You can say this about Paul Wolfowitz's qualifications to lead the World Bank: He has been closely associated with America's largest foreign aid and economic development project since the Marshall Plan. I'm talking, of course, about reconstruction in Iraq. Unfortunately, what happened there is likely to make countries distrust any economic advice Mr. Wolfowitz might give.

"What happened there" is this:  after declining by 12% in 2001, 21% in 2002, and 22% in 2003 (part of which was due to the war, and part due to elements already in progress)....after "Iraq's overall economy declined from $128bn in 1979 to $40bn in 2001" (cut by 2/3rds!).....

After all of that, Iraq's economy grew in 2004.  In fact, it grew quite a bit.  The IMF estimated "Iraq's economic growth for 2004 will surpass 50 percent" .   What's more....

For 2005, the international agency expects GDP to reach 17 percent, and for the four years from 2006 to 2009, it expects Iraq's growth to average 10 percent per annum, which would make its expansion rate exceed that of red-hot China, let alone any of the mature, industrialized nations including the United States.

Throughout, Paul Krugman is careful not to explicitly say that Iraq is an economic failure.   He knows full well that such a statement would be false.   Instead, he alludes to it, writing things like "[if] Mr. Wolfowitz says that some free-market policy will help economic growth, he'll be greeted with as much skepticism as if he declared that some country has weapons of mass destruction".  

Well, that might be true.   Of course, with high-profile international economists like Paul Krugman cheerleading the free-market skeptics, one will hardly be surprised if Paul Krugman's prophesy turns out to be self-fulfilling.  Krugman concludes...

Moisés Naím, editor of Foreign Policy, says that the Wolfowitz nomination turns the World Bank into the American Bank. Make that ugly American bank: rightly or not, developing countries will see Mr. Wolfowitz's selection as a sign that we're still trying to impose policies they believe have failed.

He writes that like it's a bad thing. 

And, sadly, that's the problem: Paul Krugman knows full well that opening up markets has a net positive effect on an economy.   Indeed, he has made his career out of proving just that point.  But, rather than take the opportunity to point out that the US is right to advocate free markets; that the US is right to push the World Bank in a direction more in line with the values of democracy and free markets.....

...rather than that, Paul Krugman takes a shot at Paul Wolfowitz. 

Because, you know, one has to have one's priorities straight, and Paul Krugman has long been a partisan first, American second, and an economist when convenient.

UPDATE: Perry at EidelBlog has a good post on this column, too.  Inter alia, he notes that Krugman misrepresents the Latin American crisis...

Ah, South America. What a perfect example for Krugman to cite. As an internationally renowned "expert on currency crises," he of all people should know that those crises fundamentally were not the fault of the free market, but from initial attempts to main overvalued currency pegs. When Brazil had no choice but to devalue the real in January 1999, the size of its economy guaranteed a rippling effect throughout the continent. Then in April 1999, then-Treasury Secretary Robert Rubin said the U.S. and IMF would stop making loans for the purpose of pegging currency. Those loans were what largely sustained the overvalued pegging—they should never have been made in the first place. The inevitable crises weren't the fault of the free market, but of government and banking intervention.

Krugman has gotten a lot of mileage out of the problems in Central and South America, blaming their economic problems on everything from budget deficits to national debt to free markets.  You'd think he could have settled on an answer by now.

Also, Econopundit puts one of the quotes Krugman cites in context.