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Encircling the World Bank: How Long Can Wolfowitz Last?

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Normally the World Bank leads a fairly sheltered existence. It gets on with making important policy decisions, lending money and collecting debt in the name of global poverty reduction. Occasionally, however, officials at the Washington-based institution find themselves at the centre of popular and media attention.

The last time was the turn of the millennium when anti-globalisation marches surrounded the institution several times. But that was nothing compared to this month. Because of the antics of the Bank’s president and his senior appointees the World Bank has been all over the airwaves, front pages and blogs, and not for the right reasons.

The Bank states its aim as creating “a world free of poverty”. Paul Wolfowitz, its president for the last two years, made it his mission to stamp out corruption as one important way to do this. Providing public money to invest in health care, education, agriculture and similar is certainly very important: it’s what I work on. But the World Bank and its current president, have very fixed views on how to achieve this, and they have the power (of the purse) to make their views stick.

Many people have challenged the fanatical focus on corruption that Wolfowitz brought with him to the Bank (and some felt it was a cover for his lack of vision on other matters and an attempted distraction from his role as a key author of the Bush administration’s failed Iraq policy. They are troubled by not only Wolfowitz’s substantive agenda, but also his style. He surrounded himself with key aides from the Pentagon and proceeded to consult them rather than the Bank’s staff (with years of experience) or board (with the political mandate to make decisions).

In a nutshell Wolfowitz proceeded to make more enemies in and around the World Bank, to add to the long list from his previous job.

So when news broke two weeks ago of corruption and nepotism at the top of this poverty-fighting, anti-corruption public institution, Wolfowitz had few friends to call on. And many people waiting to pounce.

My organization – European Network on Debt and Development – contested George Bush’s 2005 nomination of Wolfowitz very strongly. We did the normal things – write public letters, do media statements, lobbied government representatives, etc. But we also set up a specialist blog – dedicated only to the World Bank president issue. I’d never blogged before and had not seen one used in this way. But it was a roaring success – with the outgoing World Bank president telling his staff just three weeks after our launch that if they looked at our site they would know as much as he did. Then we had Reuters and other DC-based correspondents on the phone to us (in Belgium and in rural England) dying to know what we’d heard. We’d managed a kind of electronic encirclement of this major institution – encouraging Bank insiders to set up webmail accounts to send us the latest, and leveraging our network of activists worldwide to send us tips.

Anyway, this month we’re back and our World Bank president blog has again been used intensively by journalists, activists, officials and more. We’ve listed ten charges against Wolfowitz – the scandal is spreading by the day as hundreds of people pore over the documents released as part of the Bank board’s investigation.

The allegations certainly look serious enough, and there is lots of evidence released in public, for the Bank’s main man to go. In brief they are:

1) That Wolfowitz trampled Bank pay and staffing codes by awarding abnormal payrises to his romantic partner, Shaha Riza. To comply with ethics guidelines Riza had to leave the Bank once Wolfowitz took charge, but she was given pay rises to ‘compensate’ her for working at the State Department, and guaranteed automatic promotion for when she returns to the Bank. More details here and here.

2) That Wolfowitz was less than honest about his role in the pay affair, before admitting a mistake and saying he was sorry only last week. Details.

3) That the State Department-established job for which Shaha Riza is being paid more than Condoleeza Rice does not amount to much: the Foundation for the Future has yet to make a grant. Details.

4) That in less than two years of Wolfowitz’s tenure at the Bank over half of Bank senior managers have left – many either pressured by the president or unhappy with this style and direction. Details.

5) That senior management positions have been filled by appointees from governments who had supported the Bush administration in the run-up to the Iraq war. Details.

6) That Wolfowitz brought in two special advisers who had worked with the Bush administration, ensured they also were paid astronomical salaries and worked with a cabal of them and others rather than Bank staff or board members. Details.

7) That some of Wolfowitz’s senior management and/or senior staff appointees have been pushing a Republican Party line on family planning, including removing all mentions of reproductive health from certain Bank planning documents, including the Madagascar Country Assistance Strategy. Details.

