The painful, bitter, pathetic (but hardly tragic) departure of President Paul Wolfowitz from the World Bank––widely unlamented––is marked by irony piled upon irony, but may hold out the hope that such a situation can be avoided in the future.
The first irony is that Wolfowitz, who had been criticized by some for having changed the Bank’s program emphasis from fighting poverty to fighting corruption, should be charged with one of the crudest forms of corruption, i.e., nepotism. The specific offense, of course, was the compensation package for Shaha Ali Riza, variously described as his woman friend, girl friend, companion, romantic interest, and even “neoconcubine.” Her secondment to the State Department, in accordance with Bank rules, paid her more, at $193,000 (up from her Bank salary of $133,000), than the Secretary of State; and it is tax free. A British citizen of Tunisian descent, she worked on Middle East issues under Vice President Cheney’s daughter at the State Department. Some Bank personnel felt that her salary was far out of line and was based on favoritism.
Was there a “clear breach of ethics” here? Did he, as some Bank people alleged, “place his own personal interests (including appeasing a very angry Ms. Riza) opposed to the interest of the institution?” Or, as another critic suggested, is it ”like getting Al Capone for tax evasion?” Was there a “smear campaign against” Wolfowitz? Was it all a “power play” by “craven European governments opposed to his efforts to cleanse a corrupt and hidebound institution?” Why did he hire a celebrity lawyer and allegedly search for a leadership coach? There will probably always be some questions, but as the Bank panel ambivalently concluded, “A number of mistakes were made by a number of individuals.” Will it ever be known whether the famous pay package, his past identification with the Iraq War, or his administrative style drove the final nail?
The second irony is precisely that “administrative style.” Wolfowitz made no secret of his disapproval of the “ entrenched culture of the Bank. He demonstrated this, in part, by bringing two young aides with him from the Defense Department, paying them high salaries, and relying on them to carry his messages and decisions––and sometimes orders–– to senior Bank officials. The hostility he provoked among the staff was so massive that during the process of his ouster thousands of bank workers wore blue ribbons (“for wisdom and honesty”) to express their “burgeoning collective venom.” He seemed to presume that people who opposed him were incompetent or corrupt and often failed to consult them before making decisions that affected their projects. Even some of his defenders did not see him as a model of good governance. One of them said that despite his intellectual gifts, “he couldn’t run a two-car funeral.”
The third irony applies more to the Bank than to Wolfowitz and has been rather lost sight of in the controversy. Critics have said that for Wolfowitz to leave the Bank would impair its reputation and its credibility. Others have worried that his staying on would have the same result. The underlying fact, however, is that although the 63-year-old institution, whose full name is International Bank for Reconstruction and Development (IBRD), may have performed the first of these two processes effectively, reconstruction ended within a decade of its founding, leaving only development, not clearly defined, as its mission. That mission’s latest definition is the elimination of poverty, preferably through the application of a set of neo-liberal policies, led by privatization, deregulation, and total reliance on the “free market” to achieve a globalized economy in which all countries take part. This is the core of the so-called Washington consensus, which is the Bank’s prescription for ending poverty. Although accepted by most of the world’s economists, who have been educated in the industrialized North, the observation that relatively little of the more than $2.3 trillion devoted to development assistance (foreign aid) over more than a half century appears to have trickled down to the poor people who need it has begun to weaken the ranks of its supporters. (The United Nations continues to put the number of people who do not have access to an adequate human diet at about 850 million––about one seventh of the human race.) The poor are more numerous, hungrier, and more miserable––and the gap between them and the rich is greater than ever - and growing. The Bank may not be “a black hole of indolence and bureaucracy,” but it now begins to appear that its Washington consensus may have peaked and that more mainstream economists are moving beyond it.
The World Bank panel that handled the Wolfowitz case concluded that it had two questions to deal with: The first was whether Wolfowitz could continue to provide appropriate leadership for the institution; that one is now answered. The second conclusion was to “undertake a review of the governance framework of the World Bank Group with the aim of ensuring that it is capable of effectively dealing with the challenges raised for the institution.” One can hope that this second question will focus even more broadly on the Bank’s structure and operations. Where did the $2.3 trillion go, one might ask. From bureaucracies and consultants in the North to bureaucracies, often less competent and/or more corrupt, in the South. Do we call it corruption when less educated and experienced bureaucrats in the South deal with the phalanxes of bureaucracies from the North? Or when the donated funds are used to increase the profits of the North’s multinational corporations? Is it justice for an institution to fight poverty when more than 1,400 of its 10,000 employees earn more than the U.S. Secretary of State? Yes, indeed, there is reason, and perhaps opportunity now, to hold the World Bank to account.
And what can we expect from the central character in this farcical drama? Why is he staying until the end pf the fiscal year, if he is not going to make policy or personnel decisions, or attend meetings? Will he return to academe (e.g., Johns Hopkins) and fade away? Or revive PNAC (Project for the New American Century)––the neocons’ jihad? Or write the books and make the speeches about Iraq and Middle East policy that the Bank would not permit him to publish? Or perhaps manage a one-car funeral?
Posted by Martin McLaughlin, Adjunct Associate, Food Security Project.
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