Paul Wolfowitz's World Bank Frustration

By

Published March 26, 2007

| FoxNews.com

Back in November 2006, World Bank President Paul Wolfowitz held a London meeting with a handful of his top staffers and local leaders of nongovernmental organizations (NGOs), mainly to talk about the bank's anticorruption strategy.

The session provided a rare candid glimpse of Wolfowitz's frustrations, according to minutes prepared by a World Bank watchdog group known as the Bretton Woods Project, which took part.

At the gathering, Wolfowitz conceded that one of his key proposals — bypassing corrupt regimes by engaging more heavily with "champions of good governance" — such as the NGOs themselves, media and parliaments — received "particular pushback" from his board of directors.

And on his anticorruption strategy in general, Wolfowitz sounded especially exasperated.

"I cancelled loans and didn't realize how rare this was," he said, expressing surprise that it led his opponents to call this a "new policy" that required a framework to guide the decisions.

"I think that's bulls—-," he told the group.

Bull or not, the Wolfowitz team traipsed the planet to hear feedback on that anticorruption framework — holding consultations in 47 countries that the bank analyzed before presenting its "revised strategy paper" to the board last week.

But the bank's openness may have boomeranged. In one consultation report after another, attacks by numerous governments on the bank's own lack of transparency and communication were a major topic.

Bolivia: There is a "need for wider distribution of outputs, results and impact of bank projects."

Indonesia: "The Bank's own project audits … should be shared with the government."

Mexico: "Governments shouldn't decide whether or not contracts with the World Bank could be made public; it should be standard bank policy."

Senegal: Disclose the "legal agreements between the IDA [a bank arm] and the country."

And even from the U.S. government: "The Bank needs to be transparent. ... They should make public the results of economic and sector-analysis work."

The Bank also received a litany of complaints about its own transparency failures in feedback from 30 of its field offices — but the details remain top secret. Those reports have not even been posted for employees on the bank's intranet.

Wolfowitz and his board now promise to improve transparency and work on development projects more closely with groups such as media, NGOs and parliaments.

But FOX News has learned that the board has voted twice in the past few years not to expand the bank's disclosure rules — with no more than seven of the board's 24 directors voting in favor of more transparency.

More recently, Wolfowitz and many of his top advisors have dodged requests from FOX News for cooperation on its probes of the institution.

"The bank needs to take the independent media seriously," said a group of U.S. government officials consulted by the bank in January. "By creating open signals to both the government and the public that media coverage of fraud and corruption are taken seriously by the bank, you are able to strengthen the role of the media in your governance-and-corruption strategy."

Beyond transparency issues, governments such as Rwanda's complain that the bank puts "pressure" on staffers to disburse loans too quickly, which may contribute to the very corruption the bank now wants to eradicate.

There is a "mismatch in the incentives system for bank staff," echoes the bank's own branch office in Manila, Philippines.

"It may be difficult [for staffers] to disengage from a project with potential governance-and-corruption problems knowing their performance assessment would be based on the number of loans they have processed." (The bank says its "loan-incentive system" is under review.)

There are also dire warnings about competition from China. The World Bank's "crusader tone will lead to it being displaced as a lender," warns Bangladesh's think tanks.

"China is displacing the Bank and the [International Monetary] Fund in sub-Saharan Africa. It has a lot of money and will not ask these questions. … So if you make [the strategy] too onerous, the Bank gets pushed out of the market."

French private sector representatives add that China's "influence and presence in Africa [is] at a level which has never been seen before," with Chinese companies bypassing African labor by using their own staffs.

"There is no governance and no financial control on the business they are doing in Africa. India, Brazil and Malaysia are also creating problems."

There's also no shortage of comical absurdities in the consultation reports. Kenya floats the idea that the bank should find ways to "reward those that are not corrupt," while the Egyptian press says that the bank "was "essentially a puppet of the U.S government, and, as such, lacked independent moral standing to address anti-corruption issues."

Officials in Morocco — insulting their neighbors — wonder why they were even asked to consult when their country "does not struggle with these issues to the extent that other [Middle East and North African] countries do, such as Egypt or Yemen."

Indonesian officials accuse the bank of burying them with reforms.

"We have worked with the bank for five years to fight corruption in our projects," they said. "Indonesia's long experience of working with the Bank on governance should be acknowledged as a model. … No time is allowed for lessons to be learned or shared before a new set of measures is pushed into the system."

But the reports are not all doom and gloom. Some governments were so candid about their corruption problems that they could serve as role models for others.

During its own confession, Uganda invited Wolfowitz to place his anticorruption probers at the nation's ministry level.

And Nepal's government, admittedly rife with corruption, deserves an A for honesty when it says, "People in decision-making make little distinction between grants and loans; what's important to them is that the gravy trains need to keep moving. This attitude needs to change."

URL

http://www.foxnews.com/story/2007/03/26/paul-wolfowitz-world-bank-frustration