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World Bank Scandal

Paul Wolfowitz's Fatal Weakness

The cronyism that may cost him his World Bank job is also what caused the Iraq debacle.

By Juan Cole
Tuesday, 5/15/2007   10:55 AM

The executive board of the World Bank mulled a possible vote of no confidence in the leadership of its president, Paul Wolfowitz, this weekend. How did the renowned neoconservative and former deputy secretary of defense, a primary architect of the Iraq war, come to these straits? Is he, as he claims, the victim of a smear campaign by those who dislike his politics? Or do the charges of favoritism and nepotism reflect genuine character flaws?

The small morality play unfolding at the World Bank tells us something significant about how the United States became bogged down in the Iraq quagmire when Wolfowitz was highly influential at the Department of Defense. The simple fact is that Wolfowitz has throughout his entire career demonstrated a penchant for cronyism and for smearing and marginalizing perceived rivals as tactics for getting his way. He has been arrogant and highhanded in dismissing the views of wiser and more informed experts, exhibiting a narcissism that is also apparent in his personal life. Indeed, these tactics are typical of what might be called the "neoconservative style."

Soon after becoming head of the World Bank, Wolfowitz lapsed into his typical favoritism, even while he was, ironically, decrying the technique as practiced by governments of the global South. Instead of having an open search for some key positions and allowing for promotions from within, Wolfowitz simply installed Republicans from the Bush administration in high positions with enormous salaries. He brought Kevin Kellems from Dick Cheney's office (where he had been communications director) and gave him a tax-free salary said to have been as high as $250,000 a year. As Wolfowitz's new senior advisor, Kellems was leap-frogged over hundreds of officials with serious credentials in development work, something about which he knew little. When representing Cheney, Kellems went to great lengths to defend the vice president's implausible conspiracy theory linking Saddam Hussein and Osama bin Laden.

Another controversial Wolfowitz appointment was Robin Cleveland, whom he made his assistant. She had been an aide to Sen. Mitch McConnell and then associate director of the White House Office of Management and Budget. She had been implicated in a corruption and nepotism scandal at the Pentagon, but the Department of Defense had determined it did not have jurisdiction to investigate her. In 2003, while at the OMB, she had lobbied then Secretary of the Air Force James Roche to get her brother a job at defense contractor Northrop Grumman, where Roche had been an executive. Though, like Kellems, she lacked experience in international development, she also received a reported quarter of a million dollars a year in compensation at the World Bank. And also like Kellems, she is alleged to have been an abrasive and abusive boss.

Wolfowitz appointee Juan José Daboub quietly began changing World Bank policy on contraception, presumably as a favor to the Bush administration, which depends heavily on the Christian right for support. Daboub, who had been close to the right-wing government of El Salvador, ordered all references to family planning removed from a strategy document for Madagascar. Bank officials were said by the Financial Times to have been afraid that the World Bank's long-standing focus on contraception in forestalling disease was being changed by Daboub, and that poor women would suffer as a result. When the story surfaced, Wolfowitz told National Public Radio that the bank had made no changes in policy on contraceptives.

Experienced, high-level World Bank officials began resigning in droves as they saw Wolfowitz institute a reign of cronies with little development experience and massive salaries. The management style of the newcomers, cliquish among themselves and harsh toward outsiders, alienated those who remained.

None of these appointments, however unpopular, proved Wolfowitz's undoing. It was the provisions he made for his girlfriend, Shaha Ali Riza, that finally blew up in his face. She had been working at the bank since the late 1990s, and the two had become involved when she divorced her husband and he became estranged from his wife. Wolfowitz made his relationship with Riza public when it became clear Bush would nominate Wolfowitz to head the bank. Bank ethics rules did not allow him to oversee a lover and set her salary, though he initially insisted that he could recuse himself from such decisions while functioning as her superior. The bank's ethics officials said no to this proposed arrangement. He then had her transferred to the Near Eastern Affairs Bureau of the State Department to work with Elizabeth Cheney, the daughter of the vice president. He arranged such extraordinary salary increases for her that she ended up being better paid than Secretary of State Condoleezza Rice.

This spring, the World Bank Group Association, which represents the institution's 13,000 employees, sent around a memo pointing out that the pay raises received by Riza were twice what bank rules allowed. Charges of nepotism and corruption flew. Then renewed attention was given to a 2003 incident in which Douglas Feith, at the time Wolfowitz's deputy, had briefly detailed Riza to a Defense Department contractor as a consultant on Iraq democratization, and arranged for her to receive $17,000 for a month's worth of work.

A special subcommittee of the executive board of the bank found late last week that Wolfowitz had in fact broken ethics rules. He has been insisting that he will not resign, even though large numbers of his own employees are openly signing petitions against him. The aide he brought in from Cheney's office, Kellems, did resign. Few think that he is a big enough sacrificial lamb to feed such a large and hungry party. The full executive board will make its decision on Tuesday. Although member states may be reluctant to simply fire Wolfowitz, given President Bush's backing for him, they might engineer a vote of no confidence as a way of making it difficult for him to stay on.

The management techniques that got Wolfowitz in trouble at the World Bank mirrored those he used at the Pentagon to get up the Iraq war. Without cronyism, tag-teaming, and running circles around opponents of the war such as Secretary of State Colin Powell and CIA Director George Tenet, the pro-war cabal could never have persuaded Bush to launch the conflict or persuaded the American public to support it. State Department officials have complained bitterly to me about meetings called by Wolfowitz and others on Iraq in 2002, to which some relevant officials were pointedly not invited, or where the agenda was prearranged and rigidly stage-managed so as to ensure that only neoconservative points of view were heard. Other officials have spoken of being spied on by the neocons at the Department of Defense, to the point where they were reprimanded for cartoons or posters that they had hung on their office doors.

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