Pundita

In October 2004 Paul Wolfowitz addressed an audience at Warsaw University. Pundita is haunted by one of his observations during the speech, as recounted by Peter J. Boyer:

"Poles understand perhaps better than anyone the consequences of making toothless warnings to brutal tyrants and terrorist regimes," Wolfowitz said...[He] observed that some people—meaning the "realists" in the foreign policy community...believed that the Cold War balance of power had brought a measure of stability to the Persian Gulf. But, Wolfowitz continued, "Poland had a phrase that correctly characterized that as 'the stability of the graveyard.'"

Read Boyers's profile in the November 2004 New Yorker to learn about the man who will head the world's most powerful development bank. If you've read the profile before, you might want to read it again for insights about the American who now stands a fighting chance to profoundly affect the course of history.

Now is also a good time to read the Department of Defense biography of Wolfowitz, which contains links to his recent major speeches and articles.

Congratulations to the Deputy Secretary of Defense on his new appointment. As to how he might fare during his first year at the Bank, let us not forgot that Paul Dundes Wolfowitz was one of the few conservatives in the Bush administration to endorse the creation of a Palestinian state.

And remember he has a doctorate, a degree in mathematics, and taught at two major universities and was the dean of a school at one. These are very important distinctions to World Bank mandarins, who treat adults without a doctorate as if they're small children.

He'll do fine at the Bank.

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Dear Pundita, I've started doing research on the issue you raised about the link between physical exhausting labor and low interest in political involvement. From what I've been reading, this issue falls hard on women in the poorest countries. I was shocked to learn that there's still considerable gender bias in Europe, in particular Eastern Europe. It seems to be a cultural attitude toward females. Do you know anything about this issue?
[Signed] Jan in Reston"

Dear Jan:

Pundita has not studied the subject as applied to East Europe; I doubt it's easy to get good data, for the same reason it's hard to get good data on racism in those regions. As soon as an American with check-writing power goes near such questions, the lobbies for those countries produce polls to demonstrate that racial and gender prejudice are not a problem and that their government enforces laws to prevent discrimination.

I do know there was a seminar that took place in 2000 in Dubrovnik, and which produced a book comprised of 10 papers presented by women from Armenia, Bosnia-Herzegovina, Croatia, Hungary, Italy, Poland and Slovenia. The book, Women and Politics: Feminisms with an Eastern Touch was reviewed in 2001 by Olivera Jokic, who notes

...several of the articles try to recapitulate the changes within the last decade in eastern Europe as they affected women’s rights, and find that the benefits of ‘democracy’ were not necessarily meant to be enjoyed by women. Even in Slovenia...which is usually taken to be a token of successful decentralization and smooth transition of institutions, women are discouraged from political activism and exposed as intruders in a strictly male sphere.

But when you ask pointed questions of East Europeans you can get the same defensive replies, even from women, that you hear from Saudis who defend their practice of treating women like brain-damaged parakeets. They say America didn't have equality for women for much of its history, so have a little patience with their slow progress.

Who's talking about patience? We're talking about money. For the love of Larry, it's hard to blow trillions of US dollars. You have to really work at it. But now we have The Arab Problem to deal with. How could there be an Arab problem if Arabs have been rolling in oil money for half a century? The Saudis click their worry beads then reply, "Petroleum is Allah's curse. It made us crazy."

Well maybe ya'll would have been a little less crazy, if Saudi women had some say these past 50 years in the way their government was run. Same applies to endemic corruption in East European governments. They wail and throw clouds of ashes when you bring up the topic. But you can graph the fall of corruption in American government, the police forces and judicial systems with the rise of American women voters having their say and women in politics, business and law. That's because females tend to be skinflints if they don't think it's right to pay for something and they are rule oriented. Men will pay bribes just to get on with things and not disturb the ecosystem of 'codes.'

In 2000 Zbignew Breziznski told a bunch of Ukrainians, "Much of the money we [US government] have given to Russia has been misappropriated -- and we don't like to talk about this. The U.S. officials who worked closely on this are embarrassed about it."

Embarrassed? Every morning Bill Clinton gets out of bed and the first thing he does is look out the window: Whew; they're not there yet. Same ritual at the White House and in the parking garages at Foggy Bottom and Congress: "Anybody smell tar and see bales of feathers yet?"

US officials are not embarrassed. They live in fear that the American public will discover that zillions of US tax dollars were given to gangsters who had the Democracy Rap down pat. Of course Breziznski singled out Russia but that country stands in a long line. It's not just the amount of stolen money that would send the American public through the roof. It was the way the stolen money was used. Soccer Moms should be in charge of the US foreign aid checkbook. And East European women and Saudi women--and come to think of it, women all around the world--need to wake up and get serious about grabbing more power. The problems are so huge and complex these days that all countries need all the brain power they can get. It's not just a matter of equal rights. It's also a matter of two heads are better than one for solving tough problems.

Arab Muslims have been yammering for decades that the end of the world is coming. Darn tootin, if more women don't exercise more of their brain cells. Yet too many women are waiting for men to give them power. Men are not going to give them power because men are human and because that's not the way men get power. They don't sit around and say, "Where's my power? Somebody give it to me."

If you want power, ladies, step up to the plate.

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(See March 29 for Part I.)

TM Lutas blogger wondered whether the kit I described in Democracy Stage Show Kit exists.

As I stressed there is no actual kit; however, the phenomenon I described can be considered a kit; i.e., a set of methods that have been abstracted by studying general principles and 'packaged' for use by virtually anyone. In this case, the basic kit was created by analyzing mass civil disobedience/nonviolent protests in democratic countries.

Of itself, the kit isn't a 'stage show' (phony) because genuine democracy movements seeking guidance on how to confront governments nonviolently can make use of the methods. However, just because anyone can use the kit, it can and has been be used by governments and factions wanting to put on an appearance--a stage show--of a genuine nonviolent mass protest. Thus, the Democracy Stage Show Kit.

An organization known for providing the basic kit is transnational (they advise groups anywhere in the world) and not connected with any government or political party. Here the reader might ask whether I can be entirely certain of both assertions; the answer is "no" because I don't know who funds the organization and in these days of shell corporations even knowing the names of the donors wouldn't necessarily provide a definitive answer to either question.

However--and this is very important to understand--even if the organization is a front for a government agency or special interest group, this would have no bearing on the points in my earlier essay. Such an organization, and the 'kit' they provide, is as inevitable in the modern era as K&R (kidnap and ransom) negotiation firms and contractors that provide private military assistance to governments. Although the organization is a nonprofit, it follows the same pattern as any type of consulting contractor. It is a group of specialists--in this case, academics and former government workers with scholarship and/or direct experience with nonviolent movements.

Because my essay was not chiefly concerned with examining this type of organization, I did not explain that the organization I had in mind does not limit their advice to pro-democracy groups in countries that have nondemocratic government. The organization will also advise groups in democratic countries. In other words, if your group or political party didn't get what they wanted through the voting process, or doesn't like the way the government they voted in decides on issues, this organization will advise you on how to use mass protests and civil disobedience in the attempt to pressure the government into doing what you want.

If the reader is suddenly at full attention--with hindsight, Pundita might have made it easier on the reader if I'd mentioned that point. The organization is not really about 'democracy training.' It's about training large numbers of people to confront a government via mass protests.

Of course, taking to the streets out of anger at a voting outcome or in the attempt to pressure a government on an issue is part and parcel of life in democratic countries. But it's not democratic countries and mature democracies that are under discussion in the Democracy Stage Show Kit essay.

Lutas remonstrated that Pundita neglected to mention that the DSSK is a "mirror" of the violent rent-a-mob protests organized by dictatorships such as the Soviet regime, then asked what harm the DSSK did in the Ukraine, given that the protests did not involve bloodshed.

Lutas answered the first part of his question for himself. Pundita did not mention the rent-a-mob because it's nothing like the DSSK, which doesn't deploy violence. It's the very model of a nonviolent "by the rules" civil protest, so the DSSK is not a mirror of the rent-a-mob. The only connection is that as with the rent-a-mobs organized by dictatorships/autocratic regimes, the DSSK can be organized and controlled by a government.

However, it is wrong to assume that the DSSK does not carry the threat of violence. All massed protests carry the threat of violence; in the case of Kiev, which Lutas mentioned, there was more than threat even though no blood was shed. This wasn't evident to first glance because the paid protestors who filled the streets of Kiev to demand another the election round did not come armed. And they had been coached on how to act with the cameras rolling. They sang and danced and threw orange carnations and waved orange streamers. To the camera eye, they were a well-behaved lot following the democratic model of nonviolent protest against an unresponsive/tyrannical government.

But slowly the whole well behaved singing, dancing, clapping lot moved in on the Supreme Court building in Kiev. Inside the justices were trying to decide how to judge on the matter before them, until they realized they were blocked from leaving the building by the protestors--and with the police clearly not willing to stand between the justices inside the building and the happy campers blocking the building entrance.

That is how it came to pass that in districts that showed balloting at 100% for Yushchenko, even with as many as 24 candidates in the running, the justices did not order another election round in those districts. They gave the Orange protestors exactly what they wanted. That's the only way those justices could get out of the building, and be assured they wouldn't be torn apart by the happy clapping Orange demonstrators.

Pundita will not waste tears and Kleenex about the plight of the judges. There were voting irregularities on both sides and the country was virtually split down the middle about the candidates. Bottom line is that one oligarch clan wanted to replace another in the Ukraine government; the Orange side had EU and American backing. The Russians and their Blue candidate didn't have a handy-dandy DSSK. All they had was clunky Soviet style rent-a-mobs. When they learned the Orange side had the Full Monte DSSK, the TV cameras running and half the West's election observers parked in Ukraine, they realized they couldn't deploy the bone crackers. And Kuchma's government couldn't order the police to break heads because the police refused. So the slicker fools won. End of story.

The question is whether genuine democratic government can emerge from a putsch disguised as a peaceful revolt. The question has been discussed at great length in America since it was clear that the US was going to topple Saddam Hussein's regime and replace it with a democratic government, even though the DSSK was not deployed in that instance.

Thoughtful Americans asked, "What if the democratic government in Iraq throws out the US military and votes in a radical fundamentalist Muslim agenda? Is the US government prepared to live with that?"

The answer is that you need to be pretty darn clever, and very knowledgeable about democratic government, if you want to wiggle out of a Faustian bargain with the foreign powers that help you gain the palace. Because it's sure enough true that the powers did not help you gain the palace out of sheer love of democracy. Pundita's Democracy Stage Show Kit essay simply looks squarely at that reality.

Contrary to Zenpundit's observation, I am not skeptical about democratic rule. I am skeptical that the DSSK includes a companion guide to real democratic government. And I am realistic about the problems that the poorest emerging from dictatorial rule face, if they want to create workable democratic government.

Many people in certain countries (in Latin America, FSU) are exhausted with the constant turmoil and uncertainty that their experiment with democracy has brought them. And they are bitterly aware (as with the Ukrainians who wanted to throw out Kuchma's government) that no matter which platform/party they vote in, somehow the new administration is always the same old jazz: corrupt bureaucrats controlled by an elite that does no better at managing the country than the last bunch.

All this is despite the fact that the countries have received large ongoing infusions of aid from UN organizations, the EU and America, cheap loans from the World Bank and regional development banks, and numerous development projects concerned with creating and strengthening democratic institutions.

It's against this stark fact that the US government's use for the Democracy Stage Show Kit must be weighed. On paper the ends justify the means, as Lutas pointed out, if the regime in power is a brutal one. But the DSSK isn't a recipe for good government; it's simply a tool for wresting power. If the people carrying out the stage show aren't knowledgeable about good government they must try to invent the wheel--or allow themselves to be guided by an elite that is not necessarily a friend of true democracy. Neither option is pretty and given the problems of this era, unacceptable.

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Pundita has a bad habit of treating her blog posts as if they were drafts, which means regular readers know to snap up a copy of a post they plan to return to before it vanishes or undergoes major revision.

I think we have finally learned our lesson; yesterday two blogs (The Glittering Eye and Zenpundit) linked to "Pundita is not Wonkette" essay and made interesting comments. However, their readers would have quickly discovered the essay was not at the published link. I'd decided that I'd stuffed too much into one writing and thus deleted it, unaware until hours later that I'd upset the blogosphere ecosystem. My apology for the confusion this caused.

The original essay is now split into two. The material Zenpundit and Glittering Eye discuss is now under the title How do you run a government when the voters are smarter than you? Material that refers to a critic's comments and Romania remains under the original title Pundita is not Wonkette.

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Pundita's Democracy Stage Show Kit created a flurry of comments; three bloggers (see links below) published their critiques. The observations are mostly negative, which is not surprising because the essay presented two unfamiliar concepts then joined them to present an unsettling idea:

The connection between physically exhausting work and a willingness to accept autocratic government

This idea gave the critics the most trouble. That's understandable to some extent because (to my knowledge) no distinct study has been done on the subject—and if a few studies have been done they are buried in the vast body of literature on sustainable development that’s collected during the past 40 years on the specific problems of the world's very poorest. However, the subject is alluded to in countless papers on development, of the kind churned out by the World Bank.

Yet development banks generally look at the subject of physical exhaustion within the framework of development issues rather than political ones. They have not looked at the implications with regard to the impact of physical exhaustion on citizen involvement with their government and their tendency to favor leaders who promise to take decisionmaking off their hands. (I’d like to stand corrected on this point; if the reader knows of any such study, kindly pass along the information to Pundita.)

In any case, two of my critics (Schulman and Lutas) are clearly unaware that the problem of exhaustion has been (exhaustively) studied in relation to a range of situations in LDCs. But applying common sense overcomes the lack of scholarship in this instance. Here are the paragraphs from Democracy Stage Show Kit that caused the critics the greatest concern:

But freedom is not free. It's a tremendous responsibility, which imposes considerable discipline on the individual and takes up much time. That's just why dictators keep being returned to power. After the glow of a stage-managed democracy revolution wears off, the populace realizes how much work and responsibility it entails to make democracy work. Thus, many become willing to make a tradeoff between freedom and free time. They go looking for a hardworking fool to take on the burden of governing responsibility--preferably, a benevolent fool.

This impulse doesn't stem so much from laziness as from the need to conserve energy. Those who labor 12 hours a day in fields, coal mines and factories don't have much energy left over for the task of self-governance. But of course there is no such thing as a benevolent dictator when push comes to shove.

Schulman responds:

Unless I'm totally misinterpreting her, Pundita's argument is that freedom is a luxury item that is affordable only by the (relatively) affluent, who have the time and energy to govern themselves in addition to working, eating, and sleeping. But does this assertion correspond to historical reality?

I think not. Leaving aside ancient Athens, democracy was introduced into the world by the United States of America. And what was our country like at the end of the eighteenth century? It was predominantly a nation of family farmers and individual tradesman, who worked from dawn to dusk. They were tired, but they toiled in a democracy.

And what of present-day India? I'm not aware of anyone who refers to that country as anything other than a democracy, nor do I know of anyone who would describe the typical Indian as affluent.

Schulman's observations are echoed in Lutas's critique:

The idea that people have no time for political freedom is, frankly, just not credible. If the franchise could be exercised two centuries ago in the wilds of Kentucky and Ohio where agriculture was the main pursuit, time saving devices were nonexistent, and the wilderness or hostile indians could destroy all you had built in the blink of an eye, it is certainly practical for people in today's Ukraine, Romania, Georgia, or Iraq where the physical and economic challenges are generally less.

Yes, well, the people of Ukraine, Romania, Georgia and Iraq do not descend in the millions on a refugee camp, as happened in Tanzania with Rwandan refugees, and within nine months denude the region of forest and shrubs.

Two billion of the world's people still depend on wood for their cooking fuel. This has created the Human Locust phenomenon in many regions. The populations strip their region of firewood. Because the 'locust' populations are not chiefly nomadic, this means they have to keep walking further and further from their village every so many months to retrieve enough cooking fuel to sustain baseline survival. And then make the walk back--an exercise that can take up most of their waking hours.

The same situation is in effect with water supply, game and fish. With regard to the latter, many populations dependent on fishing have depleted fish in coastal waters, which means sailing further and further out each day, just to catch enough fish to feed their family and have enough left over to sell, in order to afford other baseline essentials.

Perhaps my essay should have used such examples instead of coal mining and farming; however, the history shows who made most of the political decisions during America's big coal mining days. And the grueling work of farming before modern equipment still had cycles--seasons when a break from planting and harvesting gave settler families time to attend community meetings about government, time to discuss and debate the issues connected with their fledgling democracy.

There is no seasonal cycle, no rest period, for people who must walk several miles every day just to collect and lug back enough fuel and water to keep themselves alive until the next long walk. The cycle of survival has been reduced to 24 hours--not for thousand or hundreds of thousands, but for hundreds of millions of humans. And the number threatens to leapfrog to billions.

Believe you me, such people are too exhausted to walk more miles to attend regional meetings on governance issues or even vote, if they live several miles from a voting booth. As to how they participate in government--the same way Indian villagers and villagers all over the world participate in government in the poorest regions.

The party representative drives up to the village with bags of rice and wheat in tow, gives them to the village chief for distribution and says, "Your village is voting for The Hand" or whatever pictograph the party uses for a symbol. (They use pictures because many villagers are illiterate.)

Before you snicker at this democracy stage show--how do you think things worked in this country during the late 19th Century and during early decades of the last century in the coal and steel mining towns, the poorest farming regions and ghettos? True, they didn't deliver bags of rice to the union bosses and ward heelers--they delivered promises of pork in Congress and threats to break heads if the union members and ward residents didn’t adopt the party ticket.

The difference is that America in those days was not suffering from overpopulation, AIDS, and a host of other situations faced by the world's poorest today. And it was not until the post-Depression era that the American federal government and state governments became so huge and complex that even the well-educated affluent with some time on their hands don't find it easy to follow what their government is up to.

Americans came to that realization the hard way, during the weeks that followed the 9/11 attack. The realization swelled the ranks of bloggers, brought thousands of citizen watchdog groups into existence, and made news junkies out of Americans who before had limited their newsgathering to the Sunday paper and the Seven O'clock news.

