ers in disaster areas a re fairly compensated. (18)

The Army Corps of Engineers was set to award another $1.5 billion in contracts in mid-September for post Katrina cleanup operations in Louisiana and the Gulf Coast. Although these contracts will go through competitive bi ding, they will be given "expedited handling," i.e., the bidding process can last less than three d ays. (19) Those involved say that the costs of post-Katrina reconstruction are likely to exceed $1 00 billion.

In a bid to preempt allegations of contract abuse, the Department of Homeland Security decided to s end a team of investigators and auditors to the hurricane ravaged Gulf Coast to ensure that federal funds are properly dis tributed in rescue, relief and rebuilding work. This is the same Department that drastically cut F EMA's budget for emergency response, and undermined the capacity of Louisiana's national guard-whos e job is homeland secur ity-by shipping most national guard off to Iraq. Ironically, the team will not be able to investig ate the most controversial of the Katrina contracts: a $16.6 million contract with KBR for emergenc y repairs at the Gulf C oast naval and Marine facilities. This money is part of a $500 million Navy contract that KBR won b y competitive bid last July.

Homeland Security claims that it has no authority to audit the contract since it was awarded by the Pentagon. However, KBR has been under scrutiny for receiving a 5 year no-bid contract to restore Iraqi oil fields shortl y before the Iraq invasion in 2003, and questions have been raised whether KBR was treated especial ly favourably because of its connection with Vice President Dick Cheney, who headed Halliburton fro m 1995 to 2000. (20) Halliburton (KBR's parent company) also has a 5 year, $ 500 million contract with the US Navy to pr ovide emergency repairs at military installations damaged by Katrina. (21)

Obviously Paul Wolfowitz is not responsible for the post-Katrina scandals, however it's worth keepi ng in mind that this is the milieu and working culture he comes from-cronyism and a shocking lack o f accountability. Acco rding to Danielle Brian, director of the Project on Government Oversight, a nonprofit government sp ending watchdog group, in the case of Katrina--as in Iraq-- "You are likely to see the equivalent o f war profiteering - di saster profiteering." (22)

THE WORLD BANK WAY

For the World Bank, post-war reconstruction is an opportunity to apply the most egregious form of s tructural adjustment to countries emerging from war or natural disasters, undergoing violent intern al conflicts, under for eign occupation, and/or in "transition" from communism to capitalism. The Bank is playing a signif icant role in shaping the economic, social and political climates in Afghanistan, Cambodia, Africa' s Great Lakes region, t he Balkans, Liberia, Nepal, Sierra Leone, Timor Leste, Sri Lanka, the West Bank and Gaza, and other areas torn by war, conflicts and disasters. Common to all World Bank reconstruction programmes is the immediate applicat ion of free market reforms, including legal provisions for foreign investment, full repatriation of profits for foreign investors, private property rights, zero subsidies for food and essential serv ices, and the now ubiqu itous 'good governance.'

The World Bank is one of the most influential institutions involved in post-conflict and war recons truction. "Mitigating the effects of war" accounts for about 16 percent of the Bank's total lendin g. (23) The Bank has a special unit to design development programmes for conflict affected countries (the Conflict Prevent ion and Reconstruction Unit) and a special fund to provide financing for reconstruction in "post-wa r societies" (the Post- Conflict Fund). It has an Operational Policy on "Development Cooperation and Conflict" (OP 2.30) t hat sets the scope and the terms of the institution's interventions and explicitly opens the door f or the Bank to work in conflict prevention. (24) The Bank can even intervene in countries where it is unclear who is in po wer and can provide grants on request from the international community as "properly represented" (e .g., by UN agencies). T his means that the World Bank (and the IMF) can operate in a country in the absence of a sovereign government, as they did in Iraq and Afghanistan.

