Wolfowitz at World Bank


Whether Paul D. Wolfowitz remains at the helms of the affairs or is pushed out, the credibility of the World Bank is so dented that it can neither be restored easily nor very soon. The paradox is that the self-proclaimed crusader against corruption himself is deeply mired in corruption of various types. Richard Adams of Guardian (April 14) is not wrong when he says: “When George Bush picked up Paul Wolfowitz as head of the World Bank, the biggest fear was that the architect of the US invasion of Iraq would turn the world’s most important aid agency into a neocon arm of the White House. The reality has been far worse: in two years Wolfowitz has turned the bank into a rudderless, divided institution that is seeing its credibility drain away.”

With paralysis gripping the World Bank while the IMF is already on the decline, the two most powerful financial tools of neo-colonialism are fast losing their effectiveness in controlling and subjugating the developing world. One must not forget that these two along with the US Treasury Department have been instrumental in thrusting the Washington consensus, formulated by John Williamson, on developing countries. It needs to be explored how ongoing globalization is to sustain itself when the two powerful protectors of its basis are weakened.    

The World Bank is vertically irreconcilably divided. While the Bush administration is strongly on the side of Wolfowitz, most West European countries are against his continuance as head of the World Bank. Some Latin American and African management teams do stand behind him, but Asian management teams are overwhelmingly for his departure. One of his two deputies has openly demanded his resignation. Graeme Wheeler, managing director of the Bank, called for his resignation at an extraordinary session of the Bank’s top officials. Other top managers of the rank of vice-president concurred with Wheeler. President Bush may have “full confidence in president Wolfowitz,” the overwhelming majority of the staff has no trust in him. As early as April 2005 when the move was afoot to install Wolfowitz on the presidential throne of the Bank, a survey revealed that around 90 per cent of the staff opposed it. Michael Currie Schaffer of The New Republic was taken aback at “The vision of pinstriped Bank staffers hissing the their boss”.

Except The Wall Street Journal (WSJ) directly and The Los Angeles Times indirectly, no leading journal in America or Europe has come out in support of Wolfowitz. The two of his defenders have come out with preposterous arguments. The two editorials in The Wall Street Journal opine that Wolfowitz is being targeted because of his crusade against corruption. “The real fight here is over his attempts to make the bank and its borrowers more accountable.” Nobody, except Prof. Ruth Wedgwood of the Johns Hopkins University, is prepared to buy the line propagated by the WSJ that it is “the forces of the World Bank’s status-quo,” angered by Wolfowitz’s efforts to fight “corruption-as-usual” and bring in more accountability in the lending practices have seized on a trivial issue to bring him down (see her “The Wolfowitz non-story,” The Los Angeles Times, April17). Another article in the same paper (April 22) by David Rieff holds that “Wolfowitz walked into a trap.” It doles out a very interesting formulation: “There is an old psychoanalytic joke that goes: “When the right person does the wrong thing, it’s right, when wrong person does the right thing, it’s wrong.” In a sense, for all his tone-deafness and arrogant disregard for the sensitivities of the bank’s efforts are eminently defensible priorities.” It criticizes him for being tactless and handing his enemies “the loaded revolver” with which to finish him.   

Let us say a few words about the two dramatis personae in the news, before we take up the contours of the scandal involving them. Born on December 22, 1943 in Brooklyn of the Jewish parents, Wolfowitz trained himself as a political scientist from the Chicago University where he came under the influence of Leo Strauss, ideological father of neo-conservatism. He taught at the Yale University and then at the Johns Hopkins University where he got his friends including Francis Fukuyama appointed as faculty members. When the Suharto dictatorship was at the peak in Indonesia, Wolfowitz was sent there as American ambassador. On the one hand, the Suharto family and its cronies were plundering the country, on the other, the army was making a fun of human rights and incarcerating people without trial. The media had no freedom. Wolfowitz was not a silent spectator but an active supporter of the dictatorship. Even now the Indonesians remember him and his role with utter contempt. On his return, he served the Pentagon in various capacities and was promoted as deputy defence secretary by Bush, in which capacity he became a prominent architect of the invasion of Iraq by the US. According to Bob Woodward, even before the events of 9/11, Wolfowitz had come out with a proposal for Iraq’s invasion on the pretext of seizing control of oil facilities. This invited the ire of the then Secretary of State, Collin Powell. 

He married anthropologist Clare Selgin in 1968 and had three children. After divorcing her, he fell for his present day girl friend Shaha Ali Riza, born in Tripoli of the Libyan father and Syrian-Saudi mother. She studied at St. Anthony College, Oxford University. She married Bulent Ali Riza and migrated to the USA. She divorced him and lives with her son.

In 2005, Wolfowitz was made president of the World Bank at the instance of President Bush whose country has the dominant say because of the extent of its shareholding. As soon as his nomination was announced, dissenting voices were heard from prominent US economists. To give just two instances, the Nobel laureate Joseph Stiglitz said: “The World Bank will once again become a hate figure,” and Jeffrey Sachs opined: “It is time for other candidates to come forward that have experience in development. This is a position on which hundreds of millions of people depend for their lives. Let’s have a proper leadership of professionalism.”

When Wolfowitz came to the World Bank, his girl friend was already there in a senior position, directly reporting to the bank president. This could not continue because the Staff Rule 3.01, paragraph 4.02 prohibited it. It stated: “A sexual relationship between a staff member and his/her direct report, or direct or indirect manager or supervisor is considered a de facto conflict of interest. The manager/supervisor shall be responsible for seeking a resolution of the conflict of interest, if need be in consultation with management, who will take measures to resolve the conflict of interest. Failure to promptly resolve the conflict of interest may result in a finding of misconduct.”

The trouble started when Wolfowitz, in order to come to terms with the above stipulation,  got his girl friend sent on deputation to the State Department of the US administration and secured a hefty increase of 46 per cent in her emoluments besides other favorable terms and conditions. Her total emoluments were to exceed that of Ms Rice, the Secretary of State! Her immediate boss was to be Liz Cheney, the daughter of Dick Cheney. This combination of sex and money agitated the staff that demanded his resignation. He was hooted in the staff meeting where his unqualified apology failed to pacify the agitated staff.

As Richard Adams of The Guardian (April 14) says, “The case against Wolfowitz does not rest solely on his generosity towards his lover. Two other “Bush administration retreads” – to use Wolfowitz’s phrase – have received even more generous salaries, compared with their thin experience in an institution where degrees are weighed rather than displayed. Kevin Kellems—nicknamed “keeper of the comb” by bank staff for his role in passing a comb to Wolfowitz in Fahrenheit 9/11 – receives $250,000 for his loyalty. The irony is that Wolfowitz’s signature policy since arriving at the World Bank has been a drive against corruption …” Wolfowitz has been accused of appointing his cronies from the US administration to plum posts in the bank. Besides, he has been accused of converting the World Bank into a willing tool in the hands of the US administration. In this connection the concrete case of Uzbekistan has been cited, which faced the ire of the bank soon after it expelled the US troops stationed at American bases.

It is high time that not only Wolfowitz is sent packing but also the reorganization of the World Bank takes place so that it ceases to be an instrumental of neocolonialism.

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