Yet Lutas seems to assume that democratic government, once wound up and set in motion, is self-perpetuating:

Pundita complains that "The 21st Century will pound home the point that you can't have it both ways: you can't have the luxury of letting someone else take on responsibility for your governing and expect to have good government." The problem with this complaint is that it seems to be endorsing democracy over democratic republicanism. That's just stupid if its intentional and badly written if Pundita did it by accident. By definition democratic republicanism is the idea of voting to give somebody else the government for a time and not much worrying about it until next election day.

Pundita was not complaining, only stating a harsh reality. Representative democracy does not mean abrogating the citizen responsibility to carefully oversee those you elect to office. You vote 'em in and forget 'em until the next election at your gravest peril--and at the gravest peril to your democracy.

Renewed citizen oversight and pressure brought forth the 9/11 Commission and a host of long-overdue changes in Washington. Provided people have say in their government, provided they can closely monitor their government, intelligent and efficient government follows. But in virtually all the poorest countries, there is the Forbidden City phenomenon. The centralized government is far away from the regional outposts and even within the capital city, which can see large populations, there is a walled city aspect to the government. Technology can help break down the wall, and put people in the most outlying regions in touch with their government.

And technology can save the time and energy needed to participate in government. Everywhere in the world's poorest regions that interactive communications have come (as versus state-run television, newspapers) government services have improved.

Of course the governments are not happy with the people having such an impact on the Forbidden City, and for the same reason many in the US Congress have come to fear the blogosphere. The greater and richer network of connections between Americans brought about by improved communications threatens to unseat the elite. Ever thus, for all peoples everywhere. But now we really have no choice but to bring as many people as possible to bear on problems of governance, for the problems our vast numbers have wrought are staggering. One hour spent in Mexico City is enough to teach that.

TM Lutas
http://www.snappingturtle.net/jmc/tmblog/archives/005262.html

Marc Schulman
http://americanfuture.typepad.com/american_future/2005/03/
is_democracy_on.html

Mark Safranski
http://zenpundit.blogspot.com/2005/03/some-hamiltonian-
realism-regarding.html

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"deer pUndiTa, I am riting to prostest your use of buzzard to insult KoFi Anan. I thogt you were diferrent pondita but, like all humans you are humansentric and look down on everykind else. Also now you take all the credit and never mension your team anymore. pondita you are getting puffy hed.
[Signed] Rugby the Rat"

So. He manages to hit the Caps key for Annan's name and of course always for his name but not for Pundita's. And he lectures Pundita about a puffy head. I haven't mentioned the team recently because this is the time of the year they desert their duties. Off doing things that creatures do in the early Spring. But then I suppose if one is born, raised and confined to a laboratory one wouldn't know much about the changing seasons.

Policy meetings are sparsely attended except when it's pouring rain and even then minds are not on the chores at hand. Input is usually confined to, "What do you think?" although Da and Nyet reported at the last meeting that they were chased from the Russian embassy grounds--an ominous sign that US-Russia relations are continuing to cool.

This said, it so happens it was pouring rain this morning, which brought the Peregrine falcon to drop in for a visit. After I read him Rugby's letter and explained the circumstances, the falcon asked archly, "What is wrong with buzzards?"

It is becoming quite difficult to come up with insults for one's fellow humans. One can't call them bastards without offending those born out of wedlock. One can't call them retarded, blind or deaf without bringing the wrath of the challenged down upon one's blogspot. Calling them snakes, rabbits, weasels or skunks brings forth threatening letters from PETA. And of course "rat" is now on the forbidden list.

All right, we're going to bump down a few species. Pundita will revise the offending sentence to read, "If that louse folds, Bill "Please Understand Me" Clinton will get the post..."

This is on the assumption that lab lice can't type computer passwords.

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(3/29-Note to Reader: Some material included in original version, and which Zenpundit and Glittering Eye discuss on 3/28, is now under the title How do you run a government when voters are smarter than you?)

Pundita's Democracy Stage Show Kit touched off a flurry of published criticism from a small circle of bloggers who first learned about Pundita a short while ago from Dave Schuler at The Glittering Eye. After the critiques were published Schuler wrote on his blog that he enjoyed the idea of the cross-blog discussion he set off.

If Pundita were two people with the patience of a border collie I don't think I'd mind getting involved in a cross-blog discussion of the kind the critical essays represent. However, the critics' points are so poorly informed that I'd have take time away from other writing to teach before the critics could comprehend my replies. As witness to my dilemma, this criticism by blogger TM Lutas:

Pundita complains that "The 21st Century will pound home the point that you can't have it both ways: you can't have the luxury of letting someone else take on responsibility for your governing and expect tohave good 0government."

The problem with this complaint is that it seems to be endorsing democracy over democratic republicanism. That's just stupid if its intentional and badly written if Pundita did it by accident. By definition democratic republicanism is the idea of voting to give somebody else the government for a time and not much worrying about it until next election day. It's possibly the most successful system of governance on the planet even if a little long...

Again, turning back to Romania, they voted in a neo-communist first government by wide margins, voted again to put them in by slimmer margins, voted in an opposition government that promptly betrayed its electoral platform, voted the neo-communist/social democrats back into power for another term and when that turned out to be a bad idea they put in a liberal government late last year. There were lots of corruption scandals, lots of bad choices along the way but nobody can seriously say that things are worse off than if Ceasescu the butcher or his rapist son were still in power. Nor is it credible to hold that the Romanian people haven't grown in sophistication and improved in their exercise of their sovereign power through the use of the franchise.

Pundita was not complaining; she was describing a stark reality. Now let's see what the blindfolded dartboard method of finding an adequate system of democratic government has wrought for the Romanian people. The dart throwing accompanied, I assume, by the attitude that democracy means voting in a government then "not much worrying about it until next election day." From a portion of the latest USAID report on Romania.*

Romania is one of the poorest European Union (EU) applicants. Government statistics indicate that almost one in three Romanians lives in poverty. The proportion is much higher in rural areas, where wages are far below Romania’s average of $140 per month....

Over 40% of the population is engaged in agriculture, most on small subsistence plots. Many young, educated workers continue to leave the country in search of better opportunities elsewhere.

Confidence in democracy is undercut by endemic corruption, low political accountability,and continued high levels of poverty.

Civil society remains weak, with little influence on public policy or public opinion. Partly a legacy of communism, the concept of citizenship, including the responsibility of constituent interest and involvement, has yet to take root among much of the population.

This is exacerbated by a "party list" system for parliamentary elections, eliminating any real tie between national level office holders and their constituent districts. In the 2000 elections, a large number of disaffected voters turned to an extremist and xenophobic party that offers no sustainable solutions for resolving the country's problems. The central government is transferring responsibility for many services to local governments without providing the necessary fiscal and management resources.

Unfunded central government mandates in utilities, education, social welfare, and health are a pressing problem.

On the whole, there appears to be no coherent plan for decentralization and no analysis of the impact of decentralization on local governments.

Too little attention has been given to the efficient use of local resources, the need to establish community priorities, and the means to enhance local service delivery.

The health and child welfare situation in Romania remains bleak. [Corruption in health care agencies is endemic.] Life expectancy at birth is 71 years, one of the lowest in Europe. Infant mortality, under-five mortality, and maternal mortality are among the highest in Europe. In 2000, maternal mortality rates were six times the EU average and pediatric AIDS cases are the highest in Europe...

So it's not just a matter of teaching; Pundita would have to figure a way to transmit the teachings to Pluto. Earth calling blogger Lutas: Democratic government of any kind is NOT "the idea of voting to give somebody else the government for a time and not much worrying about it until next election day."
I note Lutas wrote his critique as a first-time visitor to Pundita's blog and evidentially zipped through so fast he didn't notice the blog header, which clearly indicates that Pundita is a female. Or perhaps he noticed and decided that any female blogger who tackles weighty themes should be referred to as a male.

But we'll make an exception this one time, just for Dave Schuler, and dedicate the next two essays to an attempt to haul the critics into the 21st Century. If they don't get it after that, here is the link to Wonkette. http://wonkette.com/

*USAID Report on Romania
http://www.usaid.gov/policy/budget/
cbj2005/ee/pdf/ro_cbj_fy05.pdf


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Pundita's regular readers are 'ahead of the curve' people--those who see just a little farther and quicker than most. They know we're all students now, striving to comprehend massive shifts in civilization that took half a century to build and finally converged around the turn of this century.

One of the biggest shifts has gone almost unnoticed by the media, even though signs of it are everywhere. I first got wind of the shift 30 years ago, courtesy of a computer scientist who was known as the Guru to several in the computer industry. I wasn't involved with the computer field but one day I expressed my concern that the US government would eventually abuse computer technology to create a Big Brother society. The Guru looked at me as if I was a child and replied, "You don't understand. If they get too far out of line we'll shut them down."

I did not understand the import of his words until a week after 9/11. Then it hit me that for the first time in recorded history the pyramid of society is turned upside down. Except for a very few pockets around the world, the government does not represent the smartest and best-informed people in the society. This situation is crashing the Machiavellian School of government (exemplified by Henry Kissinger in modern times), which has been the linchpin of civilization going back to the ancient times.

The government and military in the United States are aware of the situation and at least some of its implications. They have no choice but to be aware. In a globalized, market-oriented society, only the saintly among the smartest are going to labor in the government for a fraction of the salary they could get from working in private enterprise. Indeed, only the war's appeal to patriotism is bringing in the kind of minds the government needs to fight this war effectively.

Something like this up-ended situation has arisen several times in history but it's always been nipped in the bud by military conquest. There have been eras when a knowledge explosion put a great deal of information within reach of many outside the ruling class. As long as the rulers had control of a military, they could simply enslave the burgeoning brainpower and keep it doing their bidding.

That solution to the problem of the masses getting above their station came crashing down on 9/11. Nineteen guys with box cutters outfoxed NORAD, bombed the flagship building of the most powerful military in history and destroyed the symbol of world trade.

Granted, the 19 had financing and planning behind them that trace back at least in part, and by many twists and turns, to a few governments. Yet that doesn't invalidate the fact that possession of a standing army no longer guarantees the ruling class a secure berth. Nowhere is that more evident than in the K&R (kidnap and ransom) industry, which is huge in certain countries.

Again, one may argue that the most successful gangs depend on their government, or at least corrupt factions or individuals in the government, to help them. But the elite in several countries must take very elaborate and very expensive precautions to prevent being hit by kidnappers.

Setting aside criminality and terrorism the question is how government can function effectively with so many smart people outside government putting in their two cents worth nd demanding at every turn that the government keep up with their curve.

The flip side of the issue is that the problems now facing humanity are so huge that governments need all the brainpower they can get to assist them.

Last year I spoke with a guy in his 30s from India who spent a half hour blowing off steam about the problems in his country, his government's totally inadequate response, and the government's deaf ear to the recommendations made by people in his class -- young, smart and well educated professionals. I asked what ideas he had about getting New Delhi to listen.

He replied, "I will tell you how it is. We're waiting for the older generation to die off."

Given the current state of medicine that could be a long wait. And look at the age of the top leaders in China and Saudi Arabia. If you're not completely gaga, you can hang onto power well until the young ones have white hair.

So here we are. Trying to balance between anarchy and prodding slow governments to act more quickly and efficiently to deal with problems that the smart ones outside government clearly see and know how to solve.

Make no mistake; even the governments in the wealthiest, most powerful nations are very slow. Pundita has received letters asking why she never returned to discussing what she learned from Yossef Bodansky's seminar at the National Intelligence Conference. We're working up to it--trying to find a way to discuss what we learned without plunging the sensitive reader into a steep depression.

But without going into gory detail, you need to stop and think about the people you elect to represent you in Congress. Why do you elect them? For their ability to plow daily through 200 page reports with footnotes on geopolitical situations? For their ability to analyze and synthesize data in a flash? Or so they can sit on congressional foreign relations, defense and intel committees?

No. You elect them to represent your interests on a range of domestic issues. Yet realize the interests are now so complex that to understand them requires plowing through more 200 page reports with footnotes.

If you observe that surely they have aides to do all that reading and analysis and synthesis for them -- um, have you seen the aides? Most are kids straight out of college with virtually no real-world knowledge, and who weren't picked to be congressional aides for their brainpower. They were picked because they loyally served the party and the congressional's campaign.

That's enough scary campfire stories for today.

This essay summarizes Pundita's points, scattered through several essays, about US foreign aid and development policy as applied to helping the world's poorest. I saw the need for this exercise after reading a blogger's published thoughts on Pundita's Finger of Shame essay. The blogger, Dave Schuler at The Glittering Eye blog, refers to Joseph Nye's 'hard-soft power'concept and places Pundita's outlook in the soft power category:

The notions of hard and soft power derive...from the work of Joseph Nye. Hard power—military and economic power—is making other people do what you want them to. Soft power is making them want what you want. You don't employ or deploy soft power. You either have it and it's working or you don't and it won't...Hard power and soft power can work together synergistically. In what is certainly the most lucid article on the World Bank (and development banks generally) that I have ever read, Pundita suggests foregoing our hard power(in this case economic) strategies in the developing world in favor of a soft power approach...

Clearly Dave was unaware that Pundita nominated Eliot Spitzer for World Bank president. Short of dropping a bomb on World Bank headquarters, my suggestion doesn't get more hard power than that. Schuler closes by observing:

It's pretty clear that we have not made an opening in attacking the problem of the poverty of the poorest of the poor. Can it be accomplished with a soft power strategy? Do we have the wit and skill (and faith) to exploit it?

Pundita's reply: Not unless the wits are considerably sharpened. Development policies for the world's poorest haven't made headway because the policies are on the moon. They're on the moon because they're thought up by people who live inside theoretical bubbles, which float high above the doings of mortals down here on earth.

Yet there are many good-hearted, brilliant and well educated people from all over the world laboring in sustainable development. These are people who eat, sleep, and breathe the problems of the world's downtrodden. So how is it that so many smart, concerned people ended up on the moon?

Part of the answer lies in the development 'system' and mechanisms by which development policy is actualized; e.g., the development loan model, which was not created to solve the most pressing problems of the world's poorest.

Part of the answer is that developed nations have used foreign aid/development banks not so much to help the poorest but to further strategic aims. There's nothing wrong with trying to further such aims. But when this impulse is mixed with development policy it sets up a mental screen, which makes it hard to see things simply as they are.

A famous example of this type of blindness is shown in a movie based on a Graham Greene novel set during the Cold War. The US delivered food aid to a Third World country as part of a strategic initiative. The food was delivered to the docks in crates stamped in English "A gift from the United States of America."

During the night Soviet operatives crept onto the docks and stamped on the crates "A gift from the Soviet Union" in the native language of the people who were to receive the aid.

The other part of the answer can be hard to grasp; as soon as one tries to explain people interrupt with, "Oh I see. It's prejudice, bigotry."

Then how come dogs put in charge of minding small children display the same attitude? Within a few weeks the dog starts treating the kid like an idiot. The dog's not a bigot. There is something deeply rooted in mammalian nature that you don't want to mess with, but which when poured into looking after people who are perpetually in a weak position manifests in behaviors that are something like benevolent paternalism.

Of course the paternalism can mix with bigotry, class-consciousness and the Enclave mentality. When you put all that together, you get the attitude famously associated with West European colonialism. Pundita terms this brew of traits Sahibism.

Now one would think that Sahibism is not found among aid and development bank workers who come from the very regions of the world that were under Colonial rule. But as any Indian or African who remembers the tail end of Empire can tell you, there you would be very wrong. The 'natives' elevated by the Colonialists to administrative positions eventually took on much the same attitude toward their fellow natives that the Colonials displayed.

That makes sense if you realize the attitude is not rooted in bigotry. It's rooted in human nature. But when the attitude is mixed with development policy or even charitable giving, it sets up another mental screen--one that also makes it hard to see facts on the ground.

That is why, for decades, the World Bank simply replaced valuable equipment that was repeatedly stolen from the same Bank project construction sites in 'third world' countries. That is why an otherwise intelligent Western Christian missionary defended the Africans who repeatedly stole from his hospital by saying it was their culture to steal.

How can you arrive at intelligent aid policy, if you hold in your mind the attitude that the people you're trying to lift out of abject poverty are overgrown children? Thus, President Bush's approach, which is remarkably free of Sahibism, is a breakthrough. That is why Pundita supports the general idea behind Bush's Millennium Challenge Account, which tags US aid to governments that make strides in adopting and strengthening democratic government.

To return to Nye's concept, the Millennium Challenge Account is hard power--bone-cracking economic clout. Bush doesn't want to hear the laundry list of excuses from national leaders who've learned to play US administrations and the World Bank like a fiddle. Bush's position is either get with the democracy program or forget getting more money. That's treating leaders from nondemocratic poor countries as if they're adults in full possession of their mental faculties.

The Millennium Challenge Account doesn't have much funding, which for the short run leaves US aid/development policy still dependent on the USAID agency and international organizations such as the World Bank. That means things are still not looking up for the world's poorest. However, Pundita can't give unqualified support to the MCA because I don't know exactly how the program works out in practice. Giving money to governments that have made strides in democratic reforms doesn't necessarily equate to strides with real transformative value.

To think intelligently about helping the world's poorest requires first a different way of categorizing the poor. If you look through the list of the 77 "poorest" countries that make up the G-77 (See Pundita's sidebar), you'll note that some of those countries have oil wealth and other valuable exportable resources. Other countries on the list are narco states or Money Laundering, Inc., which means they're rolling in dough.

In short, there are oceans of money sloshing around in several of the countries that the World Bank and other international organizations categorize as the poorest. So clearly there's something screwy with the criteria for determining poverty. A close inspection shows that many countries, including several in OPEC, are poor because their governments spent decades making a complete mess and blowing export revenues on the wrong projects.*

But I think the majority of poorest countries are poorest because the class that put the government in power doesn't like to cough up at tax time, and because crime syndicates don't file tax returns. Yet pouring development and aid money into countries that don't have an adequate tax base to develop and maintain infrastructure and basic social programs is pouring into a bottomless pit.

