When Paul Wolfowitz’s name was first floated for the World Bank presidency in early 2005, his nomination was met with scepticism from wary Bank staff and incredulity from development campaigners, a start that threatened to put him on a rocky path during his tenure.
But a little more than a year after he was approved by the Bank’s board of directors on Mar. 31, 2005, Wolfowitz, former U.S. deputy defence secretary and a lead architect of the ill-fated U.S. invasion of Iraq, appears to have found a life raft for his image.
He is on a drive to fight corruption that has so far succeeded in deflecting attention away from his neo-conservative ideology but, many critics say, fails to grapple with the real corruption issues plaguing Bank projects.
So far, Wolfowitz has suspended loan disbursements to Chad in response to the government’s recent unilateral modification of a law governing the country’s oil revenues, which was negotiated with the World Bank.
In India, he held up consideration of a family planning initiative, the Reproductive and Child Health (RCH) Project II, due to concerns about procurement irregularities, and froze loans of about 400 million dollars for transportation projects because of safeguard violations.
He insisted on the significant strengthening of conditions for debt relief to the Republic of Congo, after allegations of corruption in the state-owned oil company.
In Uzbekistan, the Country Assistance Strategy has also been delayed due to “good governance” concerns.
Internally, Wolfowitz has said he is restructuring the Bank’s Department of Institutional Integrity, a watchdog, to make its authority clearer and its operations more effective.
In February, he led efforts to get the heads of other multilateral lenders like the Inter-American Bank and the African Development Bank to commit verbally to fighting corruption.
The moves, promoted in a barrage of press releases from the well-paid staff of the Bank’s public relations office, won him applause from conservatives in the U.S. Congress, most recently in the form of Senate hearings, and from the U.S Treasury, the real mover and shaker in the Washington-based Bank.
The result also has been the recent association in development circles between Wolfowitz and the global fight against corruption, along with a number of favourable stories in the U.S. mainstream media.
The Bank staff, which has had a tense relationship with Wolfowitz because of his record as one of the main architects of the bloody Iraq war, which has cost thousands of lives and billions of dollars, was quickly put on the defensive with more talk in the media, rightly so perhaps, about corruption among Bank officials, as well as constant threats of staff reshuffles.
Yet despite his relative success, Wolfowitz’s campaign, by many measures, is still lacking in scope and appears to have more to do with image-building than real substance.
For one, Wolfowitz , a hard-core neo-conservative figure, didn’t pass the Iraq test.
Prior to moving into his new office on Washington’s H Street in June 2005, Wolfowitz’s sole shot at development was the teetering reconstruction of Iraq, which was already deeply mired in, ironically, corruption and futility. Water, electricity, education, safety and poverty in the U.S.-occupied Iraq are all much worse than even during the 12-year stifling economic sanctions.
It was also Wolfowitz who made the decision to allow only U.S. companies to carry out the main reconstruction contracts in Iraq, a decision that was later modified.
Since taking over as World Bank president, Wolfowitz has avoided scrutinising Bank projects in Iraq, despite numerous reports of widespread fraud in the occupied nation and within the ranks of its U.S.-backed government.
A World Bank loan of 100 million dollars to build 82 new schools in November last year was made without anti-corruption due diligence, and the same applies to water, sanitation, urban development and emergency health projects, along with technical assistance, worth 500 million dollars in total, that the Bank is involved in, critics say.
Wolfowitz is now reportedly contemplating expanding World Bank operations in the U.S.-occupied nation.
“For him to be in a position to preach what good governance should be in Iraq seems highly hypocritical,” said Antonia Juhasz, author of the forthcoming book, “The Bush Agenda: Invading the World, One Economy at a Time”.
“Maybe he is aware of the fact that the public would question the World Bank’s entire endeavour if he made too much of a focus on Iraq because of his role in the creation of this very corrupt government,” she said.
Others note that Wolfowitz would have an easier time winning believers in his anti-graft crusade if he went after larger targets. The India health project, for example, comes nowhere near the much bigger sums involved in massive — and corruption-prone — infrastructure projects.
“If one really looks at corruption you have to look at civil works. Infrastructure is the thing that should be nailed but they won’t nail that because it’s all about lending,” said a source close to the Bank who wished to remain unidentified.
In fact, the Bank has gone in the other direction. It reportedly raised its involvement in infrastructure projects from 5.4 billion dollars in 2003 to seven billion last year, with a target of 10 billion dollars in two years, or about 40 percent of the Bank’s new annual lending.
Moreover, Wolfowitz has so far set his sights on mostly small, poor nations and shied away from probing the role played by more powerful Northern governments and corporations in developing nations.
Many observers of the Bank also see the lack of whistle-blower protection as an indication the Bank is actually flippant about its anti-corruption drive, despite repeated pleas from organisations like the Washington-based Government Accountability Project (GAP).
In February, GAP released a study commissioned by the World Bank itself, which found flaws in the Bank’s current whistleblower policy and said it fails to shield staff members who report corruption from retaliation.
Although the study was submitted in April 2005, the Bank had kept it under wraps in spite of repeated calls by watchdog groups and by the U.S. Senate Finance Committee Chairman Charles Grassley to publicly release the study.
“All of this continues the pattern of the World Bank rhetorically promoting transparency while maintaining secrecy on management proposals to combat corruption,” GAP complained. (END/2006)
Analysis by Emad Mekay