I remember my astonishment and annoyance when, in June 2005, I read that Paul Wolfowitz, a neoconservative hawk and US deputy defense secretary under Donald Rumsfeld, had been nominated by President George Bush to be president of the World Bank. Known to be extremely close to the president, he was one of the most important architects of the illegal Iraq war, and as much responsible as anybody else for the shocking blunders made in Iraq after the fall of Saddam Hussein. Most of the 185 member countries of the World Bank were horrified. The United States has a wealth of talent and Paul Wolfowitz appeared to be a most unsuitable appointment.
Today Paul Wolfowitz is fighting to keep his job after a series of problems. He was forced to make an embarrassing apology after details emerged of his role in authorizing a colossal pay rise for Shaha Riza, a Libyan-born employee of the bank, and his girlfriend. He had also made arrangements for her promotion. She was posted to the State Department to avoid a conflict of interest.
Bank staff is not allowed to work under the direction of a colleague with whom they are romantically linked. After two big pay hikes she is now earning $193,590, which is, more than the pay of Secretary of State Condoleezza Rice.
To his credit, Paul Wolfowitz pushed anti-corruption in poor countries to the top of his agenda. Corruption in the use of aid, which after all has been taken from taxpayers in many countries, is a huge problem. It is holding back progress in many parts of the world, particularly in sub-Saharan Africa. There have been far too many cases of development funds ending up in Swiss bank accounts. This carefully chosen platform has now been gravely damaged by his own grossly inappropriate personal behavior. He stands out as a hypocrite. He has lost his moral authority. Paul Wolfowitz has added to his troubles by making a number of controversial appointments over the last two years. He surrounded himself with a chosen team of ideological Americans who had previously worked for the Bush administration. Two of them are now paid about $250,000 each which has infuriated other bank staff.
President Bush is known to have little sympathy for the World Bank, just as he has little sympathy for other international organizations starting, of course, with the United Nations itself. Indeed, his appointment of Paul Wolfowitz was regarded in some quarters as an attempt to rein in an important international organization. At first, when Paul Wolfowitz’s troubles became highly publicized, the White House delivered tepid political backing for him. However, Hank Paulson, the US treasury secretary, is asking the White House to withdraw its support.
Behind the scenes Hilary Benn, Britain’s able and ambitious international development secretary, is leading the charge against Paul Wolfowitz, with considerable support from the Germans and other European Union Members. Last September Benn threatened to withhold 50 million pounds of UK funding for the bank unless its president changed his ways. As UK has supported the Bush administration through thick and thin, I found this rather refreshing.
The current row over Wolfowitz, which is seriously damaging for this important international institution as it negotiates with its members over its funding for the next three years, highlights yet another example of a major international organization that has an absurd way of selecting its top person. The United Nations selects its secretary-general in rotation from among the main geographical groups, rather than seeking out the most experienced and impressive candidate. In the case of the World Bank it is always an American who is chosen! It is indefensible that it is the United States president that picks the head of the World Bank in this century.
This row has also given an airing to the general topic of the bank’s role at a time when aid to the world’s poor nations has been falling. The bank is a sprawling bureaucracy, with high running costs, and exports say its priorities remain confused. Infighting can get out of hand without clear leadership from the top. For two years Wolfowitz has grown more contentious — he has even been accused of giving inappropriate support to US foreign policy objectives — and he has lost completely the support of the bank’s staff.
The world waits to learn what the ad hoc committee looking into Wolfowitz’s behavior will tell the board of the bank, and what action that board will then take. I can report to the board their president is holed beneath the water line. European ministers are much concerned that he leaves the bank without further delay. Heaven knows who the president of the United States will pick to replace him.