Intelligent development policy should be grounded in that observation. Here we come to a snag. Multilateral development lending agencies and US aid programs are not set up to go after tax cheats. Nor do they have the authority to strong-arm governments into hounding the richest in their country to pay up on back taxes and raise taxes on the rich from a pittance percentage.

That is why development policy is on the moon. It's like the fable of the man who searched under a street lamp for a lost object in his darkened house because the lamp threw more light on his search. So making headway in helping the world's poorest is not really a matter of hard or soft power. It's a matter of lighting a candle to guide thinking back to earth.

Thanks to Dave Schuler's essay for galvanizing Pundita to summarize her writings to this point on aid/development policy.

* Seven of the 11 nations that make up the Organization of Petroleum Exporting Countries (OPEC) are poorer (or no richer) today per capita than they were in 1974. For an overview on why OPEC nations are crying poor these days, see the Christian Science Monitor report at http://www.csmonitor.com/2005/0324/p16s01-cogn.html

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In the wake of recent essays about poverty and the World Bank, Pundita has received a flurry of letters asking for ideas on how to improve US policy on helping the world's poorest. One writer asked, "If you could only do one thing to better the world, what would it be?"

Well, given that the United States is at war, I think it's more helpful to tell what the world's smartest terrorists want to do to better the world. They want to shoot all the government leaders who depend on diaspora remittances to keep the poorest in line.

Smart Islamofascists understand the connection between diaspora remittances, tax cheating by the richest in their countries, and the plight of the poorest. They're building coalitions with communists. The only thing that's holding them back is the communists' slowness to realize what century this is, which prevents them from modernizing communist doctrine. The rich per se are not the problem. The problem comes when the rich demand government-built infrastructures but don't want to pay their fair share in taxes to build and maintain the structures. They want the middle class and the poor to pay for them.

Western governments are studiously blind to the connection between diaspora remittances, narco states, terrorism, and the plight of the world's poorest. The US State Department (and the Bush administration) crowed about an initiative under the US-Mexico partnership, which makes it cheaper for poor Mexican immigrants working in this country to send remittances back home. Why don't they just line up Mexico's poor and shoot them? Oh but that's right, Pundita forgot! If you shoot them, you can't bleed them dry.

The US-Mexico initiative is small chips next to what China has done. They set up a program which 'encourages' Chinese working abroad to contribute a portion of their remittances to infrastructure projects in China. The Indian government wants to copy China's program (without the 'encouragements' of course) if they haven't done so already. So, the crime syndicates that have a big say in running those two countries will have even more heat taken off them when tax time comes around.

As to what would happen to Vicente Fox if he pushed to raise and enforce taxes on Mexico's richest--well, he'd have to take the same precautions that President Alvaro Uribe has had to take while standing up to Colombia's drug lords. So, okay, he'd have to live every moment as if it was his last. But this is not the chairmanship of Coca-Cola that Vicente Fox has got. He's supposed to be a national leader--a concept that implies moral and physical courage. And if he was on the level, he could get the Mexican people at this back. Once that happened, he could get the United States government squarely at this back.

But I don't wish to single out one national leader. Go down the list of governments that rely on remittances from their diaspora populations to keep their citizen unrest at bay. You see the same story again and again, whether it's Philippines, Burma, Algeria--you name it.

Education is a part of the solution; immigrants naturally want to send money back home. They need to learn in detail what their acts of generosity support, which is the very system of government that makes life in the old country Hell for their relatives. Yet the situation calls for more than palaver. It calls for Draconian measures on the part of nations that greatly profit from the cheap labor of diaspora populations.

To my knowledge there hasn't been much written recently about the issue of diaspora remittances--at least, not for the general public. That is why I recommend that Pundita readers look at two very short articles by Barbara Walker (links below). The articles are a few years old and look at remittances pretty much within the narrow context of Mexican workers in the US. But the articles are reader-friendly and a good if highly opinionated introduction to a complex subject.

The second Walker article I've listed provides a reading list for those who want to go deeper into the subject. However, I recommend that next you glance through the report from the UK Parliament House of Commons (third link below). If I recall the data is a few years old but the report is a primer on the subject of diaspora remittances. The bonus is that the report is well written and has cool charts, which at a glance can teach you a lot.

The caveat is that the Parliament report looks at everything upside down. The consensus in the development community (which the US-Mexico partnership follows) is to find ways to better use remittances to help poor countries. This is refusing to acknowledge that remittances are like methadone; they provide just enough of a cash flow fix so that corrupt/inefficient governments can avoid going after the biggest tax cheats in their country--the biggest being the crime bosses.

Once you realize what the avoidance has created for the poorest, you can see why the terrorists and radicals are building a broad platform that transcends cultural/religious boundaries. The platform is more sophisticated than the anti-globalist one because it's targeted, and more in tune with the fact that globalized business is here to stay.

Not to raise your blood pressure any more than it might rise after reading the Walker essays, but at the end of the following list is the link to a 2003 Time article on how Western Union got wildly rich off remittances. The data helps fill in some blanks.

http://www.vdare.com/walker/mexico_the_rich.htm

http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=86122

http://www.publications.parliament.uk/pa/cm200304/cmselect/
cmintdev/79/7908.htm

http://www.time.com/time/archive/preview/0,10987,1101030623-458779,00.html

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Dear Reader, Pundita hopes you study the Belmont Club blogger's March 22 observations on Kofi Annan's plan to reform the United Nations. That's if you have a serious interest in helping the world's poorest and want to see the war on terror end in your lifetime. Wretchard observes in part:

In my own opinion Kofi Annan's proposals are a recipe for disaster for two reasons. His entire security model is philosophically founded on a kind of blackmail which recognizes that the only thing dysfunctional states have to export is trouble. He then sets up the United Nations as a gendarmarie with 'a human face' delivering payoffs to quell disturbances. This is the "bargain whereby rich countries help the poor to develop, by promoting the Millennium Development Goals, while poor countries help alleviate rich countries' security concerns."

Second, his model flies in the face of the recent experience in Afghanistan, Iraq and the entire democratizing upheaval in the Middle East. It is by making countries functional that terrorism is quelled and not by any regime of international aid, inspections, nonproliferation treaties, declarations, protocols, conferences; nor by appointing special rapptorteurs, plenipotentiary envoys; nor constituting councils, consultative bodies or anything else in Annan's threadbare cupboard.

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Pundita! Would you stop fiddling with your sidebar! It’s driving me nuts! I went to click on the website for World Bank president and it was gone. And by the way, can we please take a vacation from talking about the World Bank? And Europe and China? We get the picture. We can’t trust the World Bank, Germany, France, Russia, Ukraine and China any further than we can throw them. Now can we please move the foreign policy discussion to someplace closer to home? What about Canada and Mexico? They’re our neighbors, you know. Also, we’ve never once discussed any country in Latin America, but now I suppose we’ll have to spend the next week discussing Kuchma’s sales of missiles to Tehran. [Signed] Not Born Yesterday in New York”

Dear NBY:

Canada and Latin American countries have not been selling weapons and weapons/dual use technology to terror sponsoring regimes. Nor to Pundita’s knowledge has any regional development bank connected with Latin America been writing loans/grants to such regimes. We’ve been prioritizing foreign policy discussion according to threats to US national security. However, Pundita takes your point. We will soon turn to discussion of our neighbors.

With regard to your comment about Kuchma, Pundita has not been doing her job properly if you automatically assume that it was Kuchma’s government that sold the missiles in question to Tehran. Yushchenko’s administration is busily working to blame everything from solar flares to male pattern baldness on Kuchma’s government.

You need to remember that at one time, Cold War warriors such as Breziznski viewed the mullacracy in Tehran as a ‘green belt’ against encroachment of the Soviets on Middle East oil. You might also want to bone up on the Iran-Contra affair. And recall the divide-and-conquer strategy favored by Washington and London, which saw the standoff between Baghdad and Tehran as very useful to keeping the rest of the Middle East in line.

Of course all that was before 9/11; US policy toward the Middle East has changed greatly since then. Yet you need to keep all the above history in mind, and keep a large salt shaker handy, when considering bombshell data that governments plop into the daily news these days.

This said, it wouldn’t surprise Pundita to learn that someone in Kuchma’s government sold some missiles. The surprise is hearing Americans sputter that Kuchma’s government was a democracy-hating tyranny of the most evil order. Then why did NATO admit Ukraine under Kuchma’s tyranny?

Kuchma was our boy; he did everything Washington wanted up to the point where he risked having Russia shut off energy supply to Ukraine. One look at US aid and World Bank loans to Ukraine during Kuchma’s years shows that he had instituted democracy reforms. He sought and gained entry for Ukraine into NATO. But one day Washington soured on Kuchma. We still don’t know why. We’ve discussed this issue before. Washington’s turn could have been due to a number of converging factors—which could include learning about the missile sales to Tehran. And there is still the accusation floating around that someone in Kuchma’s government sold weapons technology or whatever to Saddam Hussein. However, the French sold weapons to Saddam during the embargo and allegedly even after they knew the US was to invade Iraq. Doubtful that France was the only NATO ally engaged in such practice.

In any case, it's not a really a matter of trust. We can’t blame countries for acting in what they perceive is their best interest—although we can try to convince them to adopt a better set of priorities, if they’re doing weapons trade with US enemies. We need to save blame for the US Department of State, which gained far too much power during the Clinton era and combined this with dangerously uninformed views of post-Soviet Russia, oligarch clan politics in former Soviet regions, the European Community, and the Middle East entire.

With regard to your complaint, Pundita has not made changes to her sidebar for five days—a record, I believe.

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“Pundita, dear, the Japanese had signed off on Wolfy even before Bush formally nominated him [for World Bank president]. So what kind of president do you think he’ll make? [Signed] Boris in Jackson Heights”

Dear Boris:

At the moment of this writing it seems likely that Wolfowitz has the job but the Bank vote has not yet been cast. Unwise to underestimate Brussels in this matter because so much is at stake for them. Behind the polite response from Brussels to the Wolfowitz nomination is a battle to determine how to use the World Bank to work on the Arab Problem. The Arab Problem is not part of the US war on terror, although it intersects with it. The Arab Problem is the result of Arab migration patterns, demographics, widescale poverty, and a host of grave social problems connected with Arab culture.

Discussion of the problem has been muted in the Western press and officialdom even though it was Arabs who formally identified the problem with the publication of the first Arab survey for the United Nations. The survey was launched several months prior to 9/11 but by the time it was published, in July 2002, government leaders were loath to publicly discuss the topic because Arabs are of course Muslims.

However, President Bush did try to propose a solution to the Arab Problem, which he dubbed The Middle East Initiative. This was met with howls of “Helsinki Initiative!” from Brussels, Arab leaders egged on by Brussels, and the Cold War Warrior crowd in Washington, which wanted to keep US resources focused on making Russia into a corn patch on the map.

Amending the name to “Greater” Middle East Initiative didn’t mollify the critics. The Arab Street picked up the howls, charging that America was trying to pave over the Middle East with American culture. Thus, the Bush stab at working on the Arab Problem would have to proceed in piecemeal, tiptoe fashion instead of as a comprehensive, explicitly stated plan. That’s a shame because the Arab Problem went untended for so long and has so many facets that it’s best dealt with in coordinated fashion.

Wolfowitz understands at a deep level the Arab Problem and the Middle East. Thus, his name surfaced in Washington even before Bush’s reelection during discussion of possible candidates for next World Bank president. The question at that time was whether Bush would want to reshuffle leadership at the Department of Defense if he won reelection. And I think a lot rode on the Iraqi election. If the election process went reasonably well, then Bush could really push for Paul Wolfowitz as next World Bank president.

Official EU response to the Wolfowitz nomination has been muted, but Brussels is not happy with the nomination. As soon as the nomination was announced, a well organized ‘grassroots movement’ sprang into action in Europe to ‘pressure’ Brussels into making a strong protest to Washington about the nomination. Clearly the movement was ready to spring into action well in advance of the nomination but probably would have sprung no matter which candidate Bush announced.

The question is whether the movement, or elements of it, is concerned with promoting the Brussels view on how best to address the Arab Problem. The answer would be sheer guesswork because again Brussels has (to my knowledge) continued to avoid public discussion of the problem. But taking a shot in the dark, it might be that the plan for ending world poverty that Jeffrey Sachs outlined in his latest book indicates how Germany and France want the US to deal with the Arab Problem.

In any case, the Arab Problem is certainly worse in Arab regions that don’t have much or any petroleum resources. But it would be confusing distinct issues to apply that point to how the Bank can be used to work on the Arab Problem.

Contrary to popular perception, the Bank is not an aid organization. It’s a financial institution and a sound one. It has to remain sound if it wants Bank bonds to have a high rating because the Bank does not only finance projects through grants from member countries. To keep their credit rating high, the Bank has to get returns on their investments—in other words, they have to collect on loans they make to governments.

The worst-case countries really can’t afford to qualify for Bank loans—even with the softest repayment terms and zero interest. Those countries are best helped by outright aid. Yet it seems Brussels wants to remake the Bank into more of an aid organization. That trend got seriously underway during Wolfensohn’s tenure; the Bank has made outright grants. That’s like trying to make your electric blender into a bread toaster. The World Bank can raise big loan amounts just because it’s a financial institution with a good credit rating. If you mess with the formula, you undercut or even destroy the Bank’s capacity to make big-ticket loans.

Post-Ba’athist Iraq, which of course is situated in the Middle East proper, is a perfect candidate for the classic big-ticket IBRD model of development and reconstruction, which does best at helping countries that have fallen backward. Years of Ba’athist rule, which included a long war with Iran, left the country’s infrastructure in ruins even before the US bombing campaign. Yet because Iraq has large oil reserves, they can be expected to make timely repayments on big Bank loans. And because Iraq manifests all the problems that have been noted with other Arab countries, the World Bank could, in theory, make fast inroads on the Arab Problem by lavishing loans of all kinds on Iraq.

If you take the darkest view of Brussels, which is that they are bent on destroying US power in the world, it’s easy to read dark motives into what is surely their lukewarm support for rebuilding Iraq with Bank loans. However, the bottom line is that Brussels is trying to find money to build up the EU military and tend to the many administrative expenses of running the European Union. There might be no immediate payoff for Germany and France in supporting big loans to Iraq because the two Euro nations stood on the wrong side of history on the matter of Bush’ plan to deal with the Iraqi Ba’athist regime. The Iraqi government will remember that when it comes time to okay contractors for big Bank projects--unless Germany and France greatly extend themselves to be helpful to Iraq, which to my knowledge they haven’t yet done.

Does all this mean that Wolfy at the helm of the Bank would result chiefly in a flurry of loans to Iraq? His diplomatic stint in Indonesia, core beliefs, and understanding of the Arab Problem suggest otherwise. But let’s not jump ahead of ourselves. Because America is at war Brussels has cards to play. Washington’s priorities do not place the World Bank or the Arab Problem at the top of their To-do list. So now, we wait.

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“I am writing to respond to your essay “The Emperor is Naked.” You should visit Iran. I assure you we have running water there. We even have modern cities just like those in America. Most Iranians love democracy and America. We don’t love the Western arrogance and condescension that your viewpoint represents. [Unsigned]”

Dear Unsigned:

Pundita’s regular readers know that she takes poetic license when steamed. But clearly Pundita is slipping if you mistook insults for condescension, so let me rephrase. You say you have modern cities like those in America. Show me the city in America where the residents gather 100,000 strong to watch the stoning death of children. Show me that city.

Pundita has met people in a remote region in Asia who live in caves and wear animal skins. They are just a few steps up from the Stone Age but they have more civilization in their social customs than the Iranians. So what does it matter if German engineers showed you how to make water run? You’d be just as well off drinking from a stream.

Iranians do not “love” democracy. They covet democracy, in the way a pasha covets an expensive bauble. Others have it, so why can’t you? You’re waiting for the whole package and if your leaders won’t give it to you, you’ll keep looking for a leader who will. That’s why Iranian students find nothing strange about prancing around in American jeans and discussing American cinema, then writing up a petition as their response to barbaric tribal customs including stoning deaths of children for the crime of nothing at all. They’re waiting for the democracy bauble to arrive, as if possession of this gem will purge them of tolerance for barbarism and restore conscience and dignity to their society.

You tell Pundita that most Iranians love Americans. Most Iranians don’t know Americans. Once you get to know us, I guarantee you’re not going to like us because we represent the inverse of the Pasha mindset, which is still entrenched in your part of the world.

Boiled down, the Pasha mindset is “Only slaves and women take out the garbage.”

In one sentence the American mindset is “Do it yourself.”

That’s the real reason the Persians had contempt for the Greeks, particularly by the time of Alexander’s era. They saw him running around taking soil samples and making notes and said to each other, “Only slaves and paid retainers work up a brain sweat. Real men write poetry and command others to do their bidding.”

Now in the old days, it wasn’t like that. Persian kings tilled their own field and busted their brains figuring out how to repair a plough. Then along came the 900 Lazy Bastards, who always appear on cue when a large group of humans show a spark of collective intelligence.

So it came down to a day in 1985, when Pundita met a German who earned money on his annual vacation by driving a German-made van from Germany to Nepal. His route took him through a part of Iran. He told me that the villagers were starving and praying for the return of the Shah’s son. Last year I recounted the story to an Iranian expat. He told me, “I’ve got news for you. The villagers are still starving and still praying for the return of the Shah’s son.”

Still waiting for pasha, after all those years.

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Pundita is only halfway through embroidering a sampler of the following quotes for hanging above the fireplace. My apology to The Scotsman newspaper and Jim Cusak for breaking protocol by posting lengthy quotes from their piece . I hope they'll forgive me this one time, in honor of the day and the gravity of the article's implications.

The quotes speak volumes about where democracy is headed in small countries in these days of globalized crime syndicates, if citizens don't keep a very close watch. Supporters of 'managed' democracy revolution please take note of which century this is. The days are long past when only a handful of wealthy governments could afford to stage-manage the overthrow of governments in small countries.

It's a good thing the bank robbers overlooked that it's not possible to launder tens of millions of stolen bank notes in a small country, else the police might not have discovered the larger scheme.

