In World Bank Role, Wolfowitz Keeps Up Battle to Reshape Iraq

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The Wall Street Journal

In World Bank Role, Wolfowitz Keeps Up Battle to Reshape Iraq
By GREG HITT
October 30, 2006; Page A1

WASHINGTON -- Paul Wolfowitz continues fighting to shape Iraq's future, but his battle has shifted to the World Bank. The former U.S. deputy defense secretary, an architect of the Bush administration's Iraq policy who now heads the development agency, is pumping up its physical and financial presence in Iraq. The higher profile is a departure from longstanding World Bank practice of steering clear of countries engulfed in heavy violence. Coming on top of a White House-endorsed campaign at the bank to fight corruption in developing nations, his Iraq policy is prompting criticism that Mr. Wolfowitz is turning the bank into a vehicle for Bush-style nation-building while slighting other deserving countries... For critics such as Mr. Bapna, the Wolfowitz agenda is putting at risk the independence that allows the World Bank to operate in difficult environments despite geopolitical tensions.

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Some delegates on the bank's board have challenged Mr. Wolfowitz's policies, too. Germany's Eckhard Deutscher has argued that Mr. Wolfowitz's plan to facilitate business in Iraq by moving World Bank offices into Baghdad, rather than maintaining headquarters next door in Jordan, will expose staffers to new risks without guaranteeing they can accomplish anything more, according to bank officials. France's Pierre Duquesne thinks other conflict-torn countries should get similar levels of attention, especially former French colonies such as Ivory Coast and the Central African Republic, current and former officials say. "We want the same for others," Mr. Duquesne said at a bank meeting earlier this year, these officials say.

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But the scope of corruption in Iraq -- a recent U.S. report estimated $4 billion a year is lost there -- may put Mr. Wolfowitz in a bind between his competing priorities. For now, however, Iraq is exempt from the anticorruption drive under exceptions extended to countries torn by violence. Since the 62-year-old Mr. Wolfowitz took office in June 2005, he has worked hard to show his commitment to the bank's mission of fighting poverty, boosting aid to Africa and providing debt relief to poor countries. He has also broken with the U.S. occasionally, urging the White House to accept deep cuts in farm supports in global trade talks to help poor agrarian nations... At the same time, Mr. Wolfowitz created a circle of top aides drawn from the Bush political establishment..

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Mr. Wolfowitz also proposed special conditions on the Republic of Congo's participation in a debt-relief program, citing concerns about financial dealings in that country's state-run oil sector. But the United Kingdom, France and others on the board complained he was grabbing power and unfairly penalizing a country working to meet debt-relief standards. After 22 members raised objections at a nine-hour meeting -- only the U.S. and Japan offered support -- Mr. Wolfowitz agreed to less stringent conditions. Both sides later declared victory.

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