AFTER THE ZEALOT WOLFOWITZ COMES ZOELLICK

by Emad Mekay

(IPS) WASHINGTON -- Bush has nominated Robert Zoellick, a Wall Street executive, former administration official and a free market fundamentalist to succeed disgraced World Bank President Paul Wolfowitz, who steps down June 30.

"Bob Zoellick is the right man to succeed Paul in this vital work," Bush said Wednesday.

The announcement cut short speculation about a process that saw dozens of names floated to be the next leader of the international public lender, now reeling from an ethics scandal.

Following the announcement, Zoellick pledged to work to restore confidence in the Bank, after revelations that Wolfowitz had given his girlfriend and colleague Shaha Riza an unauthorized pay raise led to calls from Bank staff, international economists and many countries for Wolfowitz's ouster.

"We need to put yesterday's discord behind us and to focus on the future together. I believe that the World Bank's best days are still to come," Zoellick said.

The Bank's 24-member Board of Directors, which should receive a formal notice of the nomination before mid-June, says it will make its final decision by the end of that month.

Zoellick is likely to be confirmed under a tacit agreement between the two powers that control the Bank's board, the United States and Europe, that the Bank's president should always be a U.S. national while its sister institution, the International Monetary Fund, is headed by a European.

The nomination also appears to short-circuit burgeoning calls for reform of this selection process at the Bank, one of the cornerstones of the global financial architecture as designed by the victors of World War Two.

On Wednesday, the Center for Global Development, a Washington-based think tank, released a survey showing that nearly 85 percent of 700 respondents disagreed or strongly disagreed with continuing the status quo, in which the U.S. nominates a single candidate after informal consultations with Bank members.

A similar number favoured a merit-based selection process, without regard to nationality.

The survey was conducted among members of the international development community, including government agencies, universities and think tanks, non-governmental organizations, and staff at the World Bank and other multilateral institutions.

Non-governmental organizations, which have been at the forefront in calling for reform of the selection process, say that Zoellick's nomination is a blow to their campaign to bring greater democracy to the Bank.

They say the nomination reeks of double-standards, especially because both the United States and the World Bank preach accountability and transparency to developing countries, the main clients of the Bank.

"Replacing one Bush appointee with another will not resolve the fundamental governance problems of the World Bank," said Peter Bosshard, policy director of the International Rivers Network, a watchdog group that monitors Bank projects and policies from San Francisco, California.

"Member governments should reject a backdoor deal that leaves the Bank's governance structure intact, and should press for an open, merit-based selection process," he said.

Zoellick's name also raised eyebrows among development groups for his close ties to the U.S. establishment and corporate interests.

Until last July, the 53-year-old Zoellick was the U.S. deputy secretary of state. He is best known, however, for his role as a former U.S. Trade Representative, a job in which he campaigned, with mixed results, to force developing countries to open their markets for U.S. businesses and goods.

He is credited with helping bring China and Taiwan into the World Trade Organization, which, like the World Bank and the IMF, often promotes neoliberal policies criticized as harmful to developing coutries. Zoellick also launched the unpopular multilateral Doha Round of trade talks at the WTO that aims to create a laissez-faire trade environment, and increased the number of U.S. free trade agreements.

Zoellick also lacks significant experience in economic development in poor countries. During his tenure as the USTR, he was often criticized for arm-twisting poor nations' governments to adhere to U.S.-imposed intellectual property laws that make medicines unaffordable to the developing world.

"He has been a close friend to the brand-name pharmaceutical industry, and the bilateral trade agreements he has negotiated effectively block access to generic medication for millions of people," said Paul Zeitz, executive director of the Global AIDS Alliance. "This is terrible for AIDS patients, most of whom cannot afford brand-name prices."

His nomination has been particularly troubling for civil society groups which fear that Zoellick, currently a top executive with the Wall Street investment firm Goldman Sachs, may alter the World Bank's practice of allowing countries to use its aid to purchase generic medications.

The Bank has previously defended the right of countries like Thailand to issue compulsory licenses to secure access to affordable medications.

"We fear this could change under Zoellick," Zeitz said. "Zoellick, as a free market fundamentalist, seems unlikely to back the kind of flexible macroeconomic policy countrie s need to increase their health sector budgets in the face of the AIDS crisis."

Apart from his White House backing, Zoellick got immediate support from U.S. Treasury Secretary Henry Paulson and some senior U.S. lawmakers.

Senator Chuck Grassley, a ranking member of the Senate Committee on Finance, said that Zoellick was "extremely capable" of leading the Bank.

"Through his leadership for international trade, I know he has a real understanding of what it takes to advance economic development in poor countries," he said in a statement.