18 May Wolfowitz’s Resignation: Victory in the World Bank’s Fight Against Corruption
Let’s set aside for the moment the issue of whether Paul Wolfowitz’s tenure as World Bank President was doomed from the start because of his role as chief architect of the Iraq war, and his apparently single-minded management style. Viewed solely from the perspective of the broad anti-poverty mission of the World Bank and its work in promoting open, transparent and accountable government, his removal was absolutely essential. Here is a definition of corruption that I found on a government website (can you guess which one?):
Whenever you are in doubt about whether your actions are corrupt, ask yourself the following questions:
“Are my actions legal?”
“Am I being fair and honest?”
“How will it look in the newspaper?”
“Would I like my child, my mother or my friends to know what I have done?”
If the answer to any of these questions is negative, your actions are probably unethical or corrupt. If you are still not sure what to do, keep asking yourself these questions until you are certain that you are doing the right thing! You can also ask a colleague or a friend about your actions.*
In the case of a government or IO official, the question “How will my actions affect perceptions of the integrity of the institution?” might also be asked. When the news of the role he played in negotiating a position and pay increase for his companion was made public, Wolfowitz himself admitted he had “made a mistake” and failed to follow his “instincts” on the matter. At least one or two of these questions would have been answered in the negative.
Thirty-seven of the World Bank’s Country Directors signed a letter published on May 14 in the Financial Times that stated:
As World Bank Country Directors we are acutely aware that the Board, management and staff of the Bank face an internal crisis that has damaged our reputation and jeopardises our effectiveness as a development institution. Bank colleagues working on governance and anti-corruption and in the Independent Evaluation Group have shared their serious concerns, and we echo them. If we do not maintain high standards of integrity ourselves, we cannot speak effectively on the governance issues that lie at the heart of our development mandate.
This crisis goes beyond the governance and anti-corruption agenda and affects our ability to deliver across the entire development spectrum. Our country programmes are built on trust, mutual respect and partnership. These assets will be compromised unless this episode is brought to a swift and satisfactory conclusion. If donors are not convinced that the institution and its top officials merit their full support, future IDA funding may be endangered–at great cost to our ability to assist low-income countries, particularly in Africa. The Bank must practice what it preaches on governance and accountability for us to be credible in our partner countries.
These are strong assertions, and we do not make them lightly. They are based on numerous interactions with our clients in recent weeks. In country after country, government counterparts, civil society, international development agencies, the private sector, parliamentarians and the media are waiting to see how the Bank will resolve its problems. We respect our Board’s deliberations and see the Bank’s commitment to a process that follows sound ethical and governance principles as a major strength. We also look forward to an outcome consistent with the standards we advocate to others, and believe that a credible resolution will enable the Bank to emerge with its reputation enhanced. Failure to act credibly, on the other hand, risks both the reputation and the mission of the institution.
Not surprisingly, several of these Country Directors serve in countries that under Wolfowitz’s leadership had been targeted for World Bank anti-corruption initiatives.
I do not doubt that there were many World Bank officials who were not happy with Wolfowitz’s initial appointment given his role in the war, others who disliked his management style, and still others who disagreed with his substantive priorities for the Bank. Those reasons alone might have made him an ineffective manager of the institution and thus a poor choice for such an important position. But there can be no doubt that his tin ear about the question of his personal relationship with a senior bank official and his inappropriate involvement in her salary and job negotiations are enough that the example had to be made. Accountability may be out of fashion in the current administration, but international institutions — as neocon critics have repeatedly (and correctly) pointed out over the years — need to operate with clean hands.
*This description is from the Government of Namibia’s anti-corruption campaign, funded in part by USAID and other outside donors. The World Bank ranks Namibia in the 62nd percentile for anti-corruption/good governance practices.