8) That Wolfowitz has been continuing to promote the Bush administration’s line on Iraq (see this) using his position at the Bank to accelerate the Bank’s re-engagement in Iraq, and has also brought his political views to bear when making other lending decisions). See Wolfowitz Watch commentary here and here.

9) That the World Bank’s internal machinery for dealing with ethics and internal corruption issues is not working properly and may have been populated with Wolfowitz cronies. Suzanne Rich Folsom, head of the Bank’s Institutional Integrity department may have been reluctant to investigate a Bank staff’s whistleblowing on the Riza issue because of her ties to Wolfowitz via her husband George Folsom, former president of the International Republican Institute. One of Suzanne Folsom’s hires in that department (supposed to probe corruption within the bank) was Allison Brigati, the daughter of former national chairman of the GOP, Frank Fahrenkopf. See the Village Voice expose.

10) Another one is the question of on what basis Wolfowitz’s partner Riza went to work in Iraq for a defence and intelligence contractor (see this story). Questions include whether Riza notified the Bank (which forbids its staff taking on politically sensitive assignments, and whether Wolfowitz might have had a hand in obtaining her the position (he was still at the Pentagon).

General issues

As well as these ten points, the affair does raise some more general policy and political issues.

Firstly the deep problems with the World Bank’s top job selection process. At present the White House Chief of Staff draws up a shortlist which is presented to the US president who decides which American citizen should get the position and foists it on the Bank’s board. Not very impressive for an international organization with over 180 government members and a penchant for talking about good governance. See my comment piece of two years ago on this site.

Secondly: blowback for the Bush administration’s cavalier approach to multilateral institutions. Few have forgotten Wolfowitz’s presence in the administration when it was desperate to drum up votes in the UN Security Council before the Iraq War. Nor that many of the allegations and predictions on Iraq by Wolfowitz and others turned out not to be true. See this CNN story if you can’t remember.

This time it’s not just a radical fringe of protesters who are surrounding the World Bank and calling for change. Ministers, Bank senior staff, the editorial board of several leading newspapers worldwide, thinktank bosses and many more have told Wolfowitz to practice what he preaches and get out of the Bank. I think it’s likely he will go, but he and the US government will hold out for some kind of deal and face-saving maneuver. This interim period looks like being a good time for bloggers and a very bad one for the World Bank.

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About Alex Wilks

  • http://www.elitebloggers.com Dave Nalle

    I wonder if you understand that of your 10 ‘charges’ against Wolfowitz perhaps two have any relevance or involve any potential wrongdoing – both having to do with the Shaha Riza business. And even in that case, her salary change and job change all took place with direct oversight and approval from the board and were not even initiated by Wolfowitz. They were done to see that she wasn’t effectively punished because her boyfriend was taking a job which was going to force her to lose hers.

    Your organization and its connection to ‘insiders’ makes very clear exactly what you are up to. You’re a shill for the professional bureaucratic culture of corruption which has managed the world bank and other international institutions for years and is threatened by Wolfowitz’s efforts to clean house.

    Wolfowitz is absolutely correct that the problem with the world bank is corruption on two levels. There’s the corruption within the bank bureaucracy – which you seem to be the spokesman for. Then there’s the corruption within the governments of the nations receiving world bank assistance. Between them they cripple the effectiveness of the institution. Doing anything else as president without cleaning house and reforming how client states are dealt with would be irresponsible.

    Wolfowitz is doing the job that he was put there to do and doing it the way it has to be done. You’d prefer the status quo of corruption and incompetence and that won’t do.

    Dave

  • MBD

    “the problem with the world bank is corruption on two levels.”

    Right.

    Level 1: Paul Wolfowitz.

    Level 2: Shaha Riza.

  • http://www.elitebloggers.com Dave Nalle

    MBD, you clearly know zero about the subject, so why offer such an uninformed comment?

