World Bank board debates Wolfowitz`s fate – as he is booed by he is own staff

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Wolfowitz on the ropes

Friday April 13, 2007


For an organisation meant to serve the poor, the World Bank looks embarrassingly wealthy, in a huge concrete and glass building just three blocks from the White House. The problem, according to the bank’s critics, is that all this shapes the way it behaves. This weekend the annual spring meeting of the International Monetary Fund and the bank in Washington will raise a traditional litany of complaints. It is too bureaucratic and centralised, critics say; too insistent that poor borrower countries follow its instructions. Politically too, they complain, the bank is in Capitol Hill’s shadow.
Many of these arguments are accepted by the organisation’s own staff; others simply reflect a yearning for the perfect over the good. The two giants of multilateral development – the IMF as a last resort in financial crisis and the World Bank as an engine of development – have made attempts to improve since they were set up in Bretton Woods. Next month marks the 60th anniversary of the bank’s first loan. Then the borrower was France; now it is more likely to be Malawi.

But the critics’ job has become simpler since Paul Wolfowitz was appointed as the bank’s president in 2005. The charge that the world’s second-largest development organisation is under America’s thumb could hardly be better supported than by the appointment of one of President Bush’s closest advisers, a man who helped bring about the Iraq war. And all those who suggested that the bank was about to become the development arm of the Pentagon have had plenty of material ever since. Mr Wolfowitz hired as his gatekeepers Kevin Kellems and Robin Cleveland, two people also linked to Iraq. On top of that, he has poured funds into Afghanistan and Iraq. He even set up a permanent office in Baghdad, not staffed by the World Bank since the bombing of the UN office there. Others allege that Mr Wolfowitz’s campaign against corruption, which has led to the bank withholding funds from some borrower countries, is a more insidious version of the neocon drive to spread democracy.

Yet a press conference at the bank yesterday presented the astonishing sight of Mr Wolfowitz, the great propagator of good governance, having to defend his own record. He began the meeting, normally an affair of limited appeal to non-economists, with a personal statement apologising for his role in getting his girlfriend, Shaha Riza, a secondment to the Bush administration. Not only does she remain on the bank’s payroll, but she is on a salary well above her former colleagues. The embattled Mr Wolfowitz spent much of the rest of the conference fending off questions about his possible resignation. Tellingly, he left them unanswered.

Most of the facts of this story have been known for months. But details of Ms Riza’s pay, which have emerged recently, have made Mr Wolfowitz’s position particularly shaky. All this will have cheered up his critics, and those of the bank. It also lends great force to their calls for reform. After all, if the process of appointing the bank’s head was more transparent it is very unlikely that Mr Wolfowitz would have got the job.

But any reform needs to go much wider. What matters is not just who heads the World Bank, but what the institution does. Few doubt that the bank is necessary, and even in its current form it does good, as well as harm. Hilary Benn, the development secretary, said as much yesterday in a speech arguing that the bank must stop being so heavy-handed with its borrowers. He set out the case for a green World Bank, one that finds a new purpose in responding to climate change. But for such things to happen the bank’s structure must be reformed. At the moment the UK has a larger share of votes in the organisation than 22 African countries combined, and the US can block any change. While that is the case, some critics will go on suggesting that the World Bank is really an imperial one.

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