World Bank President Paul Wolfowitz had to go. The face-saving solution cobbled up by the World Bank executive directors allows him to leave without humiliation. This should not however be the end of the matter, because this unsavory incident has focused world attention on the bank and how it is run.
Wolfowitz had admitted to mistakes in fixing the salary and promotion for his girlfriend when he took over the bank in 2005. Nevertheless his troubles stemmed from a rapid breakdown in his relations with the bank’s staff. He arrived with a mission to reform the organization. The 2,700 employees quickly took against the plans of a chief with no background in aid projects but who had come to the job from the US Defense Department, where he was a lead planner in the Iraq invasion.
The World Bank still needs shaking up. The problem was that Wolfowitz was not the man to do it. He was a political appointee of the Bush administration. This is, in itself, arguably a scandal. The United States is the World Bank’s largest shareholder and as such has traditionally always appointed its boss. There is, however, an argument that the bank’s role in granting concessionary finance to, and studying and working up projects in, the developing world is too important for its key post to be always in the control of the same country. Though the World Bank has 185 member states that are its shareholders each appointing a governor, these individuals meet only once a year. The day-to-day oversight of the bank’s activities rests with 24 executive directors who are based at the HQ in New York. Five of these are always from the major shareholders: the United States, Japan, Germany, France and the United Kingdom. The rest are elected from among other members for two-year terms.
In recent years, smaller countries have been demanding a greater say in the bank’s affairs. There is surely virtue in this. Projected UN reforms involve cutting the role of political appointees in senior positions, simply because certain countries o.r continents must perforce have so much representation. Therefore the World Bank does not need to become another opportunity for favored individuals to enjoy a good time for two years in New York. What is needed is for senior directorial posts in both organizations to be awarded entirely on merit. The time has past when a US president can impose his nominee at the bank simply because he has won favor with the administration. These important jobs need to go to people who are qualified to do them, not those who happen to be in the right place at the right time.
The White House will no doubt be reflecting that the ouster of Wolfowitz is simply part of world anger at its Iraq debacle. That would be wrong. It does however reflect a wider feeling that Washington’s ill-informed and confrontational foreign policy has made its lead in international affairs altogether too unreliable — and that includes at the World Bank.
