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EDITORIAL
A structural adjustment for Wolfowitz?

April 20, 2007 | Page 2

THE SCANDAL over World Bank President Paul Wolfowitz's promotion of his girlfriend into a high-paying job at the U.S. State Department is only one aspect of the crisis at the Bank and it sister organization, the International Monetary Fund (IMF).

Certainly it's a pleasure to see Wolfowitz, a central architect of the U.S. invasion of Iraq, begging for his job after giving girlfriend Shaha Ali Riza a pay raise and transfer to a State Department liaison job.

Wolfowitz's predicament is even sweeter to behold in light of his anti-corruption campaign, under which the Bank cut off programs in developing countries for alleged abuses such as nepotism.

"Two other 'Bush administration retreads'--to use Wolfowitz's phrase--have received even more generous salaries, compared with their thin experience in an institution where degrees are weighed rather than displayed," wrote Richard Adams of Britain's Independent newspaper.

"The irony is that Wolfowitz's signature policy since arriving at the World Bank has been a drive against corruption--a controversial policy in the eyes of reputable aid agencies, as tangential to the Bank's real task of fighting poverty. But even then, Wolfowitz has been accused of using its policies as a veil for U.S.-inspired actions, such as the rapid turnaround in treatment of Uzbekistan by the bank, shortly after the former Soviet republic expelled U.S. troops from bases there."

Wolfowitz's lackeys also purged all references to family planning in a Bank strategy document--reflecting the Bush administration's crusade against a woman's right to choose.

But the turmoil at the Bank and IMF goes beyond Wolfowtiz's highhanded management. Both institutions are in financial crisis as developing countries, wary of debt traps, avoid taking their loans.

For the last 25 years, the Bank and the IMF have demanded "structural adjustment" of developing countries' economies as a condition for such loans. This meant drastically cutting social spending and opening up to investment and trade from the wealthy nations. In the 1997-98 East Asian financial crisis, the IMF compelled countries like Thailand and Indonesia to prioritize loan repayments despite mass unemployment and hunger.

These days, developing countries are taking advantage of low interest rates engineered by the U.S. to ease the recession of 2001--and are borrowing elsewhere, for example, from China.

The Bank and IMF have "never been in such a difficult position," said Eric Toussaint, president of the Belgium-based Campaign to Abolish Third World Debt, and author of the new book, The World Bank: A Never-Ending Coup. "Their incomes are falling to such an extent that the IMF cannot even support the salaries of its 2,500 or so senior officers, who are highly paid to give poor countries the invaluable advice that they had better pay their own civil servants less.

"The Bank suffers from the fact that middle-income countries such as Brazil or Mexico do not call on it as often as used to be the case. Indeed, it can only survive thanks to the interest paid on loans contracted by such countries."

With or without Wolfowitz in charge, the World Bank will remain a pillar of U.S. and European imperialism. But as long as he and the Bank's technocrats are at each other's throats, the rest of us can sit back and enjoy the spectacle.

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