The Worst Man In The World?

New Statesman

May 15, 2006

Robert Calderisi

Monday 15th May 2006

Paul Wolfowitz, the former US deputy defence secretary and main architect of the Iraq war, has run the World Bank for a year. His regime is highly secretive, but insiders have talked exclusively to Robert Calderisi.

The World Bank is a strange place. It believes it is doing humanitarian work, but humanity does not return the favour, thinking the bank an enforcer of bloodless rules and an abetter rather than reliever of world poverty. Yet, for all its perceived faults, it is a UN agency and an important source of advice and money (roughly $20bn a year) for countries trying to climb the development ladder. Its values are not very different from those of the rest of the world. Asked for their reactions to the arrival of the former US deputy defence secretary as their president last June, 1,300 staff responded within 48 hours -92 per cent of them negatively.

Some were prepared to admit that, despite being painfully shy, socially awkward and the main architect of the Iraq war, Paul Wolfowitz had the right qualifications for the job. He was the first World Bank president to have lived in a developing country, albeit comfortably, as US ambassador to Indonesia. He had also headed the School of Advanced International Studies at Johns Hopkins University. He is more civil, less flashy, than James Wolfensohn, the burly prima donna who was the bank's president from 1995 to 2005. "He is thoughtful, serious and apparently well-intentioned," one person told me recently. He often asks the right questions. And like that other newcomer to a global institution, Pope Benedict XVI, the biggest surprise, during his first ten months, was what Paul Wolfowitz didn't do.

The last "Republican" president of the World Bank, Barber Conable, came with strict orders to reorganise it, which he did noisily and expensively in 1987. Apart from campaigning against corruption, Wolfowitz was slow to show his hand. Even senior staff were kept in the dark about his intentions. Asked for his strategic direction, he would refer people to a September 2005 speech that was long on sentiment but short on specifics. He made few senior appointments, with the result that a third of the bank's top positions have been vacant. For a time, it was not even obvious that Wolfowitz was out to implement a US agenda. Some suggested he was there only because he had become so unpopular, even in Republican Washington, that this job was the only one he could be given that did not require Senate confirmation. The bank's public priority remained Africa, rather than the Middle East, and he did not raid any of its coffers to finance US goals. He even resisted pressures from the Bush administration to cut back on the bank's environmental work.

But the pattern of small signs has now become too large to ignore. Wolfowitz has retreated into a shell and rarely meets his vice-presidents; in fact, one VP retired late last year without seeing Wolfowitz in five months. He has frozen out senior managers who have risen through the ranks simply by ignoring or bypassing them. Several have left, and others are about to follow. What is worse, he has left the running of the bank to his lieutenants, who have behaved like a tornado in a small town.

Wolfowitz's media adviser, Kevin Kellems, worked for Vice-President Richard Cheney and Donald Rumsfeld, the US defence secretary. Several staff told me that he was the "Keeper of the Comb", a reference to the scene in the Michael Moore film Fahrenheit 9/11 in which Wolfowitz slicks down his hair with spittle before being photographed. Every one of his boss's moves (except that one) is carefully choreographed, and Kellems is intent on preventing unnecessary controversies. At his insistence, an upcoming report on climate change is to be given the limp title Clean Energy and Development.

Wolfowitz's senior counsellor Robin Cleveland is in a category of her own. She supervised the Pentagon's budget and is remembered for predicting that the war in Iraq would cost "only" $80bn (not $300bn and counting), after which its oil revenues would "pay for the rest". She also worked on Capitol Hill, where she was known as one of the meanest people in Washington. Her verbal outbursts and denigration of World Bank staff have made her infamous. And every Wednesday, I am told, she visits the White House for "instructions".

The third "Republican" in Wolfowitz's inner circle, Suzanne Rich Folsom, caused a storm when she was appointed head of the World Bank's internal investigation unit over the protests of the staff association, which questioned the fairness of the selection process. Several insiders saw this as simple cronyism, rather like an African president appointing a trusted adviser to an anti-corruption bureau.