I think the following from an opinion by piece by Mark Mulloch Brown in this morning’s Los Angele Times gets to the heart of the problem: “The World Bank’s president, despite the U.S. owning only 16% of the bank’s shares, is by tradition chosen by the U.S. president. There is no Senate confirmation or international vetting by the other governments who are shareholders. The Europeans exercise similarly unjustified control over the leadership of the International Monetary Fund. The selection of the World Bank president has traditionally involved only the most cursory of consultations with other shareholders. But in a profoundly difficult-to-manage organization such as the World Bank, it is critical that its chief have broad support. Once things get off to a bad start, it’s very hard to recover balance and win over the staff and government shareholders. Wolfowitz got into a downward spiral of mutual distrust that seemed impossible to halt. He withdrew into an uncommunicative shell behind his American advisors. About the time of Wolfowitz’s appointment, then-Secretary-General Kofi Annan was pursuing efforts at the United Nations to begin selecting key officials through a more transparent, global, merit-based competition. A well-qualified Turkish development economist and former finance minister, an… Read more »
Peggy: I think you quickly jumped on the MSM bandwagon of criticizing Wolfowitz without giving much or hardly any credence to the possibility that his dismissal might reflect bigger problems with the Bank’s internal bureacratic structure and mission. Although one could quibble with Wolfowitz’s role in the Iraq war and whether that would be sufficient to make him an ineffective leader at the Bank, I think it is a significant leap in logic to conclude that his dismissal is a victory for corruption. By many accounts, Wolfowitz has done more to combat the scourge of corruption more than any World Bank president in history. Also, it seems that the World Bank has a historical track record of making much hay about combating corruption and then largely turning a blind eye to it. In Africa, which has been the region of the world which has been most hard hit by corruption, the legacy of Wolfowitz’s leadership to reformers on the continent has been quite different. You need not take my word for it, please just read this editorial by Nuhu Ribadu–the award winning anti-corruption czar in Nigeria. For a little bit of context, Nigeria has for many consecutive years in the… Read more »
Jide– Thanks for the link to Nuhu Ribadu’s very informative op-ed. (As you will see above, I do give credence to the fact that the opposition to Wolfowitz may have been motivated by other objections to his leadership within the Bank separate and apart from his own improper behavior. Whether that reflects poorly on the Bank’s bureaucracy or on the decision-making of the US in choosing Wolfowitz, I don’t have enough information to say.) I am glad to see the World Bank has been successful in Nigeria under Wolfowitz’s leadership. But how would Nigeria’s success be helped by retaining Wolfowitz under a “do as I say, not as I do” logic? If it is true that Wolfowitz’s efforts to combat corruption have been the most successful of any Bank President to date, I would hope that the Board will work to build on his work. I also hope that to the degree others at the Bank were responsible for this mishandling of the conflict of interest, they will be held to account as well. The world is certainly watching. But it just won’t do to have a public official hold other governments to one standard (“Mr. Prime Minister, the World… Read more »
Peggy: Although I agree with your concerns in theory, I would still insist that we look at this issue and assess the tradeoffs. Even if we think that Wolfowitz’s role in his partner’s transfer would have hurt his ability to fight corruption, we have to weigh that evidence against the possibility that his opponents might not really be vested in improving the Bank’s fight against corruption. After all, anti-corruption did not automatically become a World Bank priority, it happened to be that Wolfowitz annouced that fighting corruption would be his number one priority as president. In other words, I think we often take at face value the claim by some European officials and some internal bank staff that they are “truly” interested in making the fight against corruption a priority. Take, for instance, the head of the bank association staff that is purportedly Wolfowitz’s greatest nemesis. According to various reports, she had it in for Wolfowitz right from the day he started. Her main problem was not with Wolfowitz’s romantic liasons or his ability to fight corruption, but she seemed to particularly concerned about Wolfowitz’s conservative credentials and the fact that Wolfowitz was opposed to extending generous perks to world… Read more »
Jide– We are in agreement on the importance of anti-corruption as a central, if not primary, pillar of the Bank’s programs. So yes, let’s keep the pressure on all the donor countries to walk the walk. And yes, let’s definitely keep pressure on others whose own actions and/or undeserved perqs undermine the anti-corruption message. And, while we are at it, let’s consider the competence issue (which I didn’t even get into in the original post). To read your take, Wolfowitz was a great leader of the bank who had an unfortunate private conflict (and it was not “romantic liasons,” btw, but a long-standing relationship that began years before his appointment), but whose otherwise stellar performance outweighs his misconduct. Anyone who has read the dozens of books that cover Wolfowitz’s tenure at DoD knows that management is not his forte. If you need a reminder, see Larry Wilkerson’s op-ed in the LA Times. Money quote: Then-Deputy Secretary of State Richard Armitage, who had worked at the Pentagon for years before going to the State Department, once told me that Wolfowitz had to telephone him to discover what was happening in Wolfowitz’s own department. When Wolfowitz left the Pentagon under somewhat of… Read more »
I find it hard to consider this sorry episode as anything but a naked power struggle.
Yes it is a naked power struggle, but one where Wolfowitz (generously to his opponents) set the trap and jumped into it personally.
The charges are not mere fabrications, they have some meat to them, which is what makes Wolfowitz the loser this time.
Had he obtained actual, detailed recommendations or courses of action signed by the ethics committee and by the general counsel (but this probably would not have resulted in the significant other’s 40% pay raise), then he would be much more righteous in his indignation.