The Front

The Wolfowitz Card

Shock and awe was the response around the world to the U.S. nomination of Paul Wolfowitz, former U.S. deputy secretary of defense, to become president of the World Bank.

But, from governments at least, dismay was quickly followed by capitulation. On March 31, the executive directors of the World Bank approved the key architect of the Iraq war as president of what is supposed to be the world’s largest development agency. (The executive directors are effectively the Bank’s board of directors, and represent countries, with voting shares proportionate to what countries lend to the Bank.)

By tradition, but without any legal requirement, the United States picks the head of the Bank.

The announcement of a nominee who many believe symbolizes U.S. unilateralism and contempt for the rule of law, however, stunned governments around the world.

Especially because the United States exercised an effective veto over a recent European pick to run the World Bank’s sister institution, the International Monetary Fund, for a short while it appeared the controversial Wolfowitz nomination might set off a firestorm requiring the Bush administration to replace the nominee.

Instead, however, the stars rapidly aligned, and Wolfowitz was confirmed within two weeks of his nomination.

Ignoring human rights

The Wolfowitz nomination had been floated weeks before the formal announcement. Following global outrage, the Bush administration issued a statement — soon shown to be untrue — that Wolfowitz would remain at the Department of Defense.

From civil society, at least, outrage intensified with the actual nomination.

Three messages emerged from civil society criticisms: First, Wolfowitz comes to the job of Bank president particularly unqualified. Second, there is a nexus between the corporate-friendly economic model pushed by the Bank and the military aggression of the United States. Third, controversy about the presidential appointment should not obscure more fundamental problems with the Bank’s activities. For many groups offering criticism, that the process of choosing the Bank president is anti-democratic is just one small component.

“Wolfowitz’s record demonstrates that he has almost no understanding of poverty reduction and environmental protection,” said Longgena Ginting, co-coordinator of the Friends of the Earth International campaign on International Financial Institutions.

“As U.S. ambassador to Indonesia, he also ignored many gross human rights violations practiced by the Suharto administration, like those in East Timor, Aceh and Papua. Wolfowitz was very close to Suharto, coddled corruption and made life as easy as possible for U.S. corporations, including some with terrible social and environmental records,” said Ginting, who is a past executive director of Friends of the Earth Indonesia, Indonesia’s largest environmental organization.

Wolfowitz’s allies say he worked to promote democracy and human rights in Indonesia when he was U.S. ambassador there. But Northwestern University Professor and Indonesia expert Jeffrey Winters notes that there is no available press account of Wolfowitz mentioning democracy or human rights while ambassador — but an extensive record of apologetics for the despotic Suharto regime. Indonesian human rights activists say Wolfowitz never met with them.

For many critics of World Bank policy, the Wolfowitz choice highlighted the connection between use of economic and military power to advance corporate interests.

“Washington’s message however could not be clearer or more ‘transparent,’” said a statement from Jubilee South, a network of debt cancellation organizations in the developing countries. “The World Bank, and indeed the very notion of development, must continue to take their unambiguous place in the U.S.-driven neoliberal war against people’s right to self-determination and autonomous development. The nexus between economic and military imperialism stands exposed.”

“This nomination is an aggressive move by the Bush Administration to use international development policy, and the money of the World Bank, to impose its will on developing countries, just as it has used its military to impose its will on Iraq and Afghanistan,” agreed Leslie Cagan, national coordinator for United for Peace and Justice, a U.S. peace organization.

But while critics lambasted Wolfowitz, they were careful to emphasize that the Bank’s problems extend far beyond who serves as its top officer.

“The IMF and World Bank have made repeated claims that the economic policy reforms attached as conditions on their loans are not imposed from the outside, but instead are ‘country-owned,’” says Rick Rowden, policy analyst with ActionAid International USA. “In fact, economic policies which harm poor people continue to be imposed by the international financial institutions as conditions on debt relief and new loans, with these institutions retaining the power to overrule local parliaments.”

“The World Bank has a track-record plagued with harmful projects around the world, including major oil and gas projects that have damaged the environment and done nothing for poverty reduction,” adds David Waskow, director of the international program at Friends of the Earth - U.S. “Wolfowitz, who’s promoted the interests of oil corporations in Iraq and Indonesia, is the wrong person to change the course of the Bank.”

From Jubilee South came the harshest language: “We call on all those concerned to direct their campaign efforts not simply at reversing” Wolfowitz’s appointment, “but at decommissioning the World Bank itself, holding its owners and directors accountable for the genocidal consequences of its lending and collections, and resisting the neoliberal economic offensive that it is now entrusting Wolfowitz to unambiguously lead.”

The capitulation

But while civil society opposition was heating up, governments were quickly falling into line to support Wolfowitz.

This even though Europe does have the votes to block a U.S. selection, and organized opposition from developing countries would have made it very hard for the Wolfowitz nomination to succeed.

Europe wasn’t willing to force a confrontation with the United States — it being perfectly clear that the Bush administration knew how distasteful the nomination would be in Europe, where there is continuing and overwhelming opposition to the Iraq war.

Instead, the Europeans opted for horse-trading. France hopes to win U.S. support for its candidate to run the World Trade Organization. Germany is seeking a seat on the UN Security Council. And the Europeans reportedly extracted a commitment for a new number two position at the Bank, to be reserved for a European.

The developing countries also chose to sit on their hands. There was some Machiavellian calculation here, too — Brazil also hopes for a Security Council seat — but generally the poor countries were intimidated into staying quiet. Unlike the Europeans, they actually borrow from the World Bank and are subject to its dictates, so challenging a presidential contender, with the likelihood of failing, would be a major gamble.

