After Wolfowitz
PAUL WOLFOWITZ might have been a pretty good president of the World Bank. He is thoughtful and policy-minded and, despite suspicions to the contrary, cares deeply about the poor. Further, he was involved in running one of the world’s other big and stubborn bureaucracies: the Pentagon. For more than 20 years, I have known him and respected him for his work on democracy and human rights around the world.
Instead, his term has ended horribly with his resignation over the pay increase he arranged for his partner, Shaha Ali Riza. A proud and private man, he has been subjected to vitriol and public ridicule. Now, at the end of a tortuous World Bank investigation that has been buffeted by leaks from supporters and critics alike, he has been found to have violated bank rules on conflict of interest and has announced his resignation.
Wolfowitz’ supporters claimed that the terms of Riza’s pay increase and her transfer to the State Department were just a pretext used by his enemies to drive him out. The real reason for his persecution, they say, was his role as an architect of the Iraq war -- which the Europeans, in particular, would not forgive.
Well, yes and no. They are right that the pay raise is the tip of a much deeper problem. But it is simplistic to think that it is just a case of payback for Iraq. One of Wolfowitz’ very successful predecessors, Robert McNamara, arrived at the bank with similar baggage (having served as secretary of Defense during the Vietnam War), but the bank staff and the governments that underwrite the institution nevertheless admired and followed him. What has changed in intervening years is this: The rest of the world is no longer so willing to defer to the White House’s private selection of the World Bank president.
The World Bank’s president, despite the U.S. owning only 16% of the bank’s shares, is by tradition chosen by the U.S. president. There is no Senate confirmation or international vetting by the other governments who are shareholders. The Europeans exercise similarly unjustified control over the leadership of the International Monetary Fund.
The selection of the World Bank president has traditionally involved only the most cursory of consultations with other shareholders. But in a profoundly difficult-to-manage organization such as the World Bank, it is critical that its chief have broad support. Once things get off to a bad start, it’s very hard to recover balance and win over the staff and government shareholders. Wolfowitz got into a downward spiral of mutual distrust that seemed impossible to halt. He withdrew into an uncommunicative shell behind his American advisors.
About the time of Wolfowitz’s appointment, then-Secretary-General Kofi Annan was pursuing efforts at the United Nations to begin selecting key officials through a more transparent, global, merit-based competition. A well-qualified Turkish development economist and former finance minister, an ex-Portuguese prime minister, a Sri Lankan human rights activist, a Swedish anticorruption campaigner, a British counter-terrorism chief, a Gambian development expert and a German environmentalist were among those picked in heavily contested but largely open processes. And the U.S. was no loser under this system either. Several very able senior American officials also landed top jobs.
But this transparency was not inevitable, and there are plenty of forces that would prefer to return to the old-style patronage appointments made behind closed doors. Even though his own election was perhaps a little more open than in the past, the early signs that the system as a whole will be kept open under current Secretary-General Ban Ki-moon are not particularly encouraging. All governments, not just the U.S., will, if allowed, seek their share of the spoils.
This should not be allowed to happen. The cost of backroom fixes versus competitive selection is now jeopardizing the institutions themselves. When leadership is not trusted, reform becomes next to impossible, and the institutions become mired in political gridlock. We have seen this at both the United Nations and the World Bank.
The world cannot afford this. Never in history has the global community been more integrated and less governed. Problems such as the environment, poverty, public health, financial stability and security cannot be handled only at the national level in a world that is so bound together. Yet our global institutions, starting with their leadership, are often ill-suited to the task of framing solutions that can win wide support. What’s more, rapid changes in relative economic standing and political stature of new, under-represented powers (such as India, China, Brazil and South Africa) and the old guard (especially the United States and Europe) are increasing the tensions at these international organizations.
Exactly how this will be addressed in the coming days at the World Bank is unclear. The fight at the bank’s board has been so divisive that appointing an American -- but one who enjoys strong international support -- may be a better interim step than throwing the post open to global competition. Undertaking dramatic change at a moment like this might prolong the civil war on the board.
But in the future, revisiting the shareholding and ownership arrangements of all these institutions -- including the World Bank, the IMF and the membership of the U.N. Security Council -- and putting in place competitive, open selection processes for choosing their leaders is a vital step toward restoring their effectiveness. Ultimately, the power to select the World Bank president must come to rest with its board, not with the White House. These organizations need to be seen to work for all of us if they are to work for any of us.