Members of the Garda [Ireland's police] Special Branch, Fraud and Criminal Assets Bureau had just launched its biggest ever set of raids on the offices of accountants, solicitors and finance companies across the country, looking for documents linked to offshore accounts, property deals, business ownerships and money transactions estimated to run into hundreds of millions of euros.

Ostensibly linked to the search for the £26.5m [$39m] stolen recently in Belfast, in reality the raids were about something more. There is said to be a massive amount of financial activity, ranging from pubs to trading corporations, situated in countries outside the EU in order to avoid the scrutiny of EU financial regulations. And they all have one thing in common: they are linked to the IRA.

The amounts involved were evidently for a purpose far beyond personal enrichment. There is now a belief that the finance operation uncovered is intended to fund a massive campaign to subvert politics in the Republic of Ireland, undermining its political parties and institutions. Gardai now talk in apocalyptic terms. The scheme is, they say, the IRA’s banking system to be used to overthrow the government of Ireland.

A key part of the grandiose plan was the subverting of Sinn Fein’s political opposition. The IRA is in the process of building a black propaganda campaign to attack members of the Irish parliament and other elected representatives. Across the country, the IRA has been spying on members of Fianna Fail, Fine Gael, Labour and the Progressive Democrats. Units of IRA volunteers, under the guise of Sinn Fein "activists", have been building up dossiers on members of opposing political parties.

This information is to be used to destroy the careers of politicians and public figures at key points in the run-up to the next Irish general election, in which Sinn Fein hopes to establish itself as a major presence in the Dail.

Gardai and Irish army intelligence believe the leadership of the Provisionals has decided it has completed its strategic project in Northern Ireland, having overthrown the SDLP to become the biggest nationalist party, and has now turned its attention to its grand plan of taking power in the Republic. Within republican circles this project is referred to as the "re-conquest of the south".

This project requires hundreds of millions of euros to pay for the small army of activists of all shades, ranging from the local "community" workers to high-flying financiers handling the organisation’s money

The truth has finally dawned on Bertie Ahern’s government that, rather than be content with a political agreement that would have seen Sinn Fein in a Stormont Executive in the north, the Provisionals were intent on an altogether bigger prize.

-- 02/20/05 article, "IRA's dirty cash funds power grab," The Scotsman.

Happy St. Patrick's Day, everyone.

In case you missed the details of the heist:
http://www.cnn.com/2004/WORLD/
europe/12/22/ireland.bank.robbery/

How the money laundering scheme unraveled:
http://news.scotsman.com/
latest.cfm?id=4156391

The Scotsman piece quoted above:
http://news.scotsman.com/
opinion.cfm?id=193642005

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"If you can't have Eliot Spitzer as World Bank President, will Paul Wolfowitz do? Sachs went through the roof over Wolfy's nomination. Looks like Kofi Annan, Time magazine and Jeffrey Sachs failed to head off Bush at the pass. Maybe Bush got more than Bolton in exchange for sacrificing "two knights, a bishop and rook."
[Signed] Chicago Dan

Dear Dan:

Yes, this has been a bad month for the Mercantile School of foreign policy. But if what you're implying is true, think what that means. The World Bank and the United Nations were supposed to be US foreign policy instruments. While Americans were sound asleep, the Franco-German alliance in the European Union walked off with them. If Bush felt the need to agree to back the EU's offer of concessions to Tehran in exchange for muted resistance to the Bolton and Wolfowitz nominations, that would show how much ground the US lost during the past 15 years.

However, there shouldn't be too much resistance to Wolfowitz, if European and Japanese big-ticket contractors stop and think it through. Iraq needs a lot of reconstruction and development--and not penny-ante projects. They need to rebuild the entire country. With Wolfowitz at the Bank's helm, it's guaranteed that big-ticket Bank loans for infrastructure projects will flow in great number to Iraq.

That's the kind of work the World Bank loan model was created for. And because Iraq will soon be filthy rich from oil revenues, they can be expected not to default on the loan payments. So the Half a Bridge rule would not apply to Iraq. The Bank would lend enough money so that the projects would be top-quality.

Once the Iranians see what's going on in Iraq with Bank construction and development, they will be green with envy. In that event, all they have to do is get rid of their Taliban-syle government and give up the nuke program, and they can get in on the bonanza.

As for the hundreds of millions of the poorest in African countries--as Pundita has observed many times, the Bank was not set up to be an aid organization. Clean up the Bank and let it do what it was designed to do. The Bank can help, but rely primarily on other organizations, including USAID, to rescue the poorest.

As for Annan, that buzzard is lucky he's still got his job. He should chalk up the win to Bush over the matter of Wolfowitz.

As for the Merchantile School, Shaheen Fatemi of the American University in Paris has some choice words for the Brussels crowd in his essay Whose Side is Europe On?

Let's hope Secretary Rice sees Dr. Fatemi's essay and takes special note of the subtext in his observation:

In the collective memory of the Iranian people the images of European leaders happily and proudly posing in pictures with the criminal leaders of the Islamic Republic are bitter souvenirs for the future.

With an eye to the future, there should be fewer concessions to Brussels. It's not only the eyes of Iranians that are upon us. The whole world is watching to see if we will stand behind our fine words about democracy.

http://iranvajahan.net/cgi-bin/news.pl?l=en&y=2005&m=03&d=16&a=3

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Dear Pundita, May I ask why you omitted the Second Rule of Foreign Policy from the list of essays on development? The list you put up on your home page? You brought out very important points in the essay. I think it should be included in the list. Also, I suggest you talk a little about the realities for the expats who work at the World Bank. That would help people understand why there's so much waste and inefficiency connected with Bank projects and why the Bank resists an external audit.
[Signed] Kumar in Bethesda

Dear Kumar:

We didn't put that essay on the sidebar because we forgot to do it. Thank you for the reminder; Pundita has corrected the oversight. Yes it might be a help, if Americans outside the international organization 'community' based in Washington, DC learn what happens to non-American Bank employees if they get fired. I forget how many days or hours they have to leave the USA, but they don't have much time to take their children out of school, collect all their belongings, and return to their own country.

If that brings forth, "Aw too bad" from American readers--well, how would you like to live with the thought that if you get fired from your job in the USA that means having to put your child in school in some place such Pakistan? And not in an 'enclave' school reserved for American children of diplomats and other Americans working there.

I'm not trying to elicit your sympathy but to convey why "Don't rock the boat" is the operating philosophy for World Bank employees. Most of the employees are not American and many are from LDCs--less developed countries, or what used to be called the Third World. If they screw up in their work or get on the wrong side of a Bank higher-up, it's back to wherever they came from. That place is usually a far cry from the safety and freedom that Americans enjoy.

The Bank looks after their employees well--great health benefits, and so on. But working for the Bank is a form of indentured servitude; it's a Golden Cage. And if you work at Bank headquarters in the USA, you're not free to tell the boss to go to hell then quit your job--not unless you want to lose everything you've built up in America.

This reality has created a culture inside the Bank that evokes to remarkable degree the courts of ancient imperial dynasties. This extends to the highly ritualized labyrinthian Bank language used in memorandums and reports. It's courtier language. The idea is to ensure that what you say is so hard to pin down that the ax can't find your head.

That culture doesn't make for reflexive responses to problems, which doesn't mean the Bank can't be reflexive. The World Bank has so much power, wealth and expertise that when the will is there, the Bank can move against a problem with awesome speed and efficiency. The hard part is getting the will to that point.

Very few people get fired from the Bank just because of the situation I outlined. But that means supporting a lot of bad job performance, a bloated workforce, and it means a work culture built on fear. If you justifiably fear speaking up at your job when you see things that are really wrong, what kind of organization can you expect to see evolve from a culture of fear?

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The stage-managed Orange Revolution in Ukraine was a product of what could be called the Democracy Stage Show Kit. The kit comes complete with instructions on how to stage civil disobedience, how to use the media, and coaching on how to line up your talking points. The basic kit is not new. It's as old as big money buying mobs. In the modern era the kit was refined by Western governments and used to peel some former Soviet regions from the Kremlin's influence.

A problem with the kit (aside from the question of whether it's really a democratic revolution if a foreign government is behind it) is that it doesn't teach how democratic rule is administered. The problem is easily solved if the democracy revolution is stage managed by a powerful democratic foreign government. Such governments have the money and expertise to throw in after the revolution phase. They can teach the leaders how set up a real democratic government. When that situation is not the case, there's nothing more untidy than gaining the palace then having to ask each other, "Now what do we do?"

With that thought, it might be helpful if someone published, Democratic Government During the First Hundred Days for Dummies. To Pundita's knowledge, the Democracy Stage Show Kit is not yet available for sale on the Internet--not as a package for $294.95 plus shipping and handling. Yet things are approaching that point; there are now organizations (ostensibly) independent of any national government that will advise any movement worldwide calling themselves democracy advocates on how to confront their non-democratic government.

On paper, that's not such a bad idea--provided foreign government influence can be kept out of the confrontation process. Yet there is an insidious drawback to the packaging of democratic revolution, which works greatly against real democracy.

That people in a democracy have the right to stage mass protests is not the same as saying that mass protests are a demonstration of democratic government. They're demonstrating a benefit of such government. Yet many people who use the Democracy Stage Show Kit are not clear on the fact that democratic government requires the rule of law, not the rule of a crowd.--and that democracy demands increased personal responsibility on the part of the self-governed.

These two concepts--rule of law and personal responsibility--are strikingly absent in the sales pitch for the Democracy Stage Show Kit. What you hear most in the pitch is "freedom." People are encouraged to seek more freedom. But freedom is not free. It's a tremendous responsibility, which imposes considerable discipline on the individual and takes up much time.

That's just why dictators keep being returned to power. After the glow of a stage-managed democracy revolution wears off, the populace realizes how much work and responsibility it entails to make democracy work. Thus, many become willing to make a tradeoff between freedom and free time. They go looking for a hardworking fool to take on the burden of governing responsibility--preferably, a benevolent fool.

This impulse doesn't stem so much from laziness as from the need to conserve energy. Those who labor 12 hours a day in fields, coal mines and factories don't have much energy left over for the task of self-governance. But of course there is no such thing as a benevolent dictator when push comes to shove.

Thus, the conundrum. One might characterize the 20th Century as the era in which democracy won the argument about which form of government is best. The 21st Century will pound home the point that you can't have it both ways: you can't have the luxury of letting someone else take on responsibility for your governing and expect to have good government.

This argument is not easy for the developed nations to make. The majority in advanced countries have labor-saving devices and disposable income, which allow them to conserve enough energy to spend on activities that go beyond eking out an existence. So they have enough energy for the task of participating in the work of government, which democracy demands. Large swaths of humanity still don't have much energy beyond tending to survival basics. That means it's easy for them to hope that a benevolent dictator is a bearable compromise between lack of freedom and physical exhaustion.

Humanity will work through the conundrum; we have no choice, given our current population and where the figure is headed. Democracy is not only the best form of government in terms of protecting human rights, it's also the only workable form of government in the era of huge human populations. We have simply passed the era when a small elite could be counted on to properly manage the problems of governing a populace. It takes large numbers of people to efficiently govern populations that run into the hundreds of millions.

But you can't have responsibility for governing without attendant authority. Thus, the authority of the elite must be shared with the majority of the citizenry. That's what democracy does: it confers authority on the people along with the responsibility for government.

Today, and in country after country, the elite running non-democratic governments are simply overwhelmed with the everyday problems of managing hundreds of millions of people. The other side of the coin is that those millions can be too exhausted to undertake the weighty, time-consuming responsibility of choosing good government representatives and overseeing them.

Technology is one part of the solution. Satellite-linked town halls, computerized voting, talk radio stations in rural areas, and other technologies can reduce the amount of physical labor it takes for citizens to participate in government. Yet the technology is wasted, if the people using it are not clear on the nature and operation of democratic government.

So another part of the solution is education. That's the problem with kits. They don't teach the fundamentals--they're not meant to be educational; they're meant to be used. The Democracy Stage Show Kit doesn't teach the principles of the democracy gizmo and how to put the gizmo together and keep it working. Chanting "Freedom!" and flashing the "V" sign is no help to understanding the system and operations of democratic governance.

Unless more people learn how the democracy gizmo works, they will continue in the counterproductive practice of relying on an elite to make democracy work for them. Hello, that practice is obsolete, given our population number. Today, when the elite screw up, they can climb into their helicopter and fly away. The millions left behind have to clean up the mess. Flashing the "V" sign at it generally doesn't work.

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The author of The Glittering Eye website wrote Pundita to inform her that he'd added her thoughts to his roundup of blogosphere opinions about Jeffery Sachs's ideas for ending the worst poverty. The roundup is interesting because it shows quite a range of thoughtful opinion and provides some good source material for those wishing to go more deeply into the subject.

The Glittering Eye author also published praise for Pundita's blog, which will greatly please the team when I read it to them at our next policy meeting. Here we must take a moment to correct the author's guess that Pundita is an American female residing in the United Kingdom. Pundita is an American female who resides so close to Ground Zero that our commuting route was shut down by the 9/11 bombing of the Pentagon. We live a short Metro ride from downtown Washington, DC and the Pentagon. So as with all Washingtonians, Pundita is very heavily invested in the successful outcome of the war on terror.

I also note that the author indicated he had just begun to plumb the essays on Pundita's blogspot and thus could only give his readers his initial impression. He noted that Pundita's focus is "foreign affairs with a special concentration on international development."

Pundita's essays on development are in the manner of playing Dutch Aunt. The first time I heard about Barnett's Core & Non-integrating Gap thesis I blurted, "The Core is everyone who knows how the World Bank works. That leaves Americans and Arctic penguins to fill the Non-integrating Gap."

Amazon chieftains wearing nothing but feathers know more about the workings of the World Bank and the IMF than Americans. That's why I have written about development policy--not because I have a particular interest in the topic but because the system of development banks and what they've created is a piece of the puzzle that more Americans need. That's in order to gain a clear picture of today's world outside US shores and how US foreign policy intersects with it. The World Bank is not only a bank, it's also an instrument of US policy. But while nobody in America was paying close attention, some bright souls outside our shores said, "Wait a minute. If they can do it, we can do it."

So the situation today is akin to a favorite plot vehicle of horror movies. She wakes in the dark and nudges hubby: Dear, there's something in the room with us. Nah, it's just the house settling. Shhhsh; did you hear a floorboard creak? All right we can settle this by turning on a light.

African Development Bank
Asian Development Bank
Brazilian Development Bank
Caribbean Development Bank
Central American Bank for Economic Integration
Council of Europe Development Bank
Development Bank of Singapore
Economic Development Corp. of Goa
Eastern & South African Development Bank
European Bank for Reconstruction & Development
Hungarian Development Bank
Inter-American Development Bank
Islamic Development Bank
Korea Development Bank
National Development Bank of Sri Lanka
Nordic Development Bank
North American Development Bank
Russian Regional Development Bank
World Bank Group (IBRD, IDA & related)
I've gotten tired of adding to this list

For added scare effect I didn't separate the regional development banks from the multilaterals--the ones that lend to entire regions around the globe. And the mix helps illustrate the rise of regionalism and its challenge to the policies of the multilateral institutions.

So when critics talk about reforming the World Bank, they're treating the Bank as if it operates in a vacuum. And when they talk about reforming the International Monetary Fund, what about the Arab Monetary Fund? And what about Citibank and other commercial banks that follow in the wake of the development banks like sharks follow the wake of an ocean liner?

It's not only the development banks that lend to the poorest governments. If there's even a hint that a poor country can be mined for a valuable natural resource, the commercial banks throw loan money at the government. That's after they see that a MDB (multilateral development bank) is willing to risk writing loans to whatever dictator or junta controls the resource.

Regionalism has meant that the World Bank is not as effective a US policy instrument as it used to be. Governments have gotten good at playing one development bank against another to squeeze out more loans. And they've set up regional banks that resist multilateral policies.

Meanwhile, the development bank system set in motion conditions that at best treat only the symptoms of the worst poverty in the LDCs (less developed countries) and at worst, created horrors that almost defy description.

The tragic irony is that the horrors during more recent decades arose from well-thought projects. It's just that the planners overlooked a few factors that only emerged on their radar after the disaster struck.

Truly, if you want to play God, you need to consider an awful lot of factors when it comes to project planning and execution. That's what the Bank economist meant when he told me the Bank is proof that you can't fix anything in this world without breaking something, somewhere down the line. So you have to be really, really smart about how much breakage you'll allow and how to manage it.

It's possible that Jeffrey Sachs has the idea of circumventing the mechanism of development bank loans or least greatly supplementing them with outright aid. Without having read his book (or even the Time excerpt) I'm guessing he's envisioning a kind of global Manhattan Project to eradicate the worst poverty. But then the problem becomes, who runs the project?

This problem arose during US relief to the tsunami victims. The Indian government told the US, "Thanks but no thanks" because they saw the offer as an attempt by the US to gain more influence in India and make bereft Indians into poster children for American largesse.

Then an Indian Yogini who lives in a literal backwater peeled off 20 million dollars to throw into the relief pot for Indian victims. What she pulled out of her pocket is peanuts in India. There are temples in India that take in one million dollars a day. It's nothing for many Indians to blow a million bucks on a wedding. Stop and think how much money that translates to in rupees, and how far a rupee goes in India.

As for China--have you ever seen Shanghai? That's Bling Bling City. Last season an Amazing Race team had to beg on the streets in Shanghai as part of a game penalty. They made so much money so fast, one team member said she was returning to Shanghai to beg full time after the show ended. It's nothing for large numbers of Chinese to walk into car dealerships and plunk down the full price of an expensive imported car.

As for poor Africa--there's so much money sloshing around Africa you don't even want to think about it. So if you really want to know how to help the poorest of the world, Pundita will tell. The way is to stop making an industry out of helping the poorest. The way is to treat people as if they're people not much different from you.

What do you do, if you see someone in your neighborhood not lifting a finger to help with a much-needed community project? You point the finger of shame, isn't it so? You ask them, "What's wrong with you? Why don't you help?" And you don't take excuses.

As soon as poor Indian villagers hook up with talk radio, they start pointing the finger of shame right and left at greedy, corrupt officials in their village. That's how they get projects done--and without the money for the projects being ripped off.

