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Cronyism and Corruption

Wolfowitz at the World Bank

by MOHAMED HAKKI

In an article on the eclipsing fortunes of the neocons vis-à-vis Bush foreign policy, the Wall Street Journal said: "In the past year, the ranks of the neoconservatives within the administration, who moulded the American response to 9/11, have grown thin and their influence has ebbed." It mentioned the departure from key policy-making positions of some of the administration’s most prominent neoconservatives. Some of them left in disgrace, others left their jobs for other Bush appointments. Perhaps the most interesting of these career changes involves that of former Deputy Defense Secretary Paul Wolfowitz, who was promoted for his role in the Iraq war to president of the World Bank.

From day one, all vice-presidents, directors and staff members of the World Bank were apprehensive in view of his reputation as the "high priest of the hawks" or "The Vulcans"; nicknames for Mr Bush’s tight-knit group of security advisors, the architect of the Iraq war, and the driving ideological force behind the decision to invade Iraq. They also wondered about his arrogant dismissal of all misgivings about the war. They remembered his rosy forecasts, his predictions that the Iraqis would greet US soldiers as liberators, with open arms, and his casual dismissal of warnings by Eric Shimseki, former US army chief of staff, that the US would need several hundred thousand troops in Iraq (and who was fired for daring to give his expert opinion). They remembered well his assertion that the "oil revenues of Iraq over the course of the next two to three years would bring in 50 to 100 billion US dollars which could more than finance its own reconstruction." But, to be fair, they were all willing to give him the benefit of the doubt despite the deep moral struggle they are each grappling with; working for a man who is morally and politically responsible for a horrendous war that has shed the blood of thousands of innocent victims in Iraq.

Now, it seems that the honeymoon is over. On the cost of the Iraqi war, it is becoming more and more obvious that Wolfowitz’s predictions are, at best, a joke approaching the fanciful, and, at worse, outright intentionally misleading. When White House economic advisor Lawrence Lindsay forwarded an estimate (September 2002) of the Iraq war at a higher level of $100-$200 billion, the administration dismissed his analysis as "likely very, very high" and promptly fired him (another person who lost his job because he did it conscientiously and professionally). Now it turns out that even his figures were wildly low. According to Joseph Stiglitz, professor at Columbia University and Nobel Prize winner in economics, and Linda Blimes, a Harvard budget expert, the war in Iraq is likely to cost up to $2 trillion. The American Conservative magazine says: "What is certain is that before hiring him to run the World Bank, someone should have recalled Paul Wolfowitz’s prediction that Iraq would fund the operation itself." Normal people under normal circumstances would have been fired, but not "Wolfie!"

However, even with this grim history in mind which they fear will impact on their ability to address their global clients’ needs and fulfil their mission of addressing world poverty, World Bank staff have even more immediate worries to contend with. What everybody in the Bank perceives most evidently is the increasing rift between Wolfowitz and his inner cabal of advisors and the staff at large. The problem is manifesting itself on several levels.

In recent months, there had been a massive exodus of top talent from the World Bank. The senior ethics officer of the bank has departed. Also on the exit roster are the vice president for East Asia and the Pacific, the chief legal counsel, the vice president for environmentally and socially sustainable development, the bank’s top managing director, the director of institutional integrity (who monitors internal and external corruption), and the head of the information solutions group.

Steve Clemons says in the Washington Note : "It looks as if Wolfowitz is gut- punching the most talented teams at the Bank and morale is plummeting. A lot of good people are leaving."

What has Wolfowitz done to start this serious wave of negative sentiment? He appointed Kevin Kellems, former communications director and spokesman for Vice President Cheney, to a newly created post of director of communication strategy in addition to his position as advisor to the president, effectively sidelining the vice president of communication, UN and External Affairs at the Bank. While one could question Kellems’ professional ability and record in view of his previous position and the miscommunication that flowed from Cheney’s office over the years, the immediate issue for Bank staff is that he was imposed following a Wolfowitz presidential fiat. Wolfowitz in effect, forced a political appointment at the director level, which is rather unheard of, especially since directorships are lower in the administrative stratosphere and are traditionally filled following an open competitive process based on merit, not political imposition.

Another glaring example of presidential fiat came with the appointment of the Bank’s new corruption czar, Suzanne Rich Folsom, as the new head of "institutional integrity". Her catapulting prompted the courageous and highly respected chairwoman of the Bank’s Staff Association, Alison Cave, to issue an open letter of protest to all staff. Ms Rich, married to a powerful Republican leader and a powerful Republican lobbyist in her own right, was also appointed with no concern for clear and open competitive process. She also has the title of "Counsellor to the President". A clear conflict of interest if there was ever one.

Another example involves the appointment of Karl Jackson, an old friend of Wolfowitz and colleague from Johns Hopkins University as well as government, as an advisor to the president, and who apparently has been handed the portfolio of the International Finance Corporation (IFC), the Bank’s private sector supporting arm.

Perhaps the most stunning example of Wolfowitz’s cronyism and complete lack of regard for the principles of the institution he has been handed to govern, not to mention the obvious appearance of conflict of interest, involves the ever-growing role of his senior counsellor, Robin Cleveland. Ms Cleveland left the Bush administration under a cloud after it emerged that she attempted to use her connections to get a relative a job at a large defence corporation while she was negotiating a contract on behalf of the US government with them. However, even this apparently has not tarnished her stature in the neocon’s books, as it is said that Ms Cleveland effectively is now running the Bank.

All these examples are only serving to fuel Bank staff’s growing doubt with the stewardship of Wolfowitz. One key senior official called it "utter shamelessness". Another old time Bank staffer said "the fight against global poverty is essentially a moral cause; if we lose the moral high ground, by disregarding transparency, competence, and integrity in our own institution, nothing else is left."

Others are saying he is appointing political hacks to positions that should be filled by highly qualified professionals through a competitive and transparent process. Senior Bank staff sees Wolfowitz withdrawing from the Bank’s senior professionals and relying instead on a group of political operatives, zealots and ideologues. The current confusion and concern of the staff of the Bank over the direction of this global institution is best reflected in the results of the institution’s own staff survey, released only last week. When asked: "Do you have a good understanding of the direction in which World Bank Group senior management is leading the institution?" only 48 per cent of respondents answered favourably, in contrast to a 67 per cent favourable response during the previous staff survey in 2003.

No one is comparing Wolfowitz with any of the former Bank presidents any more. Everyone is saying that he is building his "cabal" of supporters at the highest levels of the institution and confirming all their worst fears of foisting a Bush administration agenda on the world’s premier development agency. Meanwhile, the board of executive directors, which represents the 184 member countries of the World Bank, remains scandalously silent. Quel domage!

MOHAMED HAKKI is a former member of the staff of the World Bank.

This article originally ran in Al-Ahram.