While the Europeans cut deals, Wolfowitz quickly launched what all labeled a “charm offensive.” He noted his concern for the poor, and repeated that he understood the Bank chieftain to be a civil servant responsible to all nations, not just his friends in the Bush administration.

The charm offensive succeeded, and Wolfowitz quickly won the unanimous support of the World Bank’s executive directors.

In accepting the appointment, Wolfowitz said that he had “exchanged views with dozens of ministers, ambassadors and even Presidents and Prime Ministers, from every continent. I appreciate their support and their commitment to the vision of the World Bank. As I have said frequently, that mission — helping the poorest of the world to lift themselves out of poverty — is a noble mission or, as former Secretary of State George Shultz said, a beautiful mission.’ I believe deeply in that mission.” “Nothing is more gratifying than being able to help people in need and developing opportunities for all the people of the world to achieve their full potential.”

Whether Wolfowitz will do anything to advance that mission — which the Bank, by its own accounting, has so routinely failed — is something about which many Bank watchers are deeply skeptical.

One small sign of hope for some is that Wolfowitz brings a skepticism about the institution’s effectiveness, and perhaps a preference for grants over loans.

Another possible “silver lining in this choice is that Wolfowitz was a leading advocate for canceling Iraq’s debt,” says Neil Watkins, national coordinator of Jubilee USA. “His advocacy for canceling Iraq’s debt on the grounds of its odiousness — its history of being contracted by a dictator without public consent, and the funds used for purposes antithetical to the public interest — mirrors one of the chief arguments jubilee campaigns have long invoked in the their struggle for debt cancellation in dozens of countries.”

— Robert Weissman

Australia's Oil Grab

“We went to East Timor to help those people, and now we are slapping them in the face and stealing their oil.”

This is what Chip Henriss-Anderssen, a former major in the Australian military who served with the International Force for East Timor, told reporters on March 7. “We thought we were doing something decent. Now we have to ask the very real question of whether or not we went to East Timor to secure oil assets that aren’t ours.”

The latest round of talks between Australia and East Timor in Canberra on disputed oil and gas fields in the Timor Sea took place March 7-9, but concluded with little more than an announcement that further talks will take place soon.

Just prior to the talks, a foreign affairs and trade department official told reporters in Canberra that the Australian coalition government was prepared to hold out for up to 99 years — referring to a “Hong Kong” scenario — if the government of East Timor maintained its demand that the maritime boundaries be settled according to international law.

Two months before East Timor gained independence, Australia withdrew recognition of the maritime boundary jurisdiction of the International Court of Justice, leaving East Timor with no legal avenue to contest the current boundary dispute.

At the center of discussions is the Greater Sunrise gas field, the largest known reserve of gas in the Timor Sea. Negotiations stalled last year after the October federal election, when the East Timorese government refused to accept the terms on offer for a “creative solution” regarding Greater Sunrise.

The Australian government has reportedly made an offer of $2.4 billion to $4 billion (over 30 years) to East Timor if it drops the demand for a royalty share greater than 18 percent. Australian negotiators are arguing that this new “creative solution” should be concluded separate to finalizing the maritime boundaries, hence the threat to hold out for decades if East Timor does not relinquish its claims.

While the estimates of the wealth expected to be generated from Greater Sunrise vary, based on current world prices the total government take from royalties is likely to be on the order of $30 billion. The Australian government appears to hope that cash-strapped East Timor will accept.

A delegation of prominent Australian supporters of East Timor, including Greens Senator Bob Brown, Bishop Hilton Deakin and businessperson Ian Melrose, gathered in Canberra outside the venue of the talks on March 7 and condemned the Australian government’s stance.

According to Bishop Hilton Deakin, “The majority of Australians want our government to offer a fair deal that reflects East Timor’s rightful entitlement under current international law.”

Melrose has vowed to spend more than $4.5 million on a media campaign in support of East Timor’s claims, “if I don’t think it’s getting the momentum required.”

Many former Australian military personnel, including Second World War veterans who were stationed in Timor, have spoken out in support of East Timor’s rights.

A letter signed by 17 U.S. senators and representatives was also recently sent to Prime Minister John Howard, calling for “Australia to move quickly and seriously to establish a fair, permanent maritime boundary with Timor-Leste.”

The letter said: “An equitable sharing of oil and gas revenues would enable Timor-Leste to provide better healthcare and other essential services to its citizens. Such equitable sharing of revenue is not a question of charity; rather it is a matter of self-determination, sovereignty and Timor-Leste’s future.”

“Unless the Australian government acknowledges East Timor’s legal entitlements under current international law and stops trying to shortchange the East Timorese people,” says Tom Clarke, coordinator of the Timor Sea Justice Campaign in Melbourne, “future negotiations are not going to result in a just and fair outcome.”

“The East Timorese resisted a brutal occupation for 24 long years. Why would they give up on their struggle for self-determination for a one-off payment that falls well short of what East Timor is legally entitled to?”

Clarke claims the Howard government is ignoring international law “so it can take billions of dollars from one of the poorest nations in the world. East Timorese children are dying from preventable diseases and the Australian government is taking $1 million a day of contested oil royalties. It’s bringing shame to all Australians.”

— Jon Lamb
Third World Network Features/
Green Left Weekly. This article
appeared initially in Green
Left Weekly, March 16, 2005.