Even 10 years ago, it was not possible to apply this time-honored method toward getting people in LDCs to show more heart toward each other. Today, with the Internet, satellite TV and talk radio, it's easy to point the finger of shame.

That's what Jeffrey Sachs is trying to do: point the finger of shame at America and the West about the horrible plight of Africa's poorest. But....what's wrong with the Africans? Do they lack a gene that renders the richest among them incapable of turning out their pockets to help their own poorest? Only when a World Bank official is around.

Now let's back up and take a closer look at the Amazing Race team begging in Bling Bling City. They were begging with a cameraman in tow. So of course Chinese lined up to be filmed giving money to begging Americans.

Human nature. Amazing thing about it is that it's the same for all. Time to stop treating peoples in the poorest countries as if they're a different species. That doesn't mean halting all development projects and aid. It means shifting much more responsibility for development and aid back to where the responsibility belongs. It also means ceasing to use aid as a foreign policy instrument.

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"Pundita, I just read Juggernaut2. You're overlooking the Darwinian angle. Somebody has to lose in the global competition for big-ticket contracts. If you give good training to people in the poorest countries, as America has been doing in the developing countries like China and India, the people from the poorest countries won't be poor anymore but it's because they'll take away jobs from Americans.
[Signed] Tom in Sioux City"

Dear Tom:

Your argument might have held water a century ago. But industry is no longer materials-based in advanced societies, it's knowledge based. The latter creates more jobs than Americans can ever hope to handle. However, there is a way to tilt the playing field against America and against all democracies that engage in global trade. The unfair advantage comes when democratic peoples compete with despotic governments. This is because the despot can order his subjects to learn whatever profession and work in whatever industry gives an edge in exports. Thus, China graduated something like 300,000 engineers last year.

Do you get executed in China if you don't take up the career the communist party bosses deem necessary for the greater good of the Chinese people? It's a question intelligent Chinese don't ask. There are unpleasant penalties, if you don't do well in friendly communist party classes designed to help you mend unsociable thinking.

The treatment of peoples as a cog in the machine of state is an old story in communist countries; it's an old story even in the Old Testament. It's the story of Pharaoh, who could encourage his subjects to work on a building project and enslave those who said they'd rather be doing something else.

That's how the playing field is tilted against the American worker. A democratic government can't walk into your house and tell you what career your children will undertake. Red China's leaders can map out an industry in which they want to compete, and sequester as many Chinese as they need to learn and fill the job slots needed for that industry.

That's what the West created by putting regimes such as the one in China on equal footing with democratic nations. That's what you uphold, every time you buy a product made in China. That's what American business upholds, every time they set up a branch in China. That's what the World Bank and other development banks uphold, every time they write a loan to China. They uphold the rule of Pharaoh.

That is the problem India and other developing democracies face. India, for all it's flaws in government, is a free country. The Indian government doesn't force its citizens to work in a particular industry or learn a particular school subject. That puts India and other developing democracies at a big trade disadvantage with Pharaoh governments.

That, too, you and I and everyone else in the developed world uphold, when we don't demand that Pharaoh deliver his people from bondage before we'll trade with him, admit him to the United Nations, and write development loans to him.

Pundita hastens to add that the World Bank and other development banks shouldn't be blamed for the situation. The development banks are government-sponsored lending institutions. As long as the member countries supporting the development banks put Pharaoh on an equal footing with democracies, the development banks will continue to write him loans.

Oddly enough, American corporations and patent attorneys get huffy because India cuts corners on patent laws in the struggle to be competitive in global markets. So India must play by the rules, but it's okay for American corporations to increase Pharaoh's wealth and global power.

A Pundita Prize to the first reader who can tell me the downside to the Pharaoh method of staying competitive in global trade. And I'll give you three guesses as to which countries and financial institutions have to bail out Pharaoh, every time his industry map doesn't keep up with leapfrogging advances in technology.

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In Part 1 Pundita looked at the World Bank as part of the 'system' of development banks. I explained that the basic development bank model is actually designed to benefit the industries--represented on projects by contractors--that work on projects the development banks underwrite, execute, and oversee for governments. It is the system that must be examined when asking how the World Bank can better serve the poorest countries. Those who suggest dismantling the Bank don't understand the system, which is so successful at employing industries that if the Bank closed down, other development banks would arise to take up the shortfall.

Yet the proliferation of development banks set in motion a destructive cycle that is hard to break and keeps the LDC ('least developed country') governments hooked on development bank loans. In this essay I examine a spinoff cycle that doesn't get attention from the public because it's not part of the most glaring mistakes of past development bank projects. Yet this cycle is the most damaging in the long run because it tamps down human potential. And it is connected with entrenched social problems in both LDC and developed countries--problems that range from drug addiction to terrorism cells. West Europe has become a backwater for these problems. So to begin:

Many people outside the banking community don't realize that the World Bank is much more than a bank in the general understanding of the term. The Bank not only loans money for development projects, the Bank is also involved in every aspect of the project. The Bank has their own engineers who specialize in particular projects, their own procurement specialists and project financial analysts. This is on the theory that the poorer countries cannot fully provide the pool of expertise needed to properly execute the projects, even though the projects do make use of local talent.

So on paper World Bank projects have a valuable educational component. Bank project engineers, other Bank professionals and contractors from advanced countries work with the locals, who use that route to learn about modern technologies and methods. The catch is that the LDC governments can't afford to borrow the kind of money that uses state-of-the-art building methods, materials, and technologies.

I remember a Bank power engineer telling me that he couldn't leave the Bank to work in private industry because the advances in his field were so rapid that he no longer had the qualifications to be competitive. This was despite all the dams he'd helped build in developing counties. He explained that the dam projects he worked on for the Bank used technologies 20 years behind current ones.

But it's not only Bank engineers who can find themselves stuck behind the times. The LDC locals who work on the projects are not getting the information/technology transfer that helps them become competitive in the modern world. They are only competitive in trade with countries that are in the same boat.

Now one might argue that advanced societies don't owe technology transfer to the backward countries, and that any teaching element connected with development bank projects is gravy. True on both counts, if you keep the discussion narrowed to the actual projects. But if development and foreign aid pours trillions over decades into bringing the poorest countries out of abject poverty, and the countries stay in abject poverty, this signals a flaw in the approach. The Half a Bridge approach to development lending institutionalizes business and lending practices that provide poor-quality infrastructure. This sets up a destructive cycle. The practice:

1. Contributes to an inferior pool of local workers, so that LDC governments continue to hire contractors from advanced countries for projects that must be done right (e.g., Sahib Zone buildings, oil industry infrastructure).

2. This creates a brain drain: the brightest and most determined nationals flee their LDC to receive education abroad and work in advanced countries.

3. This shrinks the LDC's tax base, meaning that educational institutions remain inadequate for turning out skilled workers.

4. This further entrenches bad conditions for the LDC poorest, who flee to advanced countries and take the most menial jobs or go on the dole.

5. This creates an immigrant underclass in the developed countries.

6. The underclass supplies crime and terrorism syndicates with an inexhaustible supply of cheap, disposable labor.

Then people in developed countries ask, "Why are we overwhelmed with illegal drugs, child prostitution, gangs of thieves, and nut cases who think it's fashionable to blow themselves up?"

To understand the part that development banks play in these situations, walk the cat backward through the above cycle. Then keep walking back through the cycle outlined in Juggernaut Part 1. To review:

1. At some point governments have to pay for the loans they receive from development banks,

2. they can't pay without an adequate tax base and expanding economy,

3. hard to expand a 'commanding heights' (socialist) economy,

4. but if governments move away from socialist government, the contract pie shrinks for contractors--the ones who depend on getting business from governments that get loans from development banks,

5. when the contract pie shrinks, many contractors go belly up,

6. that shrinks the country's tax base,

7. return to "1" and repeat the cycle several times,

8. the government defaults on the loan payments,

9. the development banks stop writing loans,

10. more contractors go out of business,

11. the tax base shrinks even more,

12. the broke debtor governments stand outside the annual G7/8 meetings and rend their clothing and gnash their teeth,

13. the G7/8 put together some kind of debt relief (i.e., refinancing the loans and writing more loans),

14. Return to "1" and repeat the cycle.

Then Americans ask, "Why is it so hard for these poor countries to get away from socialist government, which is killing their countries?"

If you keep walking the cat backward, you can stop before reaching Bretton Woods. When the IBRD model was applied to advanced countries that had simply fallen backward, as happened in West Europe during WW2, it was a success. The trouble began with Robert S. McNamara's tenure as president of the World Bank.

McNamara did not understand how the IBRD gizmo worked. He believed the myth about the IBRD, which leaps over the critical factor of how the Bank really works. To review, when studying the Bank's failures, it's chasing red herring to think in terms of "development." The IBRD was not designed to "develop" a country. It was designed to keep businesses afloat by giving them contracts financed by loans to governments.

McNamara didn't understand this, which is not a slur on his intelligence. The World Bank is so complex in its workings that it takes Bank employees about two years to learn to navigate the basics of the Bank's way of doing things. (Reading books on how the Bank works only shaves a few months off the learning curve.) So when Americans are put in the president's chair they are at the mercy of the Bank's mandarins--senior management who have been working at the Bank for years. That's what happened to McNamara.

To cut a story, Robert McNamara assumed that the IBRD could apply their loan model to "developing" the world's poorest countries out of abject poverty--countries that had not fallen backward but had always been backward, by modern standards. However, what the IBRD gizmo does, when applied to the LDCs, is the same thing it does when applied anywhere: provide gainful employment for many skilled contractors from advanced countries. So to blame the Bank for failing to develop the LDCs is akin to blaming your electric blender because it doesn't toast bread. The Bank wasn't set up to do what McNamara wanted done.

But it compounds the error of misapplying the IBRD model, if the Bank underwrites projects that operate according to the theory that half a loaf is better than none. What use is it to build a bridge with outmoded materials, structural design, and inefficient building methods--a bridge that when completed is insufficient to handle the vehicular traffic?

Pundita will tell the use: the need for major repairs within a year of the bridge's opening requires the development bank to write yet another loan to the government. That loan will be serviced by contractors using technologies 20 years behind the times. That will create the need for another loan....

Again, all this works splendidly to keep many contractors gainfully employed. But if the goal is to help the LDCs pull themselves up, this is not the way to go about it. The highest cost of the Half a Bridge theory is that it wastes human intelligence. It condemns minds to learning things that are obsolete in the modern world.

The reader might ask whether this Half a Bridge style of business also holds back the contractors from the developed countries--the ones who specialize in servicing highly technical projects for development loans. I doubt there's ever been a study done on the question. But I imagine if an engineering firm can coast on projects that don't require the employees to be at the cutting edge and don't require R&D--that would leave the firm dependent on doing work that is obsolete in the advanced countries.

For a very brief and cutting overview of Robert McNamara's contributions to the World Bank, see:
http://www.techcentralstation.com/072904E.html

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"I am writing in response to your Friday post. You seem to view the European Community as completely unprincipled and on the side of America's enemies. This view is wrong and very disturbing, and I hope it's not shared by many Americans.
[Signed] Henry in Leeds"

Dear Henry:

I stated that the EU is founded on the principle of trade; that to be true to the principle Brussels can be counted on to side with their (important) trading partners, even if this pits them against America. And, I should add, even if this pits them against the foreign policy of certain EU governments. Brussels, as the seat of EU government, is currently dominated by the views of the chief founders of the EU, which are Germany and France. That situation might change over the years but that's the way things are now. And the EU is in the process of adopting a single foreign policy.

Pundita fails to see what's wrong or disturbing about the above statements. What's disturbing is that Washington doesn't recognize the fact of the European Union's growing power and cohesiveness. They don't recognize that during the past decade, Brussels has been moving toward placing the United Nations alliance above the NATO alliance. Many in Washington have not confronted that Brussels isn't only talking about giving the UN more power. Brussels is implying that the UN, not NATO, is the premier alliance for the European Union.

If that's Brussels' choice, that's their prerogative, but that calls for a revision of the US view of NATO. At the least it calls for Brussels to clarify their position at the official level. But we can't call for that clarification until Washington confronts where we are now. Until there is clarity, the US Department of State will continue to adhere to the clearest position, which is to treat the NATO alliance as if it's frozen in time, even though the position is irrational.

All right, that's enough chat about the price of tea in Outer Mongolia and the best weather to plant corn. Tehran is blackmailing Brussels. That's why the US shouldn't go along with the so-called negotiations.

If you had told Brussels in August 2001 that by 2003 the US would be camped in Baghdad, they would have laughed 'til they cried. But once they saw it might come true then it was, "Uh oh. Saddam keeps really accurate records of his weapons purchases. We need to head off the US at Turtle Bay Pass!"

Now the same crew is trying to head us off over Tehran. The French, German and British governments need to stop playing the role of Hyacinth. We're going to find out sooner or later which companies the Tehran regime contracted with to build their nuke weapons facilities.

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"The Europeans have a strategy which is to show the Iranians that if they are prepared to live up to their international obligations there is an alternative path to confrontation and there is a path to a better future. We are supporting that diplomacy but this is most assuredly giving the Europeans a stronger hand, not rewarding the Iranians." --US Secretary of State Condoleezza Rice

But the Europeans are rewarding Iran by offering them concessions. Wait, let's speak with more precision--granted, the enemy of diplomacy, but in the interests of defending the logic of the English language and indeed the logic of all language, let's name something for what it is: the Europeans are rewarding Iran by offering them bribes.

So if the United States supports the European offer of bribes....isn't that rewarding the Iranians? Asks Alice of the Red Queen.

Can we wring logic from Rice's first major executive decision as secretary of state? Within the concept of a chess game, yes. Brussels looks at John Bolton in the way they look at Genghis Khan. So the exchange of chess pieces is that the US sacrifices support of democratic principles in exchange for muted resistance from Brussels to the Bush nomination of Bolton as the US ambassador to the UN.

If you tell me that's not logical, given that sending Bolton to the UN is meant to bolster Bush's democracy doctrine--it's Red Queen logic. You get to make your own laws of logic when you're the world's most powerful nation. However, it occurred to Bush that there's something screwy about sacrificing two knights, a bishop and rook in exchange for a pawn. Thus, the White House directed everyone to notice that today's announcement came from the State Department, not the White House.

In this way, the White House hopes to divert attention from the fact that State's announcement studiously omitted the Bush administration's red-line position on Iran. Up until today, the White House demanded the complete and permanent end to Iran's nuclear fuel cycle activities. The demand was not specified in the State Department's official announcement today.

Thus, Iran and Brussels won a huge tactical victory. The bone to Washington is a leaked EU classified document that says the EU will back US calls to refer Iran to the UN Security Council if Iran does not scrap programs linked to nuclear arms. But this position is not official--again, it's stated in a leaked internal document. And neither the document nor any statement by Brussels puts a time limit on when Brussels will decide that Iran has refused to scrap their nuclear weapons program--a program that Iran refuses to acknowledge.

Is there any other logic to Rice's decision to capitulate to Brussels? Logic no, hope yes. The hope is that by backing the EU approach to negotiations with Tehran, this will tamp down calls building in Germany to leave the NATO alliance.

Thus, the true face of the US Department of State is clearly revealed. The State Department is NATO spelled backward. So there's no mystery to Secretary Rice's approach to Brussels--or Moscow, for that matter. It is a Cold War approach, which is at the heart of NATO.

For all the talk of Rice being a new direction for State, she is simply a different label on the same system. On paper, there are good reasons for the US continuing the NATO alliance. The reasons ignore the actual situation, which is that the most powerful European members are not allied with the US. In 2002, Germany and France clearly demonstrated that they were allied with Saddam Hussein's regime. Along with the United Kingdom, they now show that they're allied with the regime in Iran.

The catch is that one can't be allied with the Tehran regime and the US. Indeed, one can't be allied with both the European Union and the United States--a fact that Tony Blair had to acknowledge by backing the Franco-German approach to Tehran's clandestine nuclear weapons program.

Let's be clear about what the European Union is. It's the third-largest governing institution in the world. It's the world's largest economy, even though its land mass is half the size of the continental United States. The EU is also the world's leading exporter and largest internal trading market.

In short, the EU a trading bloc which is now in the process of ratifying a constitution that will bring all its members under one military and one foreign policy run from Brussels. It's a union of countries founded on trade principles.

The union represented by the United States is founded on democratic principles. So there is an inherent conflict between the two unions. The Brussels approach to Tehran's nuclear weapons program is a perfect example of the conflict. When push comes to shove, Brussels will side with whatever position supports their trade.

That's consistent with the European Union's founding principles. But if the United States allies itself with those principles, we sacrifice our founding principles. To avoid confronting this reality Washington clings to NATO, which is founded on more transcendent ideals than the EU. And thus, Secretary Rice's attack on logic today. That the attack came on the anniversary of the Madrid train bombings is not a good day for those who took Bush's Inaugural promises seriously.

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In memory, in condolence, to the people of Spain. Americans have not forgotten your outpouring of sympathy on America's darkest day. Faith and courage will carry us through these troubled times.

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"Pundita! Where is the Juggernaut 2 essay you promised us? You're not going to go wandering off talking about Russia again, are you?"
[Signed] Not Born Yesterday in New York

Dear NBY:

Yes yes Pundita hasn't forgotten. It's just that we've been plunged into a dark mood, which ruffles the calm mien required to discuss the World Bank. We don't approve of burdening the reader with our personal problems but so far this week a dear colleague attempted suicide, there was a storm in the Atlantic Ocean, and Pundita learned that the Council on Foreign Relations managed to steal the Theoretical Bubble machine from the Pentagon and get the contraption working again.

The colleague was coaxed from a window ledge on his office building, which is not situated in this country. He held out for five hours, all the while screaming at police and bystanders that the Washington Post is in the pay of Russian oligarchs. His wife told me by satphone that with time and beadwork he'll recover but right now he's under heavy sedation.

