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Bureaucratic Betrayal At The World Bank

This column was written by Pablo Pardo.

Exactly two years ago, at a cocktail party, a staff member of the World Bank told me: "I think he is a murderer."

"He" was Paul Wolfowitz, then just a week away from taking the helm at the world's biggest development agency. Many at the Bank thought the same way as my friend, who said some of his colleagues had hung from their office doors newspaper articles calling for the trial of Paul Wolfowitz as a "war criminal."

Now, Wolfowitz is gone, and the bureaucracy is safe again. It has been a perfect coup.

It is easy to portray the current crisis at the World Bank as a mere self-correction — an organization purging itself of an incompetent, ideologically driven leader with a penchant for cronyism. It is easy, but wrong. A more accurate explanation reveals a bureaucratic war waged by an old guard (some Wolfowitz appointees among them) defending its privileges and its freedom to do things "the right way." Wolfowitz's management of the Bank threatened those people, and they reacted. They have had the support of the Staff Association, which, despite its title, is no different than any other trade union — eager for more power — and a bunch of countries that wanted desperately, and finally, to inflict a defeat on the Bush administration. Add to that the normal controversies that spring up from a gigantic organization with 183 state members, responsibility for managing more than $20 billion of aid per year, and Wolfowitz's own mistakes — the coup may have been inevitable.

Wolfowitz came to the Bank with a new agenda and a new team. There is no worse way to enter an international bureaucracy, but Wolfowitz did make matters worse when he tried to push through that agenda without showing respect for the bureaucracy itself. He single-handedly cut credits to Uzbekistan after that country's government massacred several hundreds of innocent civilians in the city of Andijon. He did the same to Chad when it was revealed the country had diverted money earmarked for development to arms purchases. And then again to the Republic of Congo when its president, Deniss Sassou-Nguesso, spent $300,000 on a weekend in New York City.

Those moves fed the notion that Wolfowitz was using the Bank as a tool with which to punish "unfriendly" governments on behalf of Washington. Even if this were true, one wonders why the Andijon massacre should pass without punishment. But that theory seems rather unlikely given the fact that among the many targets of Wolfowitz's anti-corruption crusade was India — hardly a foe of the United States.

But action against corruption and human-rights abuses was tantamount to a declaration of war against the World Bank's bureaucracy. As a staff member told me last November: "We are a supply-driven organization. We supply credits, no matter what. And Wolfowitz, with his anti-corruption policy, is threatening that." In other words — at the World Bank, you rise in the organization by getting projects and loans approved. If someone cancels "your" loans, he is putting a glass ceiling above your head. Worse still, Wolfowitz ordered internal audits to see if the World Bank's staff had been involved in any wrongdoing. The results weren't damning — very few cases of corruption were found — but, once again, the bureaucrats were irked by such initiative. They are the ones who investigate and impose conditions, not anyone else.

Further, Wolfowitz started to create his own team. Not surprisingly, this bothered many staffers. The prior chief, James Wolfensohn, also had to deal with that situation when he arrived at the Bank. But it is nonetheless remarkable how in the current crisis everybody has accepted at face value the criticism from Wolfensohn holdovers. The World Bank's vice-president for Human Resources, the Spaniard Xavier Coll, has produced allegedly incriminating documents dealing with Wolfowitz's handling of Shaha Ali Riza's secondment to the State Department. Coll waited two years to reveal that information, and he did so only after he had resigned from the Bank and accepted a new job in Luxembourg with the European Investment Bank. Equally remarkable is that in the current crisis no media outlet has explained Coll's close connection to Wolfensohn, or the open secret of his frosty relationship with Wolfowitz. According to sources at the Bank, Coll granted Shaha Riza the salary and working conditions demanded by Wolfowitz, but only alter being threatened with some form of action if he failed to comply.

To any outsider, hearing the "Worldbankers" — as they call themselves — complaining about Wolfowitz's attitude is, to say the least, laughable. As it is to many staffers, as well. "If Wolfowitz is going to resign because of this, then everybody — maybe with the exception of the janitors — should be fired," a World Bank employee told me in April, when the scandal broke. The World Bank is an institution in which positions often exist merely to match the "right" applicant's profile. It is an organization whose members often travel in business or first class to extremely poor countries, and then stay in the capital city's best hotels in order to instruct officials on how to collect taxes. (How can you lecture others about taxes if you don't pay them?) It is, finally, an institution packed with husbands and wives, and with sudden promotions and salary increases explained with a half smile.

Wolfowitz threatened that state of affairs. For sure, he made serious mistakes. At SAIS (the School of International Affairs of Johns Hopkins University, which he led from 1993 until 2000) many people remember him "as a superb fundraiser, but a lousy organizer." As a speaker, he performed poorly in meetings with the staff and media. His management of the whole Riza affair was clumsy. Just two weeks before the Bank's spring meetings, the Washington Post and the New Yorker ran stories on Shaha Riza. It was the perfect coup. The bureaucracy had counterattacked, and it won.

By Pablo Pardo

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