Wolfowitz's resignation offers a window into a corrupt institution.
Friday, May 18, 2007 12:01 a.m. EDT
So after weeks of nasty leaks and media smears, the World Bank's board of executive directors yesterday cleared President Paul Wolfowitz of ethical misconduct for following the board's own advice on how to handle a conflict of interest involving his girlfriend. And Mr. Wolfowitz in turn will resign from the bank at the end of June. Run that by us again?
We've said from the beginning that the charges against Mr. Wolfowitz were bogus, and that the effort to unseat him amounted to a political grudge by those who opposed his role in the Bush Administration and a bureaucratic vendetta by those who opposed his anti-corruption agenda at the bank. That view was vindicated by yesterday's statement, which showed how little the merits of the case against Mr. Wolfowitz had to do with the final result.
Mr. Wolfowitz "assured us that he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that," the directors said, thus rejecting the findings of a rigged investigating committee that had ignored key evidence. The most damning judgment the directors could muster is that "a number of mistakes were made," including by the bank's own ethics committee that had refused to let Mr. Wolfowitz recuse himself from matters involving his girlfriend, Shaha Riza.
In other words, this was all about politics. And all that mattered to Mr. Wolfowitz's accusers was to be rid of him, whatever the pretext or methods. The least they can do now is restore Ms. Riza to her job, assuming she wants to be part of an organization that treated her so shabbily.
This all may pass as World Bank justice. For the rest of us, it has served as a window into an institution that seems to observe no rule other than the interests of the unaccountable mandarins who consider themselves its rightful owners. There have been plenty of outrages in the bank's treatment of Mr. Wolfowitz, but for sheer chutzpah nothing exceeds the argument of last week's report by the investigating committee of the board that he had put the institution "in a bad and unfair light" by daring to defend himself publicly against selective and false media leaks designed to smear him. Had Mr. Wolfowitz taken that advice, he would have been out on his ear without so much as the benefit of the formal acquittal he has now received.
As for the Bush Administration, it might be in a better position now had it defended its man as vigorously as he defended himself. Instead, its officials were slow to understand what was happening and--with the exception of President Bush himself--largely mute as the coup unfolded. Treasury Secretary Hank Paulson took the line that the U.S. would allow the bank process to work itself out, when it ought to have been clear that the process itself was rigged.
Secretary of State Condoleezza Rice remained on the sidelines until the very end, and her reported "quiet diplomacy" on Mr. Wolfowitz's behalf was precisely the wrong way to fight a battle being waged on front pages. Her behavior in this case is reminiscent of her pre-emptive capitulation on the famous "16 words" in President Bush's 2003 State of the Union, words that Britain's Butler Report later concluded were "well-founded" but which now are a defining myth of the left's "Bush lied" theology.
Mr. Paulson and Ms. Rice may think that by staying on the sidelines of the Wolfowitz fight they have safeguarded their own political capital. Perhaps, but the precedent being set by Mr. Wolfowitz's departure will damage not just the Bush Administration in the time it has left but U.S. interests for years to come.
An American appointee has been ousted from a multilateral institution by a staff and media cabal on trumped-up charges solely because they disliked Mr. Wolfowitz's priorities. The inmates are now in charge. Yet the U.S. will still be expected to provide the bulk of funding to these institutions--more than 16% at the World Bank--while it cedes de facto control of its operations to a multilateral elite. That's a recipe for declining American influence.
If there is a silver lining here, it is that the public has been able to get a glimpse of how the World Bank works and what it actually accomplishes. Among other lowlights, we've recently been reminded that the bank annually pushes billions in loans to countries like China and Mexico that can easily get credit in private capital markets. We've seen that many of those loans go to projects in places like India or Kenya that are riddled by corruption; the bank may have lost as much as $8 billion to corruption in 25 years of lending to the Suharto regime in Indonesia. We've also learned that the bank funds literally hundreds of projects from Albania to Niger that were ill-conceived and proved to be failures.
We've seen that senior bank personnel, such as former Indonesia country director Dennis de Tray, openly argue that corruption is no big deal and should not get in the way of the bank's "helping people." We've seen how the bank trashed the careers of longstanding and well-regarded employees such as Bahram Mahmoudi, who blew the whistle on a misamanaged project. We've seen how Shengman Zhang, the bank's No. 2 under former President Jim Wolfensohn, seems to think there's nothing amiss with calling for Mr. Wolfowitz's resignation despite the fact that Mr. Zhang's wife was swiftly promoted while working under him.
We've seen how the board of directors apparently covered for one of their own--British Executive Director Tom Scholar--when he was accused of having a conflict of interest because of a personal relationship with an employee at the bank. And we've seen how the bank has served as a well-paid sinecure for out-of-office politicians such as Dutchman Ad Melkert, who has moved comfortably within multilateral institutions making an enviable tax-free salary while performing incompetently and behaving dishonorably.
In a better world, the bank would shrink to perform only its core mission of helping the world's poorest nations. That's not going to happen, however, so the best that President Bush can do now to minimize the damage of the Wolfowitz putsch is by replacing him with someone who shares his agenda and will clean the place up. No European should have a chance to do that given what has transpired, not even Tony Blair. Nor should he name another well known member of the Council on Foreign Relations seminar circuit whom the Europeans and staff can quickly capture.
We've suggested former Federal Reserve Chairman Paul Volcker, who saw first-hand how these institutions function while investigating the U.N.'s Oil for Food scandal. But whoever it is, the core task of Mr. Wolfowitz's successor should be to clean the World Bank stables, or shut it down.
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