The Theoretical Bubble Machine has always had a bug. Once it's switched on, it keeps making bubbles. These drift on the air currents to Geneva, where over time the bubbles formed a lagoon. Every once in a while the creatures who live in the lagoon mass for an attack on Washington, which they are doing as I write these very words. An ominous sign is this New York Times headline:

Data is Lacking on Iran's Arms, U.S. Panel Says WASHINGTON, March 8 - A commission due to report to President Bush this month will describe American intelligence on Iran as inadequate to allow firm judgments about Iran's weapons programs, according to people who have been briefed on the panel's work....

Now study this paragraph from an article published in the International Herald Tribune of March 8, 2005. Ray Takeyh, a Senior Fellow at the Council on Foreign Relations recommends that:

The United States should officially participate in the EU-Iran discussions and put on the table its economic sanctions, acknowledgment of Iran's territorial integrity and recognition of its existing regime.

Taken together, what do these March 8 stories mean? They mean that the US contingent in NATO is sucking up to the Euro contingent in a bid to hold the alliance together.

Is it all that wrong to want to make concessions to NATO allies? Up to a point, no. But as Shaheen Fatemi pointed out on John Batchelor's show and in his response to Takeyh's piece, there's plenty wrong with assigning legitimacy to the Tehran regime:

Appeasement of the regime in Tehran will not stop them from pursuing their weapons policy, nor will it diminish their support of terrorism. But it will keep them in power longer and will allow them to prolong their oppression of the Iranian people.

Now what does this have to do with a storm in the Atlantic and Pundita's bad mood? Well, every time the Creatures slosh their way toward Washington, this sets up a disturbance in the Atlantic Ocean. This causes a storm, which drives the seagulls into downtown Washington, DC. The situation is not so bad in the warm months but when the storm rises in the winter, as it did earlier this week, this creates what passes for dangerously cold and windy weather in the Greater Washington, DC region. It wouldn't be dangerous weather in say, Chicago or Albany, but this region is the only place in the galaxy where local meteorologists refer to 3 inches of snow as "The White Death."

When the weather gets dangerously cold in Washington this means the squirrels have trouble scrounging croissant crumbs and French fries. The seagulls have every fast food outlet and Starbucks in Washington mapped out. Then can spot a croissant crumb from two miles up and if a squirrel is there first, well, the squirrel is toast.

All this falls back hard on Pundita. We once made the mistake of explaining to the squirrel member of the team what is meant by the term, "World Bank consultant." Since then, every time there's a winter storm Pundita has to run policy meetings with scores of consultants scampering across the conference table.

Why don't they simply dig up the nuts they spent the Fall burying instead of asking to get beat up by seagulls? Pundita has a theory. The Winter and Spring finds the squirrel accusing Pundita and the other team members of stealing his hoard. One day it hit me: he can't remember where he buried most of the nuts. Perhaps the effect of junk food and pastry on the squirrel brain.

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Pundita received a number of emails in response to the Juggernaut essay. Some readers wanted to know if I made up the story about the origin of the IBRD. Other readers asked whether I had read the Time magazine cover story on Jeffrey Sachs's book (The End of Poverty) and whether I agreed with his proposals for ending the worst poverty in the world by 2025.

Pundita learned about the Sachs book from the Guardian Unlimited, which is the only newspaper to read if you want to know what the Democrat Party and the left wing of the Supreme Court are up to these days.

We have yet to read the Sachs book but from the Guardian column about the book it's clear that the Creatures from the Theoretical Bubble Lagoon are massing for another attack on Washington. After all, this is the run-up to the IMF Spring meeting, the White House decision on the next World Bank president, and the upcoming G7/8 meeting. Pundita warned her readers months ago that this is the Trifecta. If you think the Sachs book wields a sledgehammer, you ain't seen nothin yet.

President Bush is partly to blame. He agreed in 2002 to give 0.7% of the US national income to foreign development goals. Why he should agree without first demanding an independent audit of every development bank to which the US belongs is beyond a reasonable mind. But Jeffrey Sachs is an economist so he doesn't need to be reasonable. Thus, according to the Guardian, he argues that there is little evidence that corruption has been the main obstacle to development in Africa.

Well of course there's little evidence. How can there be evidence without an audit? In any case, development banks are not set up to serve the poorest. They are set up to serve the trickle-down theory. The development banks are designed to keep contractors and subcontractors gainfully employed. The idea is that if enough businesses can stay afloat, the country will stay afloat and stay away from war.

So Pundita fails to see why Sachs assumes the IMF and the World Bank can be reformed and remade to help in the task of saving the world's poorest on the theory those organizations have accumulated useful expertise and experience. If your phone company has been trying for 40 years to get your service back on, the experience and expertise they've accumulated during those decades of trying is neither here nor there--if you want phone service. If the Bank and the IMF haven't gotten it right by now, clearly their expertise and experience have limited value for the task Sachs envisions.

Of course both organizations have tremendous expertise and experience, both of which are valuable at certain stages of a country's development. But Jeffrey Sachs is the wrong person to advise on such matters. Even the Guardian, which predictably supports any idea meant to squeeze more aid money out of the United States, can't avoid a glaring contradiction in their praise of Sachs.

Prof Sachs rose to prominence 15 years ago as the chief designer of "shock therapy" for the post-communist economies of Poland and Russia, emphasising an immediate transition to free markets and drastic cuts in state spending. In his new book he argues that the market-oriented prescriptions of the IMF have been part of the problem, by cutting away at the fabric of poor societies

The theory pushed by Sachs was as much a part of the problem as the IMF, a point which the Wikipedia encyclopedia alludes to in a chapter on shock therapy theory. The author points out the downside of the theory:

A developed Western economy rests upon and tends to take for granted a framework of law, regulation and established practice (including between parts of the domestic and international economy) that cannot be instantaneously created in a society that was formerly authoritarian, heavily centralised and subject to state ownership of assets. Even re-defining property law and rights takes time.

That's some downside. But establishing the framework is a thousand times harder in a country where the rule of law was only superficially applied by a colonial rule. That's what African countries faced, while they served for decades as experimental labs for IMF theories.

That was essentially Iraq's problem under Saddam Hussein, as Pundita has noted before. Behind the stage paint of the Europeanized Baathist fascist government stood a tribalized clan society.

That was also the situation in the Soviet Union. The shock therapy that Professor Sachs and his cronies shoved through in Russia created the oligarchs, who proceeded to vampire their country's wealth and retain inordinate power through clan affiliations.

Once the stage paint was scrubbed from the Europeanized fascist model of government, it turned out that Russia and the rest of the FSU countries had been running according to ancient clan laws. The structures of modern government simply weren't there--a situation which Sachs and his bubble-headed school of economics completely ignored.

So. Now Professor Sachs brings his intellect to bear on the plight of the world's poorest countries. Pundita will read his list of recommendations and report back to her readers. Point by point.

In the meantime, we impatiently await India's first luncheon at the G7/8 meeting. Yes, India has finally received an invitation to the lunch. If memory serves, this will be China's second lunch.

Pundita can't wait for the Chinese and Indian delegations to arrive. It's going to be music to hear the anti-Globalist protesters yelling, "Stop robbing the poor!" at the Chinese and Indians sneaking in the back entrance to the luncheon.

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"I knew you would go through the roof over Snow's mention of Bono but I bet Snow dropped the name as a nod to Europe. My money's on Paul Wolfowitz for next World Bank president. [Signed] Chicago Dan"

Dear Chicago Dan:

9/11 was all our tomorrows--all the problems we put off 'til tomorrow while fighting two world wars and the Cold War. Once you see the connection between the development bank business model and 9/11, I guarantee your first reaction will be, "Shut down the World Bank." But the World Bank is but one of many development banks. You can no more shut down the business model created at Bretton-Woods than you can return to before the atom was split.

We cannot and must not prepare ourselves to live with more 9/11s, but we can't deal with the most intractable problems in the developing world unless we grapple with the downsides of the development bank. The candidates now under consideration for Bank president show that Washington has not even confronted what the World Bank was set up to do. So we need to return to Ground Zero, the real Ground Zero, and build up understanding from there:

After the American command saw the first US casualty figures for the Normandy invasion, they looked at each other and said in effect, "The Three Strikes rule must not apply."

Less than two months later, the International Bank for Reconstruction and Development (IBRD) was signed into existence.

American commanders saw that the survival of civilization depended on assuming that if left to their own devices the Europeans would be at each other's throats again, as soon as they climbed out of the ruins of World War 2 and probably even before. Given the state of modern weaponry that meant another world war. That was untenable.

The question was how to ensure that the Europeans were not left to their own devices. There was talk of the US annexing Europe. There was consideration of the basic idea behind Hitler's Third Reich--the third Holy Roman Empire. The last time Europeans had more or less gotten along was under the Roman Empire.

I don't know who came up with the idea or how long before Normandy the idea might have been kicking around. But at some point people said, "Wait a minute. What are we really talking about, when we say Roman Empire?"

What comes first to your mind's eye when you visualize the Roman Empire? No, not troops. You see the Coliseum, roads, aqueducts, vast plazas of marble government buildings.

The Holy Roman Empire was Nirvana for building contractors. It was construction projects and materials procurement, not troops, which caused so many diverse peoples to put up with the Romans. Rome's mania for building was the gift that kept on giving to every outpost in the empire.

As soon as chieftains living in mud huts figured out that you didn't need to make raids on a neighboring tribe to get rich, humanity took a leap forward. Chieftains turned themselves into procurement specialists, building project managers, and entire industries to serve Roman building sprees.

The endurance of the Rome Empire rested on a business model that allowed peoples to sublimate war into competition for building contracts. That is the basic idea behind the IBRD.

So, contrary to myth, the IBRD, which along with spinoffs is now known as the World Bank Group, was not designed to reconstruct postwar Europe. It was not designed to develop Europe. The IBRD was designed to produce a business model that allowed European industries to compete for government building projects financed by low-cost loans.

If the Europeans wanted to go on bashing each other after two world wars, they could do it by competing for business contracts issued by governments--contracts paid for with money borrowed from a bank that loaned exclusively to governments.

Someday, a building materials procurement specialist will write a history of the world. Then many mysteries of history will be revealed. And it will be clear that one of the brightest ideas human brains ever hatched was signed into agreement at Bretton Woods. The development bank model of business is the biggest single factor in the relative peace the world has enjoyed during the past half century.

What's the catch? Many years ago, while first learning about the World Bank, I put that question to a Bank economist. I asked if the World Bank ran the world.

He replied, "No. The IMF runs the world. The World Bank fixes the world."

I observed that the Bank was like no bank I'd ever banked at, so he could he tell me in one sentence what the World Bank actually was?

He replied, "The Bank is a juggernaut."

After chewing that over I replied in the manner of Alice, "But a juggernaut is an engine of destruction. Doesn't your definition of the Bank conflict with the Bank's mission to fix the world?"

"Not at all," replied my guide to Wonderland. "The World Bank is irrefutable proof that you can't fix anything in this world without breaking something, somewhere down the line."

What the Bank can't fix about itself is the very success of its business model, which spawned numerous imitations. You've heard of nuclear proliferation. There is also development-bank proliferation. There is now a version of the World Bank in every world region you can conceive, including the "Islamic Region."

The proliferation set trouble in motion. As long as the IBRD model was serving a relatively small group of competing contractors--the Europeans and Americans--there was enough contract pie to go around. But once everybody and his uncle jumped in, that was a different game. Everybody's clamoring for contracts, which means writing more and more development loans. But there are only so many national governments on earth. Those governments can only contract to put up so many bridges, dams and buildings.

To see where this has led, an episode of the Amazing Race found the teams in a Gulf Arab state. One contestant blurted, "Look at this place! There's a mosque on every corner!"

Ah, but you mustn't think "mosque" when seeing a mosque, if you want to understand development banks. Think cement contract, steel girder contract, electrical contract, copper tube contract, plumbing contract, painting contract....

In short, there is now cutthroat competition among peoples all over the world to get government contracts funded by development bank loans. That means the contract pie is fast reducing to the size of a poptart.

When development banks proliferated, this set in motion a destructive cycle:

1. At some point governments have to pay installments on the development loans,

2. they can't pay without an adequate tax base and expanding economy,

3. hard to expand a 'commanding heights' (socialist) economy,

4. but if governments move away from socialist government, the contract pie shrinks for contractors--the ones who depend on getting business from governments that get loans from development banks,

5. when the contract pie shrinks, many contractors go belly up,

6. that shrinks the country's tax base,

7. return to "1" and repeat the cycle several times,

8. the government defaults on the loan payments,

9. the development banks stop writing loans,

10. more contractors go out of business,

11. the tax base shrinks even more,

12. the broke debtor governments stand outside the annual G7/8 meetings and rend their clothing and gnash their teeth,

13. the G7/8 put together some kind of debt relief (i.e., refinancing the loans and writing more loans),

14. Return to "1" and repeat the cycle.

Then Americans ask, "Why is it so hard for these poor countries to get away from socialist government, which is killing them?

There is also an insidious aspect to the development bank model as applied to LDCs (least developed countries). It keeps the LDCs always moving backward in relation to the developed countries, which sets up another destructive cycle. Pundita will discuss that cycle in Juggernaut, Part 2.

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"Pundita, have you heard? [US Treasury] Secretary Snow said he wouldn't rule out Bono as a candidate for World Bank president. Isn't that a hoot?
[Signed] Claudia in Taos"

Dear Claudia:

Every German finance minister serving in the post-WW2 era has been completely convinced that his American counterpart was barking mad. The candidates John Snow likes for World Bank president help explain why. But at least John Snow barks madly on Earth. The last Treasury Secretary, Paul O'Neill, stationed himself on Pluto. There he met Bono.

So there we were in the post-9/11 days, with the world on fire and the US economy teetering. President Bush would come to work in the morning, look around the conference table and ask Cabinet members, "Where's my Treasury Secretary?"

He was running around Africa with Bono. After Bush fired him, O'Neill wrote a book in which he complained that Bush wouldn't listen to him after their first meeting. But after you've heard, "Arf arf arf arf arf arf arf!" you don't need to hear the thoughts expressed a second time.

As to where America's presidents find these people--well, at least since the post-WW2 era the treasury secretary post has been largely ceremonial. The Federal Reserve has run US economic policy, except for the years during which the Bundesbank ran it.

As to how the German central bank came to run American economic policy--Pundita can't remember whether it was the head of the Bundesbank or Germany's finance minister who rang up Paul Volcker (then Chairman of the Federal Reserve) and yelled at him in at least three languages. At the time the American economy and thus the entire world was 48 minutes away from falling off the edge of the planet.

Things were such a mess that the Bundesbank told the Fed, "We're faxing you instructions in simple English. Do everything on the list, don't ask why, just do it."

But if Bono for next World Bank President is a scary thought, promise you won't run screaming if I tell you what's been running the World Bank. Sebastian Mallaby, a journalist who has written about the Bank, spilled the beans. Mallaby recounts that when he was ushered into his first interview with James Wolfensohn, he found Wolfensohn seated with Bono, Swami Agnivesh and the Archbishop of Canterbury.

That's the crew that's been advising the head of the world's most powerful development bank.

At least Bono is well-meaning; he's deeply concerned about the world's very poorest. The same can't be said for George Soros and Mikhail Khordokovsky, who were greatly responsible for the choice of Wolfensohn for Bank president.

As to how that situation came about--Soros's money helped put William Clinton in the White House. Soros had a strong reason for backing Clinton. Two years at Oxford did not teach Clinton how international finance works, much less how development banks work. So with Soros in effect running the State Department and President Clinton hanging on his every advice, the next task for Soros and his oligarch buddies was to find a World Bank president they could work with. Thus it came to pass that Clinton's choice for Bank president was James Wolfensohn, an investment banker.

Oligarchs can clean out investment bankers in six banking days flat. That's why stealing close to a billion dollars from the IMF was a walk in the park for Ukrainian oligarchs. Money says they were caught only because a rival oligarch clan ratted on them.

As to how much the oligarchs have skimmed from the World Bank with Wolfensohn at the helm, we can't find out because the Bank won't allow an independent audit. That's why we need Eliot Spitzer for the next World Bank President beep this is a recording.

Here, readers might ask whether Mallaby's eyeglass prescription might have needed adjustment at the time he met Wolfensohn. It's entirely possible. The man introduced as Shree Swami Agnivesh was probably Khordokovsky in an orange turban. The archbishop was quite probably Soros in purple miter. Wolfensohn and Bono wouldn't have known the difference.

But where there's life and fiscally responsible German bankers there's hope. Pundita has hatched a stopgap solution. Bush should ask Paris Hilton if she wouldn't mind allowing Tinkerbell to fill the post of US Treasury Secretary. Don't laugh before you've considered my reasons:

1. Tinkerbell has a very pleasing yip. She could get a better hearing from Bush during Cabinet meetings than the present treasury secretary.

2. The German finance minister loves Chihuahuas.

3. Tinkerbell's human family knows more about international finance than the last three treasury secretaries put together.

4. Chihuahuas happen to be the best lizard catchers. Handy during economic summits.

5. She would make the cover of newsweeklies more times than all other treasury officials and world leaders combined. Thus, Tinkerbell would popularize the subject of economics and direct a much-needed spotlight on the US Treasury post.

6. She is sane.

Given that the Treasury post is largely ceremonial, it's obvious from the above that Tinkerbell is the very best candidate for the Cabinet slot.

A bonus is that Paris Hilton reports that Tinkerbell is an excellent judge of male character. That trait would be invaluable in helping the Treasury Secretary decide on candidates for the post of World Bank President.

This seems a good place to review Pundita essays that address deeply entrenched problems in the poorest countries and my pick for World Bank president.

Verticalization of corruption

Why widescale poverty is entrenched

Why it's so hard to see the real problems

Democracy Stage Show Part 1

Democracy Stage Show Part 2

Eliot Spitzer for Bank President Part 1

Eliot Spitzer for Bank President, Part 2

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"Pundita! It's not like you to be mean to Bush! I understand what you're saying [in previous post] but he's just trying to find ways to persuade Iran not to continue with their nuclear weapon development. I don't think it hurts for Bush to say he's considering Europe's plan to offer incentives to Iran. It makes him sound reasonable.[Signed] Sleepless again in St. Louis"

Dear Sleepless:

It makes him sound dizzy. That is one reason Pundita jumped all over him. Tehran is not engaged in nuclear weapon development. We have their word on that. So it makes no sense to offer them incentives not to do something they're already not doing. In other words, we can't nail the slippery bastards. That means we'll have to bomb half of Iran to rubble before we can figure out where they're hiding the nuke-building facilities. The good news is that Iran won't look much different after the bombing than before. Once you get out of the cities you're in the 5th Century BCE.