The Bank's Post-Conflict Fund (PCF) was established in 1997 to "enhance the World Bank's ability to support countries in transition from conflict to sustainable peace and economic growth." The PCF makes grants to governm ents, civil society organizations, institutions and private sector actors, to channel Bank aid as e arly, and in as broad a spectrum as possible. In financial year 2004 alone, the Bank disbursed US $10.6 million; since 19 98, it has disbursed US $66.7 million to, among others, Afghanistan, Sri Lanka, Columbia, Haiti, Az erbaijan, Rwanda, Sierra Leone, Bosnia, Croatia and the Philippines. (25)

What is remarkable about the Bank' involvement in post-conflict reconstruction is the breadth and s ize of its operations, and the ease with which it repackages its usual programmes into 'reconstruct ion' mode. The Bank's reconstruction activities span a wide spectrum, from giving policy "advice" and commissioning studi es, to financing in-country activities and managing the donor funds channeled to an war torn or con flict ridden country fo r reconstruction. In the Great Lakes region in Central Africa, the Bank is administering a US $35 0 million, multi-donor programme to demobilize and reintegrate 450,000 former combatants from Angol a, Burundi, Central Afr ican Republic, Democratic Republic of Congo, Republic of Congo, Rwanda and Uganda.(26) Even the Int ernational Finance Corporation (IFC)-the bank's private sector financing window-is into the busines s, and has provided fin ancing for projects such as a luxury long-stay hotel for international development personnel in Rw anda, a luxury hotel for diplomats and development aid professionals in Afghanistan, the developmen t of oil fields in Sout hwest Chad, the construction of an underground pipeline from Chad to Cameroon (to transport the oil from the Chadian wells), a greenfield cement plant in Iraq, privatization and expansion of a state owned power plan in Ta jikistan, and a special loan facility to reconstruct and rehabilitate tourism facilities destroyed by the tsunami. (27)

In order to expand its reconstruction work, the Bank has developed "new products" for situations wh ere normal lending instruments cannot apply. These allow the Bank to "position itself" early on in shaping the affected co untry's development path. In a number of countries emerging from conflict, the World Bank prepares a Transitional Support Strategy (TSS). The TSS is a short to medium-term plan for comprehensive r econstruction through w hich the Bank can provide emergency recovery grants and loans. Angola, Macedonia, Kosovo, Timor Le ste and the Democratic Republic of Congo all currently have a TSS. The Bank has also established a nd managed joint donor trust funds in countries such as Afghanistan, Kosovo and Timor Leste, and in the Great Lakes region in Africa. (28)

At the end of 2002, the World Bank established the Low Income Countries Under Stress (LICUS) Unit. LICUS focuses on improving development effectiveness in what the Bank calls "fragile states." In collaboration with oth er development agencies and academics, the Bank has started to create an analytical framework and " assemble the right tools" to help countries in difficult circumstances.(29) As of June 2004, target countries included the Central African Republic, Haiti, Liberia, Myanmar, Somalia, Sudan, Togo, and Zimbabwe.

In the Bank's world, fragile states are "characterized by particularly weak institutions and perfor mance, as measured by the World Bank's Country Performance and Institutional Assessment ratings." ( 30) Significant here is the Bank's observation that LICUS countries have "environments that are not conducive to absorbing significant quantities of development assistance." (31) The Bank's approach to fragile states is a ctually quite similar t o that of the S/CRS. Both express concerns about a proliferation of failed states that are as much a threat to the world at large as they are to their own populations.

"Many LICUS have domestic stakeholders who are attempting to initiate basic reforms. Domestic ref ormers in these countries are often politically weak: they require modest but timely international support to build momen tum for reform efforts. This is particularly critical in LICUS countries where efforts at national reconciliation or political transition are underway: it is crucial that economic and governance i mprovements take place during such transitional periods, both to prevent a return to political instability and to strength en policies and institutions in readiness for more comprehensive engagement by the international co mmunity." (32)

In January, 2004, the Bank set up a LICUS Trust Fund to support LICUS countries during what it call s "transitional" periods, especially for those that have loan servicing arrears to the Bank. Finan ced by the Bank's surpl us in financial year 2003, the Trust Fund has a budget of $25 million, and to date has disbursed $1 9.1 million in grant packages to Comoros, Liberia, Central African Republic, Haiti and Sudan. Accor ding to the Bank, "The proposed trust fund, targeted primarily to countries in non-accrual, would allow the Bank to p rovide modest support that would assist them as they initiate the kinds of reforms that would set t he stage for arrears cl earance and subsequent access to IDA financing and debt relief, on the basis of a robust track reco rd." (33)

In other words, the objective of the LICUS Trust Fund is to bring these "fragile" countries back un der the apron strings of the World Bank and the IMF. The main reforms envisaged through Trust Fund financing include, gov ernance, civil service, public finance, policy, institutional and judicial reforms- all the element s of a classic structural adjustment programme.

