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 ex-Portuguese prime minister, a Sri Lankan human rights activist, a Swedish anticorruption campaigner, a British counter-terrorism chief, a Gambian development expert and a German environmentalist were among those picked in heavily contested but largely open processes. And the U.S. was no loser under this system either. Several very able senior American officials also landed top jobs.
But this transparency was not inevitable, and there are plenty of forces that would prefer to return to the old-style patronage appointments made behind closed doors. Even though his own election was perhaps a little more open than in the past, the early signs that the system as a whole will be kept open under current Secretary-General Ban Ki-moon are not particularly encouraging. All governments, not just the U.S., will, if allowed, seek their share of the spoils.
This should not be allowed to happen. The cost of backroom fixes versus competitive selection is now jeopardizing the institutions themselves. When leadership is not trusted, reform becomes next to impossible, and the institutions become mired in political gridlock. We have seen this at both the United Nations and the World Bank.
The world cannot afford this. Never in history has the global community been more integrated and less governed. Problems such as the environment, poverty, public health, financial stability and security cannot be handled only at the national level in a world that is so bound together. Yet our global institutions, starting with their leadership, are often ill-suited to the task of framing solutions that can win wide support. What’s more, rapid changes in relative economic standing and political stature of new, under-represented powers (such as India, China, Brazil and South Africa) and the old guard (especially the United States and Europe) are increasing the tensions at these international organizations.
Exactly how this will be addressed in the coming days at the World Bank is unclear. The fight at the bank’s board has been so divisive that appointing an American — but one who enjoys strong international support — may be a better interim step than throwing the post open to global competition. Undertaking dramatic change at a moment like this might prolong the civil war on the board.
But in the future, revisiting the shareholding and ownership arrangements of all these institutions — including the World Bank, the IMF and the membership of the U.N. Security Council — and putting in place competitive, open selection processes for choosing their leaders is a vital step toward restoring their effectiveness. Ultimately, the power to select the World Bank president must come to rest with its board, not with the White House. These organizations need to be seen to work for all of us if they are to work for any of us.”
Peggy,
Perhaps you could provide a link to the entire article. Thanks.
Patrick
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 late 1990s won the notorious distinction by Transparency International as the most corrupt country in the world to do business. Thanks to Ribadu’s courage–he has survived numerous assasination attempts–Nigeria no longer enjoys that distinction. You can read Ribadu’s views on why dismissing Wolfowitz would be a mistake here. http://www.iht.com/articles/2007/05/01/opinion/ednuhu.php
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 Bank abhors the practice of awarding sweetheart government contracts to your friends and family.”) while reserving a different standard for himself (“Sorry, my bad.”) I realize that my views on this may sound hopelessly old-fashioned (I work at a public institution and am quite sensitive to the fact that we are beholden to the tax payers), but with all due respect to Mr. Ribadu’s opinion, Wolfowitz had to go.
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 bank staff who were consultants. See the following article “Leader of World Bank Staff Group Becomes Wolfowitz’s Chief Nemesis” at http://www.washingtonpost.com
Again, turning back to Nuhu Ribadu, apparently one of his greatest headaches as an anti-corruption crusader in Nigeria was that certain European governments and banks–most prominently that of France–went to elaborate lengths in refusing to disgorge stolen Nigerian loot. See http://www.efccnigeria.org. In any event, if we must adopt the “do as I say, but not do as I do” logic, we should also evaluate Wolfowitz’s opponents under the same logic. Finally, although one might argue that Wolfowitz’s future efforts to fight corruption might have been somewhat compromised (a questionable proposition standing alone), how do you know that any replacement would be vested in fighting corruption–either vigorously or half-heartedly? Hypocrisy might be the homage vice pays to virtue, but I would definitely choose a sinner who thinks it is at least worthwhile paying homage to virtue rather than one who thinks virtue is a lost cause.
–Jide
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 a cloud because of the deteriorating situation in Iraq, the bureaucracy breathed a sigh of relief — not because the architect of the war had departed but because we longed for a deputy who could get the trains unscrambled (half a trillion dollars worth of crashing trains at the center of the federal bureaucracy is a hell of a problem).
But when we heard that Wolfowitz was going to the World Bank as its president, we knew that it would be only a matter of time before disaster struck again — that Wolfowitz’s lack of administrative, managerial and leadership skills would derail him once more. Now it has happened.
In all this, I am reminded of the many recent episodes of men in positions of extraordinary power who just don’t get that, notwithstanding brilliance of mind, they actually might not be the right the person for the job.
Peggy
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.