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Capital Markets

The world according to Wolfowitz

It is hard to see how Paul Wolfowitz will be able to run the World Bank, at least in his first couple of years there. His only supporters seem to be people who think the Bank is in need of a radical shake-up. That, however, is the last thing the Bank needs: it is only now recovering from years of turmoil at the beginning of the tenure of Wolfowitz's predecessor, James Wolfensohn. But Wolfowitz comes from a US administration (where he is currently deputy secretary of defence) that has been very unhappy with the Bank, and he has surely been charged with changing things.

Wolfensohn's biggest beef with the Bush administration was the argument over whether the Bank should move from concessionary loans to outright grants. Under Wolfowitz, there can be no doubt that the Bank's grants programme is going to pick up a lot of speed. The Bank will get money from its shareholders – principally the US – and then give that money to needy governments, never to be repaid.

At any point, if he wants to do more good in the world, Wolfowitz will need to go back to his shareholders and get more money.

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