HOW IT ALL COMES TOGETHER

Despite its best effort to portray otherwise, the World Bank's motto, "Working for a World Free of Poverty," rings increasingly hollow with every dollar of aid it disburses. Over the past 60-odd years of its existence, the Bank has moved through numerous fads, including em ergency relief, infrastructure development, building human and social capital, meeting basic needs, financial and economic reforms, good governance and participation. By any measure of economic or social performance, the last two decades have shown rigid applications of Bank-Fund economic and financial orthodoxy to be abysmal failures. Cou ntries indebted more than 20 years ago remain mired in debt with crippling repayment burdens that h ave undermined all social and environmental indicators; income poverty, inequality, unemployment, h unger and malnutrition have become entrenched conditions as result of Bank-Fund designed economic and financial reforms; s ocial exclusion, distress migration and human trafficking are on the rise wherever the Bank and Fun d have left their polic y imprints; environmental and ecological destruction and forced resettlement accompany most Bank fi nanced infrastructure projects, and; the abilities of most Bank-Fund borrowers to combat HIV-AIDS, malaria and other epide mic diseases have been undermined as a result of shrinking public expenditure budgets.

In a study on IFI involvement in Afghanistan, Anne Carlin notes that IFIs are seeking "new lines of business" at a time when large borrowers such as India and China turn to other sources for major p rojects. (34) In order to keep middle income clients such as India and China, the IBRD has cut its loan fees and raised th e maximum amount it would lend to a single country by $1 billion, to $14.5 billion. (35) According to a senior Bank offic ial, India has complained that it find the costs of borrowing from the Bank too onerous and is unwi lling to borrow if the costs of borrowing are not reduced.

Post conflict/war reconstruction provides an excellent opportunity for the World Bank to carve out a new role for itself and keep institutional irrelevance at bay. "Nation building" and supporting "fragile states" to ac hieve "sustainable exits" from conditions of conflict offer useful shields to the Bank to deflect u nfavourable attention away from its poor record with structural adjustment, debt relief and white e lephant infrastructure projects. The ascent of Paul Wolfowitz to the Presidency of the Bank thus suits the Bank's interes ts of self perpetuation.

Although Wolfowitz comes to the Bank presidency without any development experience, he does bring t he extremely valuable experience of overseeing the reconstruction of Iraq during which, he demonstr ated his commitment to corporate-led development. It matters little that in the two years since it was invaded, Iraq has descended into chaos, food, water and medicines are scarce, security is practically non-existent, a nd the country is wrack ed with sectarian conflicts. More important is the fact that US corporations have control over all the plum contracts for rebuilding the structures that Wolfowitz's war destroyed. Vertical integrat ion at its best.

In mid-September, the World Bank's Board approved a plan for using as much as $500 million in loans to the Iraqi Government. In 2004, Wolfowitz's predecessor, James Wolfensohn committed $3-5 billio n for reconstruction an d agreed to manage the Iraq Trust Fund. The Bank is now considering sending staff back to Iraq to oversee the huge sums of reconstruction funds that will be channeled through the Trust Fund, since an internal Bank report has warned that "there are high and unprecedented risks" to the Bank's work in Iraq, arising from the inability of Bank experts to travel around the country and oversee aid disbursement. (36)

An interesting facet of the World Bank's LICUS programme is that it endows the Bank with the capaci ty to designate countries that are at threat of becoming "fragile states." Similarly, Carlos Pasqu al's S/CRS office has r equested the US National Intelligence Council to identify every six months a group of countries tha t they consider to be at the "greatest risk of instability." From among these, the CRS will select countries on which it will "focus a more intensive planning process."(37) Both, the Bank and S/CRS then, are in a positio n to make state failure a self-fulfilling prophesy through their respective post war reconstruction programmes.