This observation brings us to the crux of the problem. If you have to hire German or French engineers just to figure out how to put up an electricity grid, and if you're stoning children to death as government policy, you're just not ready for modern weapons. But no one in the modern world told the Iranians that. Why? Because they have oil. Everybody pandered to them. Nobody told them the truth about themselves. Nobody cared enough about them to speak straight.

So they're like emperors who have never once been contradicted. They do not have an idea of civilized behavior, much less responsible behavior. Yet they are completely convinced that they're doing just fine in the modern era. So if they can't have a nuclear weapon, they are going to throw a tantrum and break things.

The first thing Dr. Phil would advise is that you don't play into that. You don't offer incentives for the same reason you don't bribe children into stopping a tantrum. And for the same reason you don't pay thugs not to rob you. If you go down that road, the thug will be back next week asking for another payment.

Every adult with half a brain knows all this. So why are European officials heading for Geneva this week for yet another round of negotiations about a nuclear weapons program Tehran says they don't have?

The answer is that by keeping the discussion centered on nukes, the EU3 hope to distract the world's attention from the fact that they're pandering to a regime that makes history's barbarian chieftains look like the model of civilized behavior.

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"What do you think of Bush's new willingness to consider offering incentives such as WTO membership...in exchange for Iran giving up their nuclear weapon program?"
Tom in Sioux City"

Dear Tom:

The disastrous EU negotiations with Tehran about nukes have left Brussels staring down the barrel of spectacular failure to demonstrate that they're capable of making effective foreign policy for the entire of Europe.

Add to this, the longer Washington remains aloof from the EU3-led* negotiations with Iran, the more questionable Europe's claim to be a friend of democracy and civilization.

Add to this, the Iranian democracy advocates have expressed their outrage at European complicity with the regime in Tehran. So Brussels knows that if the regime falls, Europe will be pushed to the back of the line for Iranian oil purchases and big-ticket business contracts with the new government. This would include a flood of development bank loans, including World Bank loans, which would be made to a democratic government in Tehran.

Also, a democratic government in Tehran would cancel many outstanding defense-related government projects now underway in Iran and demand a review of the contractors and subcontractors for the projects. It is guaranteed that a democratic government would keep European contractors in the courts for years if not decades, just as a matter of principle, rather than continue with many of the contractors.

So Brussels is not only looking at a massive diplomatic failure and loss of Face; they're also having contemplate the billions of euros that key European industries stand to lose, if the regime in Tehran is booted. This loss would be coming on top of the billions they lost when Iraq's regime was toppled and the money lost from European participation in the Oil for Food Program. All this would come on top of Russia's repatriation of their energy industry.

That's why Europe's media yowled and nattered that Bush must come to Europe prepared to listen. Brussels had only one shot, which was to ask Bush behind closed doors to at least voice consideration for joining Europe with offering incentives to Tehran. In exchange, Brussels would back Washington's call for sanctions against Iran. This would be in the event Tehran betrayed incentivized promises to give up their ambitions for a nuclear weapon.

President Bush fell for it, over protests from the Pentagon and Vice President Cheney. Thus, the United States is now on record for a willingness to consider offering incentives to a regime that finds nothing barbaric about stoning adults and children to death.

Even if Bush decides not to go along with incentives to Tehran, it's now on record that Europe's betrayal of the Iranian democracy movement is not censured by the United States of America. That's what Brussels needed.

As to whether the United States got anything in return for selling out our principles--we got the word of goverrnments who had already sold out on civilization. Even if the EU3 went on record with the assurances they used to bait the trap, we have to assume that Europe would use the United Nations and every other means at their disposal to stall the implementation of sanctions.

They would stall until Tehran presented clear evidence that they had a nuclear weapon. That would allow Brussels to rescind their agreement on the grounds that the sanctions only applied to preventing Iran from acquiring a nuclear weapon. That would force negotiations to start all over again.

To put all this another way, Brussels is committed to seeing that the current regime in Iran remains in power as long as possible. Toward this end, they want help from the USA in giving legitimacy to the regime by agreeing to bargain with them. They might not get what they want, but they got what they needed by selling President Bush the Brooklyn Bridge.


* The EU3 are Germany, France and Britain.

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"Pundita, Your explanation [in 'Anti-jive Policy' essay] about government corruption in the developing world is very depressing. You're saying that much of it is not really corruption as Americans understand the term but a way life that could take generations to change. There seems to be no solution except attempts to educate."
Ann in Cincinnati"

Dear Ann:

Pundita did not state that the situation could take generations to change. Yes, there has to be a process of education but the process must be first on our side. Rush Limbaugh spent last week in Afghanistan. He wanted to see the situation there with his own eyes. Rush told his audience a story that perfectly illustrates the essence of the problem on our side:

At first there was tremendous resistance among the Afghanis to voting. An Afghani explained his reluctance to a US solider he'd become friends with. He didn't want to vote because the winner would stalk the people who voted for the loser and shoot them.

The soldier told him, "Naw, that's not how it works in a democracy; if you lose, you just regroup and try to make your guy the winner in the next election."

The Afghani asked, "Really?" The soldier replied, Yeah really.

That was all it took. The Afghani went and told his family and friends. Thus, the US military realized the problem, and pretty soon word was flying around Afghanistan that a democracy means you don't get shot if you vote for the loser.

Well, how were the Afghanis supposed to know unless someone told them?

Rush also told a story about Ayatollah Sistani; Sistani nixed the US advice that the Iraqi Constitution had to be ratified by a majority of Iraqis. Conversation with Americans he'd gotten to know revealed that he thought the US had made up the rule for Iraq. The Americans told him, Naw, that's what Americans did; that's why American democracy is so strong.

Sistani decided to investigate. After a few weeks of studying American history, he realized that by gum, the Americans were telling the truth; thus, he saw the logic of not adopting a constitution without majority agreement.

Now in consideration of the billions of dollars the World Bank and Washington have spent on analyzing The Native, you might think the stories Rush Limbaugh told are anomalies. You would be wrong. The stories point to the Enclave Mentality, which has dominated US foreign policy thinking since US relations with Native populations began. The mentality is lifted whole cloth from the European colonizing mindset.

Americans are greatly mistaken if they think the mindset died out along with European colonizing. Today, Americans doing oil business in Nigeria live in enclaves, which keep them isolated from virtually all Nigerians except the officials and the wealthiest businesspeople. This situation is repeated all over the world.

The Native officials do provide the Enclave Americans with a picture of the host country and its peoples. However, the picture is the same type that World Bank employees drawn from the developing world write up in policy papers for the Bank. The Natives gauge what the Bank wants to know, then frame their analysis of the Native from that viewpoint. Therefore, galactic-sized chunks of reality are omitted from the analyses.

The Bank's view is as skewed as Washington's. Washington runs on policy papers; to be more specific, it runs on one page two-syllable abstracts of policy papers. Congressionals are supposed to read the policy papers but most only read the abstracts, which are piled to the ceiling in their office. They leave the chore of reading the actual papers, which can run to 1,000 pages with 20 pages of footnotes, to their aides. These aides are straight out of college and their brains must function on the nutrition provided by peanuts, popcorn and cola.

These are the Americans charged with comprehending and summarizing policy papers for Congress. Their boss stuffs the summary and abstract into his briefcase and reads them on the way to his congressional committee sessions, which set budgets and help shape US defense/foreign policy.

With regard to the Pentagon and CIA, their analysts actually read the policy papers and even comprehend them in some cases, but they read with a magic marker in their head. Every sentence has to be reframed in terms of budget considerations and DoD or Intel protocols. That means their analysis of the papers omit galactic sized chunks of reality.

The picture that Americans receive from government officials in foreign countries is the same type that the British overlords received from the rajas in India. The rajas were mostly concerned with keeping their power. Thus, the strongest message that came through to the British was "Don't rile the Natives any more than you have to."

The French developed a very creative way of dealing with the same message, maybe because the French didn't possess the navy the British had in those days. The French thought up the Modernity Kit, which they hawked to every chieftain they wanted to trade with. They convinced the chiefs that you're a thoroughly modern person if you master the French language, learn to eat with a knife and fork, and develop an appreciation for chamber music.

Thus, generations of colonized peoples were raised up without a clue as to what really constitutes modern Western government. They got only the outward forms: the marble buildings of bureaucracy and judiciary, the 15 copies of a directive that had to be signed and stamped, the filing cabinets and the ritual banter between judges and lawyers.

That is how it came to pass that vast tracts of humanity have no idea what makes for American democracy and how it came about. They do not know that America was built by women wearing long dresses and men with beards--men and women who were not terribly bright, who were for the most part narrow-minded and insular, and whose education was pretty much confined to reading the Bible. In short, vast tracts of humanity don't know that America was built by the same kind of people they are.

Now what does it take to correct that misperception? Yet more mountains of policy papers? Yet more billions spent on educational programs? The creation of yet more international organizations?

First it takes understanding the major roadblock, which was inadvertently alluded to by Banfsheh Zand-Bonazzi, the editor of Iran Press News during a conversation she had one night with John Batchelor. She mentioned in passing that the Iraqi borders weren't locked down by the Coalition forces because the British didn't want to offend the so-called nomadic tribes.

The tribes insisted that they be allowed to pass back and forth between Iran and Iraq whenever they wanted. These aren't just any old tribes; they control a lot of business including oil business in Iran. Zand-Bonazzi said bluntly that the British wanted to protect British business interests in Iran.

As to why the US military command in Iraq went along with it, Pundita is not sure. But given the history of US-British relations during the Cold War, which parallels to remarkable degree the plot of Thelma and Louise, it's likely the US command in Iraq didn't have a clue. The British command lectured their American counterpart about the importance of striking non-threatening poses while dealing with the Iraqi Native. Don't wear helmets, wear caps; don't carry your weapons in such obvious fashion, etc.

The British pointed to the relative peace and quiet of Basra to shore up the lectures. Well of course it was peaceful and quiet in Basra. The most powerful tribes were happy they could cross the border at will. The Iranian military and al Qaeda were happy they could use Basra as an easy entry point into Iraq.

Don't tear your hair because you'll be bald by the time you finish reading this essay. What Zand-Bonazzi was talking about is a very old story--it's as old as trade among different tribes. However, it was the colonizing trade model that created the enclave. During Victorian times, the mentality gave rise to the Oriental Stranger Syndrome, which is the Enclave Mentality filtered back to the home peoples who hear third hand about Natives.

The Oriental Stranger kept legions of British novelists, scholars and newspaper reporters gainfully employed. He also took the heat off London's embattled police force, which was fighting a crime wave that emanated from inhumane working conditions in London factories and slave wages paid the factory laborers. Muffled in turbans and reeking of garlic and other strange odors, the Oriental Stranger stalked the gaslit streets of London, wreaking murder and mayhem on Christianity, Western Civilization and British who didn't make it home before dark.

The Oriental Stranger did not spring whole cloth from the fertile imagination of fiction writers and reporters. He sprang from their imaginings about tales told by British soldiers garrisoned in far-flung outposts and British traders who lived in enclaves in the outposts. These tales rested largely on what the outpost rulers told the British about the outpost peoples.

This doesn't mean the stories were complete fiction; they were a window on the world outside the enclave. But you can see very little of the world if you look at it from a window inside your house. In the same manner, the Enclave view shows very little about the peoples outside the enclave.

The Oriental Stranger Syndrome is not really 'prejudice' in the sense of bigotry. It's what happens when you live near peoples you never really interact with. They are always The Stranger, and strangers are always suspect. Thus, you never let your guard down, you never say what you really think, you never really communicate. This sets up a cycle where the Stranger also sees you as a stranger. The upshot is that many colonized peoples learned the outward forms of modern life but didn't get the essences, the subtexts, the referents.

A good example of where this situation leads is the US military and business consultants stationed in Saudi Arabia. They lived in garrison and enclaves, they were trained not to make any criticism of the cultural practices they saw when they had to leave the enclaves. They were trained to look without seeing, and to avert their eyes about many things they looked at. This created a mystique of American power and menace and kept the knowledge Americans had about their culture locked up with them in the enclaves. That allowed the most radical elements in the Saudi society to interpret American culture and democracy to the Saudis.

So while it's ghastly that it had to happen this way, the ongoing terrorist attacks forced the US military out of the Green Zone in Baghdad. That meant legions of American kids and Iraqis had no choice but to interact with each other in a way that never would have happened, if the US occupation of Iraq had gone as the White House originally envisioned.

The same happened in the Afghanistan theater of war. American kids spilled off the military helicopters, looked around and asked, "Where's the base?" An Afghani would ride up, hand the soldiers the reins to a horse and say, "Here it is."

During an earlier era, the CIA and the Afghanis understood the common enemy--the Soviets--and were able to communicate effectively at that one level. That's a far cry from the communication needed to help the Afghanis build up their nation and a functioning democracy while dealing with insurgencies. The US military learned that they could not stay in their garrisons. They had to get out and go live with the Afghanis and they had to explain who Americans are and how we think.

Same happened in Iraq. What do American kids know about diplomacy and trade? And how many of them are walking textbooks on democratic government? They just reacted to the Iraqis in the way they react to people in their home towns. In other words, they acted human, which allowed the Iraqis to learn about them and respond in kind. This was despite the Green Zone, which is an enclave.

The terrorist attacks forced the US military to keep coming out of the enclave, and forced the Iraqis to keep talking with the Grunts. So despite the situation that Zand-Bonazzi mentioned, and despite the Green Zone, the Oriental Stranger syndrome was broken. No surprise, this was followed by the willingness of several Iraqi patriarchs to give a democratic election a try.

Thus another illustration of the truth in the old adage, "Your worst enemy is also your best friend." The enemy's ongoing terrorist attacks in Iraq have done more to further the cause of democracy than most Americans can imagine at this time.

After the Colombine massacre, a neighbor of one of the killers lamented that if only they'd gotten to know their neighbors and engaged with the kids on their block, maybe they would have noted the killers' increasingly strange behavior and mentioned it to the parents. The neighbor added, "But we were just so busy working and commuting; we didn't have the time to engage with the neighbors."

Better make the time because we can't expect a policy analyst to identify the most serious warning signs here or abroad. Yet the signs are not hard to read if we stop, look and listen and engage, engage, engage.

You won't ever lose your compass if you remember that people are not economics and political models of behavior. They are people. They are people whether they live next door or ten thousand miles away; if you forget that, then you must look at people through the narrow window of policy papers and intelligence briefings.

And you must be prepared to wait generations more, before the developing world grapples with the issues Pundita discussed in the Anti-jive Policy essay. But where is the rocket science in the points I brought up? Does it take a special gene to grasp that one can't stick with the clan system, which was designed to serve a few thousand people, and hope to get rid of entrenched corruption in a centralized government that administers to many millions of people?

.

"Hey, Dita like this is the first fan letter I ever wrote. Like I see where you're comin from man, I'm rappin about you. You don't let nobody past. You the anti-jive machine. Also you got me interested in foreign policy. It's all connected man, like I see that now. I can tell you why Bush opened fire on Putin. Putin dissed him, man. Like Bush had to refrigerate him.
[Signed] DetroitTHX5"

Dear DetroitTHX5:

That's an interesting if somewhat ornate thesis. Let's see if we can work our way through it. The protocol is that national leaders refrain from giving public support to political candidates in another country. Putin broke the protocol when he came out in support for Bush during the US presidential campaign. By doing so, he conveyed that his friendship with Bush took precedence over protocol, which would imply a close friendship. However, several of Putin's actions as head of state did not show friendship to Bush or the US war on terror.

Thus, it could be argued that Putin was practicing diplomacy judo--using Bush's own statement of friendship against him in order to gain a political advantage, and making Bush lose Face in the process. From that angle, Bush would be required to restore Face by verbally punching Putin in the face. It all makes perfect sense after a few beers.

On the other hand, the thesis ignores the similarly tough language used by Secretary Powell in the immediate wake of the Beslan massacre; Powell as much told the Russians that they had brought Beslan on themselves through the way they handled the Chechen situation. And it ignores the reportedly very tough language Secretary Rice used during the recent meeting with her Russian counterpart.

All this tough talk has been around for months in the Establishment US news media and voiced by certain factions in the GOP and Democrat party. To be specific, the talk burst into the US news during the election in Ukraine and has escalated since

However, Bush is famous for not following Washington Groupthink and media opinion, which lends some support to your thesis. So, on balance, it's possible there was something personal behind Bush's decision to beat up on Russia during the Brussels speech. I note that the passage about Russia was a last-minute addition, unless the White House kept it under wraps. The version of the speech released to the press the day before did not contain the toughly worded passage.

Whether or not Bush had an ax to grind with Putin, Pundita is getting a bad feeling about all this uniformly tough talk. It smacks of a programmatic approach, which translates to adopting an attitude in place of dialogue. The Russians are known to respect toughness in political leaders. But they're equally known for intellectualism and polemics. All these traits were on abundant display during a 3-1/2 hour press conference that Putin held soon after the Beslan massacre.

That press conference was a humdinger. Putin accused the United States and the United Kingdom of being responsible for the Beslan terrorist attack. He accused the US and the UK of colluding in a plot to destabilize Russia by fomenting anti-Russian sentiment in former Soviet republics. He accused the US and UK of being behind the breakaway movement in Chechnya. He clearly implied that the US and UK were trying to topple his government. And just to make sure he was perfectly understood, Putin came right out and said that the US and the UK had launched a covert war against Russia.

I add that Putin's remarks got very little coverage in the US media and only in attenuated form. The remarks were widely reported in painstaking detail by the European press and pored over and parsed for many days, to the great enjoyment of the Europeans who love opera and hate the Coalition invasion of Iraq. They particularly liked the part about Carthage. After he'd blown off steam it occurred to him that conjuring the image of Russia reduced to a salt flat was not a boost to Russian tourism and trade so eventually he scaled back on his accusations. However, he stuck by the gist, which still amounts to very serious charges.