If Wolfowitz had been more assertive, his team would have been less troubling, but now even staff prepared to give him the benefit of the doubt have become disenchanted. One disappointment is how poor a manager he is. Even more disappointing, given his background, is his lack of strategic sense. One manager told me: "Surprisingly, he is more of a back-room analyst than an upfront leader." An American who regards Wolfowitz as a war criminal put it plainly: "These people have big ideas and strong opinions but no plans." Others believe the new man is just being deft. "We're waiting for the Stealth bomber to strike," said a Caribbean woman. "Everyone knows it's out there, but no one knows where and when it will strike."

Another irritation has been his public emphasis on fighting corruption. World Bank staff detest dishonesty and resent privileged people hijacking funds intended for the poor. However, they have learned to be "realistic" and believe the bank would go out of business if it reacted to every illegal act committed by borrowers. In Chad, Wolfowitz had little choice but to suspend World Bank programmes when the government violated an agreement allocating oil revenues from a controversial pipeline. Elsewhere, however, staff detect purism or opportunism rather than sober policy at work, as with education loans to India or debt relief for the Republic of Congo (which ran into trouble when the country's president spent $81,000 at a New York hotel). One manager thought Wolfowitz's war against corruption was prompted by the same "gutsiness"
he wanted to show in the invasion of Iraq.

Even more disturbing, insiders say that, in an orchestrated effort to improve his image, Wolfowitz has created the impression that the staff are at the heart of the problem. "He came with the widespread view that bank staff are coddled and corrupt," one young economist told me. "We may be coddled, but we're not corrupt." Particularly infuriating was the suggestion that most of the 350 investigations under way at the bank's "integrity" unit concerned employees rather than borrowing governments. In fact, fewer than 70 cases were internal, and many of those had to do with forms of misbehaviour (such as harassment) other than financial impropriety. One exasperated manager said: "He uses the fight against corruption the way George Bush uses the war against terrorism - as a test of loyalty and a cover for his personal agenda."

In the past two months, attitudes within the bank have hardened. Most staff feel the incomers are acting as if they were a new US administration, distrusting everyone they haven't appointed themselves, rather than respecting the competence and loyalty of a civil service in a parliamentary system.
What's more, Wolfowitz and his advisers have shown the same secretive, unilateralist, omniscient bent as the Bush White House just down the street.
Rather bizarrely, for an international organisation, the inner circle is ill at ease with foreigners and shows a marked preference for US nationals.

Relations with the bank's board are also highly strained. At a nine-hour meeting to discuss a controversial proposal, Wolfowitz is said to have
protested: "I run this institution, after all!" "No," the Chinese director barked back. "We do." And board members learned in the news-papers that the bank had suspended its operations in Uzbekistan, a decision that required their formal approval.

As Wolfowitz's first year comes to an end, many staff feel the bank is adrift - or heading towards an iceberg. Some hope that the midterm congressional elections this November will turn the tide against the Republicans, making Wolfowitz a lame duck. But that is like a person on a life raft fantasising that an ocean liner is about to pull up nearby. Some outsiders wish Wolfowitz would turn his anti-corruption drive to more positive ends - such as promoting greater openness of political systems in the developing world. In fact, if he learned his lessons and engaged more actively with his managers, it is possible that a famous neoconservative could drag a venerable institution on to political ground where liberal interventionists such as Woodrow Wilson and William Gladstone would have felt comfortable.

But most insiders believe the bank is becoming the very caricature of a US-dominated, ideological agency that they have always denied it was. Its critics may feel vindicated, but friends of international development will worry that the Europeans - who are the largest providers of aid to poor countries - will lose confidence in using the bank as an objective channel. Or they may bide their time and decide that Paul Wolfowitz will be the last US-appointed president of the World Bank.