    Dave

  • Washingtonian

    To Dave:

    Subject: Wolfowitz: an example of fraud, abuse, and waste

    – fraud: to infiltrate the whole institution with the “coalition of the
    willing” belonging to the neo-con agenda;
    – abuse: everyone of the crony is entitled to be a “senior”; and
    – waste: refusal to resign has cost the institution $100 million (one
    month’s paralysis) of the total annual administrative budget of $1.2
    billion.

  • Zedd

    Alex

    Wolfowitz come in with guns blazing. He was not equipped to deal with this type of body. His Presidency comes because of the US’s contributions to the World Bank. The other members of the board which consists of countries that also have major investments into the institution, were dismissed. The arrogance of this administration was felt at the World Bank and the other countries and their reps did not appreciate it.

  • MBD

    Dave, you clearly know zero about this subject, so why offer your uninformed comment? Your bias is showing. Why do expose yourself to ridicule? Are you related to Wolfie or Riza? Are they your friends?

    In #2, I didn’t want to embarass you with details as #4 and #5 did.

  • MBD

    “The world bank and other international institutions for years [were] threatened by Wolfowitz’s efforts to clean house.”

    What should we learn from this fiasco?

    Never send in a wolf to clean the hen house.

  • http://www.elitebloggers.com Dave Nalle

    Why do expose yourself to ridicule?

    Because it makes it so easy to tell the sheep from the goats.

    Are you related to Wolfie or Riza? Are they your friends?

    Nope. I neither know them or particularly like them from what I’ve seen of them.

    In #2, I didn’t want to embarass you with details as #4 and #5 did.

    Two comments which were devoid of fact and rather short on rhetorical coherence. Anyone can post – ewww Wolfowitz is evil, Bush is Satan.

    Let’s see some facts sensibly explained – and not just self-serving propaganda like the original article.

    Dave

  • MBD

    Dave says he can tell the sheep from the goats.

    Wolfie certianly is not a sheep so he must be a goat.

    Dave’s goat, Wolfowitz, is in deep trouble Over 40 members of the organization’s anticorruption team believe his conduct has undermined their work. The team wants the bank’s board to take decisive action to resolve the crisis because it is undermining the bank’s credibility and authority on corruption issues.

    But wait! How can this be?

    Wolfowitz made ending corruption his primary issue as World Bank president.

    Ha! So much for that bullshit.

    But Dave Nalle supports goat Wolfie. Does that makes sense? Yes.

    Goats flock together.

  • Zedd

    What has taken place with Wolf is another continuation of how this administration does business. Like adolescents they believe that they know best how the world should work. However because of lack of skill, proper experience or finesse, they charge in blazing unprepared and end up making a bigger mess of things. As we all know disrespect of your elders or those who have gone before you has always been a predictor of a short life or a low quality of life. We have hitched our buggy on to a bunch of adolescents with no future, what does that say about us and our chances. Can we bail quickly enough to save ourselves.

  • http://lebloomsbury-alexandremercier.blogspot.com/ Alexandre Mercier

    The big issue is not about whether or not Wolfowitz has done something wrong, we all know he did.

    The real issue is about the future and how the nominations of international organizations should be done. The World Bank is usually led by a US citizen while the IMF is left to a European citizen. This is non-sense. The main criteria for selection should be competency. All countries (except for the US and Europe) should be against this and the main opponent to this should be Japan, who’s the 2nd largest international donor and is left behind.

  • Nancy

    One more nail in the coffin of Dubya’s “legacy”. Even more incredible is Dubya’s contention that, as with Gonzales – & every other person in this administration who’s been caught with their hands smeared & forced to resign or been jailed – he stupidly & stubbornly continues to ‘support’ him. Dubya’s problem is that he actually believes Rove’s mantra that if he keeps denying something forever, it will be true & the rest of us will believe him. I could almost decide Bush is just plain insane instead of evil, Dave. He clearly is abnormal in his thinking. Maybe he’s drinking again….