I can't speak to the accusations about the United Kingdom but there is a grain of truth in the accusations directed at the US. It is true that some Chechens who eventually became terrorists got their original training in CIA-sponsored camps; this was during the Afghan struggle against the Soviet Union. In those days the US was training anyone who was willing to fight the Soviets, which included Arabs who became al Qaeda members.

With regard to the rest of the accusations about terrorism, it sounds as if Putin moved history forward to gloss the present. I would not be surprised to learn that British and US agents helped in Chechnya, as they did in every republic that wanted to break away from the Soviet Empire. And surely there are still groups in Eastern Europe and former Soviet republics who are helping the Chechen separatist movement. However, by the mid-90s, the love affair between the oligarchs and America was such that the US (and Britain) had a vested interest in seeing that Russia was as stable as possible.

The truth is that Chechnya became a magnet for al Qaeda; when the going got tough for AQ after the US crackdown Tehran stepped in with money, arms, and training. This said, it's wrong to dismiss Putin's studious blindness to the present as cynicism. True, Russia is doing big business with Arab countries that are known to be sponsoring terrorist organizations and with Iran, which is ruled by a terror-sponsoring regime. But we have to look at our own situation in the wake of 9/11 to understand Moscow's struggle with reality.

No State Department worker wanted to accept a certain number of terrorist attacks on the US as the price for doing business with Saudi Arabia, and with other countries that are tolerant of terrorist organizations or involved with funding them. But as the facts piled up in the wake of 9/11, the response behind closed doors in Washington was, 'Omigod, what are we going to do? We're in up to our necks with these governments.'

The same sentiments were expressed behind closed doors in Paris, London, and Berlin. Moscow had a delayed reaction; they clung to the idea that Russia had more leverage with the same governments because Russia wasn't dependent on any country for energy supplies. They thought that if push came to shove, they could make threats and make them stick. Thus, they learned the hard way that threats only work if you can deliver them to the enemy. The enemy in this case is like smoke.

To put all this another way, on September 11, 2001, the earth when seen from a satellite was a sea of ostrich bottoms. Everyone had their head stuck in the sand--and this includes the Israelis. They had tunnel vision about China's role in selling weapons and nuclear weapon technology to states that sponsor terrorism. The Israelis were hyperfocused on Arab terrorism and the terror-sponsoring regime in Iran. And the focus made them blind to the connection between terrorism and the Russian mobs that had burrowed into the Israeli financial markets. Every time there was a terror attack on Israel the Israeli military would ring up the mobsters and ask, 'You're not doing any smuggling deals with our enemies, are you?'

In reply, the mobsters would throw on a prayer shawl and go kiss the Wailing Wall.

This said, the Israelis had the only functioning and I mean only functioning intelligence organization among our allies. It's awful to contemplate the extent to which intelligence-gathering among NATO countries had fallen into disrepair. Now one might reasonably ask why the US didn't make use of Israeli intelligence during the decade running up to 9/11, if US intel was a basket case. One has to understand something about budget wars in Washington to get the full picture. There were intelligence analysts who spent the 90s piling Israeli intelligence data on Washington and drawing little stick figures in the effort to illustrate the growing danger to the US from Arab terrorism. The response in Washington boiled down to, "Oh it's just the Jews trying to scare up more aid dollars for Israel."

How could so many reasonably intelligent, sane people the world over be so blind to a steadily growing threat--a threat that was not hidden, but which continuously announced itself with escalating terrorist attacks?

The answer is buried under layers of myriad causes and conditions, which is why the world is lucky that George W. Bush landed in the White House. Bush has a drill-down mind; he has a knack for reaching through layers and grabbing onto the precipitating factor in a problem. The answer is quite simply that people were blind because they were up against something completely new. Seeing begins in the mind, which relies on memory. There was no memory, no way to think about what the new threat looked like, until after 9/11.

What Bush saw after 9/11 is that civilization had reached the point where it's suicidal for nations to allow expediency to govern their foreign relations.

Bush used simpler words to describe the problem; he said in essence that it was time to call a spade a spade, to say what you mean and mean what you say, and stick to your guns. However, the message was greatly obscured by the dust raised during the first years of the war on terror. Also, the war, and particularly the Iraq campaign, turned the Beltway into an armed camp of factions at State, Pentagon, CIA and Congress.

But the world changed on the day that Paul Bremer was ordered back to Washington from the Green Zone in Baghdad. The yelling inside the White House could be heard from across the Potomac. Pundita was not privy to exactly what was yelled, but the drift of the conversation was plainly evident in Bremer's actions when he returned to his duties in the Green Zone. He stopped practicing expediency and took actions that were in line with the promises that Bush had made to the Iraqi people.

From that day forward, the Bush administration made a wholehearted attempt to ditch Cold War policy, which had degenerated into a textbook on expediency. The response from the State Department and the CIA? They were so horrified at Bush's attempt to destroy the linchpin of foreign policy that they redoubled their efforts to block his reelection. They did this by deploying a machine-gun series of 'leaks' that portrayed Bush as an inept president and commander-in-chief.

The Beltway Wars continued even after Bush's reelection but slowly and surely, the White House is winning because many Americans are now at their back. This includes members of Congress from both sides of the aisle, and people inside State and the CIA. In short, it's taken a few years, but many people inside Washington are starting to 'get' what Bush has been trying to convey. Bush's second Inaugural speech and his speech at Brussels are not there yet. But they come close to articulating an epoch-making shift in US foreign policy.

The radical aspect of the shift diverts attention from its common sense. With hindsight, it's just plain stupid during these days of EFTs, Coach Class and portable nukes to give training, money and arms to people whose concept of civilization boils down to eating with a knife and fork. And it's plumb loco to turn your back on them, once your immediate need for them is finished.

So while Pundita basks in your compliment, it's really President Bush who's the anti-jive machine. I'm simply trying to fill out the basic idea Bush sketched and explore how to put it into practice. Many people the world over are engaged in this same effort, and the more the better. We're all out here in new territory, trying to lay down paths that we're improvising as we stumble along.

The problem is that civilization was raised on the foundation of expediency. True, expediency always had a way of blowing back on the government that relied on it to deal with neighbors and marauding tribes, but relying heavily on expediency got humanity this far. So if we're going to rely more on integrity and consistency in foreign relations, there are many wrinkles to be ironed out.

The sticking point is that is there's no such thing as partial integrity. You either have it or you don't. Ditto for consistency. So if you see "Made in China" stamped on weapons used by terror sponsoring regimes, what are you supposed to do? Tell Wal-Mart to stop trading with China? And should we return to horse and buggy until we figure a way to cease dependence on oil imported from autocratic or totalitarian regimes? The most vexing question is how far a nation should take a principled stand if the stand pits the nation against much of the world.

Yet 9/11, 3/11 and Beslan testify that humanity no longer has a choice about confronting the point Bush brought out. We've got to find ways to bring foreign policy in line with the basic ideals of modern democratic civilization. This is because data show that democracies tend to refrain from hot war and don't create large numbers of citizens who export terrorism around the world. The question is how to proceed according to what the data indicate.

Russia's advice in this regard should be welcomed, yet we don't have the luxury of engaging in weighty discussion during peacetime. The inescapable truth is that Russia is selling arms and dual-use nuclear technology to governments that are active enemies of the United States.

Russia is not alone in doing trade with US enemies. They are following the lead of China and the most powerful nations in the European Union. So it's practicing a double standard to criticize Russia on the issue without doing the same with allies.

Pundita can understand Bush taking a softer public with US allies. However, the uniformly tough talk to Moscow that has emerged from Washington during the past year smacks of a programmatic approach. This translates to adopting 'attitude' in place of dialogue.

The Russians are known to respect a tough attitude. However, they're equally known for intellectualism and polemics. All these traits were on abundant display during Putin's 3-1/2 hour press conference.

Thus, if Washington's tough attitude is not accompanied by informed debate and dialogue, the Russians will continue to throw out polemics and rationalizations that go unanswered by the US because attitude isn't reply.

Also, Washington could do more to bring the implementation of foreign policy in line with policy rhetoric. Putin has invoked the US Civil War in defending Russia's right to subdue a breakaway republic--Chechnya. We don't need to agree with the analogy but US policy should recognize Russia's policy toward Chechnya.

If we want to allow a Chechen rebel leader to take asylum in the United States, that's one issue. However, Russia has designated the leader as a terrorist. If we claim a willingness to work with Russia in the war on terror, our policy should match our words to the extent we can accomplish this without betraying our principles. That means the US government should not have direct or indirect dealings with the Chechen leader and should not provide him with financial or any kind of material assistance.

If US intelligence on Chechnya is so poor that we're rationalizing assistance to the leader as means to get good intel on Chechnya and Russia--this is a problem with US intelligence gathering, one that shouldn't drag foreign policy into it.

Also, the US government should ensure that the Chechen leader knows the difference between taking asylum and using the US as a base of operations against Russia.

The same observations apply to US government dealings with the Russian oligarchs who recently attended a White House prayer breakfast. Those oligarchs are fugitives from Russian justice. There's an Interpol warrant out on them. There was no need to give them asylum in this country; they have asylum in Israel. Inviting them to the US and showcasing them at a White House function was a nasty way of telling Moscow that Washington doesn't think the oligarchs should be considered criminals.

Okay. But then Moscow doesn't think Tehran should be designated a terror-sponsoring regime. They don't think Tehran will convert the nuclear technology that Russia is selling them into nuclear weapons. They don't think the Iranian military will figure out how to convert the vehicle-mounted rocket launchers that Russia's selling Syria into shoulder-fired launchers.

If Washington disagrees with Moscow's thinking--well, if foreign policy is silly putty, what's there to disagree with? Why have policy, if whatever thoughts pop into your mind can shift policy on a dime?

If rationality comes from the point of a gun, right now the United States is a paragon of reason because our guns are bigger and in better working order than any other nation's. But the enemy is not only making use of guns. He's turning humans into bombs. To win against such an enemy requires a great deal of cooperation from other nations, to include Russia.

The concept of cooperation has a rational basis, which is grounded in consistently applied policy. If we expect cooperation we need more than a good rap about democracy. We need to bring the implementation of foreign policy in line with fine words about policy. Else, all the fine words are just jive.

.

"Pundita, the more I learn about world affairs, the more it seems that most countries are frozen in time. No matter how much aid the developed countries have given, no matter how many grand development schemes carried out by organizations such as the World Bank, there seem to be intractable problems in many countries. In every case, I come across a discussion of deeply entrenched government corruption. The World Bank and other international institutions have been trying for decades to deal with this problem but there never seems to be any progress.
Ann in Cincinnati"

Dear Ann:

To understand the situation, realize first that it's a joke to place Bill Gates and Warren Buffet among the richest people in the world. They're just among the richest who file accurate tax returns. But Gates and Buffet probably don't even make it onto the list of the top one million of the world's richest people--these being the filthy rich who don't file tax returns or file a complete fiction.

It's not corruption per se that's the fundamental problem in Russia, Mexico, India, Egypt, and continue down the list. The problem is that the richest people in such countries pay much, much more in taxes than the rest--but the payments are off the books. The payments are made directly to officials.

The payments should not be seen as bribes, if you want to get a handle on the problem. They are a form of taxation and because taxation means representation, the richest people are the first in line with demands for how government money is to be spent.

To put all this another way, the lights always work in certain sections of Cairo. There is never a problem with traffic lights because for certain Egyptians the police simply back up traffic for miles and hours so the special cars can get to their destinations on time. There is never a problem with the water supply for certain Egyptians because the government digs special wells for them.

Same situation in Mexico. There's plenty of government money in Mexico. It's just that it doesn't get spent very much on education and health facilities. It gets spent mostly on projects that the biggest taxpayers want done--these being the taxpayers whose payments are not recorded.

Same situation in India. Yet millions of Indians are literally brain-damaged from drinking water from the city supplies--the Indians who don't die first from a host of diseases brought on by bad drinking water.

To give you some idea of just how bad the situation is, and how it undermines all the backbreaking labor and brain sweat of ordinary working stiffs the world over--

When the British laid out pipes for sewage and water in New Delhi, they installed the pipes right next to each other. That was standard practice in those days. However, by the time the British quit India the pipes had corroded so that the sewage mixed with the water supply. Boiling the water only kills a fraction of the pollutants. As to what was done to fix the pipes, nothing. Maybe during the past decade the Indian government got around to making some repairs in response to complaints by Western businesspeople. But the situation went on for decades untreated. That was in India's capital city.

Now try to imagine how Washingtonians would respond to the same problem in America's capital city. In fact, you don't have to imagine, if you followed the news about the discovery last year that lead had been getting into the water supply for years and that this information had been suppressed. Believe you me, the water bureaucracy scrambled to ward off the lynch mobs. That's because all Washingtonians have something approximating representation along with their taxation.

That's just what the majority of Indians, Russians and Mexicans, etc., don't have--even though they pay taxes. What they pay is not enough to give them adequate representation against the representation that the richest receive via under-the-table tax payments.

At the bottom of it all is not organized crime. At bottom is a system of doing business that stretches back to the ancient civilizations. That system is the clan system, which differs from tribalism in that marriage can be outside the tribe in a clan.

Marriages in a clan system are actually business mergers and/or business contracts. Say my clan controls the lumber supply in a region and your clan controls the trucking industry. We make a merger to have your trucks handle the lumber transport by marrying my daughter to your son. That's why you'll see arranged marriages in Muslim northern India and other parts between children. The marriage isn't consummated but there has to be a marriage ceremony to cement the contract.

Alert readers might ask if polygamy gives clans a huge business advantage. Of course. If you have one wife, you maybe only have five sons. If you have four wives cranking out 25 sons between them, you've got lots of merger material to play around with.

So all this talk about Islam under fire from the modern era is twaddle. It's the clan system that's under fire and Muslims know it. And they don't want to give up polygamy because there goes the big business advantage in the clan system. This is what many Muslims don't want to confront. They say, "We look after our own."

Yes, they have big charity, but in the modern era where dams and bridges and road systems and electrical grids cost billions upon billions, and where human population in a small region can run into the tens of millions, the charity system is completely inadequate. The clan model is simply not capable of dealing with the modern age.

Yet still they want it both ways. They can't have it both ways. They can't have all the benefits of modern life plus hold onto a way of doing business which subverts the type of government that makes modern life work. Fair taxation with adequate representation for the majority is the base of modern civilization's pyramid. The clan model, when mixed with off-the-books taxation, stands the pyramid on it's head. The patriarchs of the most powerful clans throw enough money at officials to ensure that their neighborhood has its own water well, the lights working, and the garbage picked up. The rest of the neighborhoods can go to hell in a handbasket.

The flip side of the same problem is how tribes can wreck the tax base in a country by invoking nomad status. To understand this part of the problem--

Knock! Knock!

"Who's there?"

Taxman.

"Taxman who?"

Taxman you haven't paid your taxes to the Iraqi government for the last 60 years.

"I'm not Iraqi. I'm Wigeemeosooombbi Nomad. We Wigeemeosooombbi have no fixed abode for the past 200,000 years."

But you remain fixed enough during part of the year to use the electricity and garbage collection service in Iraq. Pay up.

"If you're going to persecute me, give me a moment to collect my satellite dish, 10-speed blender, refrigerator, washing machine, microwave, television, toaster oven, computer, electric breadmaker, electric spice grinder and my goats and sheep and continue my nomadic wanderings. Unless you'd like to accept this gift of gold dinars for your dear mother."

That's why Gazi al-Yawer, the Iraq interim President, was furious with the Coalition military for not locking down the Iraqi borders after the Coalition toppled Saddam's regime. It's not just the security issue. It's also the taxation issue. Unless that issue is dealt with, Iraq is always pedaling backward, Saddam or no Saddam.

Al-Yawer is part of the wave of Middle Easterners who came to the West and figured out everything Pundita sketched above. They know you can't have a modern nation unless you have an adequate tax base, and that you can't have a tax base without a census. You can't have a census if a third of the population doesn't participate on the grounds that they're just in country to visit their cousins for a couple months.

The response from al-Yawer's tribe to his demand that everyone in Iraq get a national ID? They put out a contract on his life.

To summarize, the developing nations don't have the tax base to support adequate programs to provide services that you and I consider baseline necessities. In country after country, the tax base is not adequate to provide baseline services because so much of the tax collection is off the books and doesn't figure into the government's spending budget.

Now we arrive at the most interesting part of the problem. Let's back up and take a look at all those electric appliances owned by Wigeemeosooombbi Nomad. Some of the appliances are manufactured locally or close nearby, such as in India or China, and some are imported from the developed nations. Now step back and look at Wigeemeosooombbi's neighborhood. It looks like Bam, Iran before or after the big earthquake hit, which is to say it's situated somewhere between the Fifth Century and 12,000 BCE.

Why are those residents buying 10-speed blenders? Why don't they spend on the big stuff, such as a step up from a mud hut for a domicile and cement to build real roads? For the answer watch carefully, don't blink:

If the tax base is adequate, the government can use myriad means to stimulate the private business sector. One way is using taxes to build and maintain infrastructures that allow private industry to take root and grow. For example, think of the US federal highway program, which interstate truckers use to deliver goods. But if much of the tax money is paid off the books to officials, what can the individual official do with that bribe money? Even if the bribe equates to a few thousand dollars, that's not enough to build a road system.

What the official can do with the money is start a very small business, which often turns out to be a merchandise sales outlet/import business, which in turn is a money laundering scheme. That's why you can go to the most remote regions anywhere in the poverty-stricken world and find a bazaar around every bend selling anything you can get at Best Buy. If the blender you want is not in stock, give them a week to special order it.

But all these electric chachka sales outlets are not going anywhere. They are not growing the tax base enough to fuel serious business development. The result? Governments favor the socialist economic model, and depend on low-cost development bank loans to make up the shortfall--at least enough to keep the nation from sinking into the sea.

So the next time you hear a discussion about corruption in the developing world, remember that government corruption is 'inadequate tax base' spelled backward.

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