Paul Wolfowitz's past experience in the US Administration is likely to serve him well in his new jo b at the World Bank.

About the Author: Shalmali Guttal is a senior associate with Focus on the Global South.

1. Andrew J. Bacevich, Trigger Man, In Paul Wolfowitz, messianic vision meets faith in the efficacy of force. The American Conservative, June 6, 2005.
2. Ibid.
3. http://www.state.gov/s/crs/c12936.htm
4. Ibid.
5. Ibid.
6. Stephen D. Krasner, Director of Policy Planning and Carlos Pascual, Coordinator, Office of Recon struction and Stabilization. Addressing State Failure. Foreign Affairs Magazine, July/August 2005 , Vol 84, No 4, Washing ton, DC, June 27, 2005.
7. Ibid.
8. Financial Times, US prepares classified watch-list of 25 unstable countries. March 29 2005.
9. Ibid
10. Naomi Klein, Baghdad Year Zero, Pillaging Iraq in Pursuit of a Neocon Utopia. Harper's Magazine , September 2004
11. Herbert Docena, The Other Reconstruction: How private contractors are transforming Iraq's state and civil society. Focus on Trade, Part 1, Number 101, July 2004. http://www.focusweb.org/pdf/fo t101.pdf
12. For details see the website: www.HalliburtonWatch.org
13. Herbert Docena, Iraq's Neoliberal Constitution. Foreign Policy in Focus, http://www.fpif.org/f piftxt/492
14. Ibid. See also, Emad Mekay, US to Take Bigger Bite of Iraq's Economic Pie. Inter Press Service , December 23, 2004.
15. Leslie Wayne, Expedited Contracts for Cleanup Are Testing Regulations. The New York Times, Sep tember 13, 2005.
16. John M. Broder, In Storm's Ruins, a Rush to Rebuild and Reopen for Business. The New York Time s, September 10, 2005.
17. Ibid.
18. The Associated Press, Investigators to Monitor Katrina Contracts. September 13, 3005.
19. Leslie Wayne, Expedited Contracts for Cleanup Are Testing Regulations. The New York Times, Sep tember 13, 2005.
20. The Associated Press, Investigators to Monitor Katrina Contracts. September 13, 3005.
21. John M. Broder, In Storm's Ruins, a Rush to Rebuild and Reopen for Business. The New York Time s, September 10, 2005.
22. Ibid.
23. World Bank Conflict page, World Bank website.
24. See "Bank's policy on development cooperation and conflict," World Bank web page. http://lnweb1 8.worldbank.org/ESSD/sdvext.nsf/67ByDocName/ThePostConflictFund
25. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20042303~menuPK:34480~pagePK:36694~ piPK:116742~theSitePK:4607,00.html
26. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20629793~pagePK:34370~piP:34424~the SitePK:4607,00.html
27. http://www.ifc.org/ifcext/about.nsf/Content/WhatWeDo
28. Bretton Woods Project:http://brettonwoodsproject.org/article.shtml?cmd[126]=x-126-16554
29. http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/STRATEGIES/EXTLICUS/0,,menuPK:511784~pagePK:6 4171540~piPK:64171528~theSitePK:511778,00.html
30. http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/STRATEGIES/EXTLICUS/0,,contentMDK:20288808~me nuPK:532113~pagePK:64171531~piPK:64171507~theSitePK:511778,00.html
31. Ibid.
32. Ibid.
33. Ibid.
34. Anne Carlin, Rush to Reengagement in Afghanistan: The IFI's Post Conflict Agenda, Bank Informat ion Centre, December 2003.
35. ://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20610454~pagePK:34370~piPK:34424~theSitePK: 4607,00.html
36. Paul Blustein, World Bank Considers Sending Staff Back to Baghdad, Wolfowitz Acknowledges That Presence Is Important to Success of Rebuilding Programs. Washington Post, September 18, 2005.
37. Remarks delivered by Ambassador Carlos Pascual at The Center For Strategic & International Stud ies, 20 October 2004.

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