Behind
The World Bank’s
Ouster Of Paul Wolfowitz
By Patrick Martin
20 May, 2007
World
Socialist Web
In
the end, World Bank President Paul Wolfowitz went out with a whimper,
accepting a mildly worded resolution of the bank’s board of governors
thanking him for his two years at the helm of the international lending
institution while declaring that “mistakes were made.”
The details of the scandal
that triggered his departure are both sordid and relatively small potatoes.
He arranged for his girlfriend, Shaha Ali Riza, a mid-level official
at the bank, to receive a $60,000 raise, and then claimed, apparently
falsely, that ethics and human resources officials at the bank had approved
the deal.
When the circumstances became
known, through documents uncovered by a watchdog group, the bank’s
staff association began to organize protests demanding his ouster and
the board of governors set up a subcommittee to conduct an investigation.
The panel’s report, delivered Monday, found emphatically that
Wolfowitz had broken the rules and seemed to regard himself as being
above them.
Wolfowitz’s most rabid
defender, the editorial page of the Wall Street Journal, has argued
that the financial scandal involving Shaha Ali Riza is a deliberate
set-up, orchestrated by European and Third World officials at the bank
and backed by the European powers, who opposed Wolfowitz’s supposed
“reform” agenda.
Whatever the truth of this
charge, there is an undoubted irony in the sudden and touching concern
of the Journal and much of the Republican right over the manufacture
of petty scandals involving private matters for use in political warfare.
They had no such compunctions when they were howling for the impeachment
of Bill Clinton.
It is, however, true that
the Wolfowitz affair is an expression of more fundamental political
issues. It stems above all from the conflict between American imperialism
and its major rivals in Europe and Asia. In the end, there was a clear
international lineup of the US, Canada and Japan, the relatively isolated
defenders of Wolfowitz, against all the European powers including Britain,
France and Germany, as well as China, India, Brazil and the bulk of
the poorer countries.
These tensions were expressed
throughout the two years-plus that Wolfowitz headed the bank, which
has been identified with a somewhat softer approach to imposing the
demands of imperialist finance capital on the most oppressed countries.
Where the International Monetary Fund (IMF) represents the stick—loans
only on onerous and stringent conditions, including virtual dictation
of domestic economic policy—the World Bank supplies the carrot—low-interest
lending, and in many cases outright grants, with much of the funding
going to the most impoverished countries in sub-Saharan Africa.
Wolfowitz sought to shift
the bank to a policy tied more directly to US foreign policy, although
this was concealed by rhetoric condemning corruption and pledging a
greater concern for Africa and other areas of the worst poverty and
social misery. Loans were cut off to countries that clashed with Washington,
as in the case of Uzbekistan after it terminated US basing rights for
warplanes in the fighting in Afghanistan. Loans were directed to governments
like the US stooge regimes in Iraq and Afghanistan and to other US client
states on friendly terms with the Bush administration.
To carry out this policy,
Wolfowitz brought in his own leading personnel, including former Pentagon
and White House aides who alienated the staff with their high-handed
bullying and right-wing prejudices. He also recruited right-wing politicians
from governments aligned with US policy in Iraq. Former Spanish Foreign
Minister Ana Palacio was installed as general counsel, while a right-wing
Roman Catholic politician from El Salvador, Juan Jose Daboub, was named
one of two managing directors.
In April it came to light
that Daboub had ordered references to “reproductive services”
and “climate change” removed from World Bank documents,
in line with Bush administration efforts to undermine family planning
programs and abortion rights and to deny the reality of global warming.
When the Shaha Riza scandal
first erupted in mid-April, at the time of the World Bank’s spring
meeting in Washington, it was clear that Wolfowitz had lost the support
of a majority of the bank’s board of governors. Nearly every European
government indicated its opposition, and the European Union parliament
passed a resolution calling for his ouster.
Wolfowitz denounced his critics
stridently, claiming he was the victim of a smear campaign involving
“orchestrated leaks of false, misleading, incomplete and personal
information,” and vowing never to give in. The White House, seeing
the campaigns against Wolfowitz and Attorney General Alberto Gonzales
unfolding at the same time, initially adopted a circle-the-wagons approach,
with both Vice President Dick Cheney and chief political aide Karl Rove
demanding a full-throated defense of both men.
The abandonment of this defend-to-the-last-ditch
posture is an indication of the international isolation and political
weakening of the Bush administration.
The decisive role in the
World Bank affair seems to have been played by the German government,
which makes the third-largest contribution to the bank’s financing
and which holds the European Union presidency during the current half-year.
Eckhardt Deutscher, the German
representative on the board of directors and the senior board member,
gave a speech April 19 declaring that the bank needed “credibility,
credibility, credibility” in its leadership, a clear rebuke to
Wolfowitz’s record of preaching against corruption worldwide while
practicing the opposite in his domestic arrangements.
When German Chancellor Angela
Merkel visited Washington later in the month, she reportedly discussed
the issue with President Bush. Merkel made no public comment, even while
Bush was vociferously defending Wolfowitz at a joint news conference
at the White House—a contrast that provided a striking illustration
of the underlying tensions between Europe and the United States.
The final blow came on May
16, when German Development Minister Heidemarie Wieczorek-Zeul, a Social
Democratic member of Merkel’s coalition cabinet, openly called
for Wolfowitz to resign and said that he would not be welcome at a forum
on aid to Africa that the World Bank is holding in Berlin next week.
“He would do the bank and himself a great service if he resigned,”
she said. “It would be the best thing for all concerned.”
There are many ironies in
the Wolfowitz affair. The former deputy secretary of defense, one of
the principal advocates and architects of the war in Iraq, was not hauled
before a Nuremberg-style war crimes tribunal, as he so richly deserved,
to face charges of plotting an illegal war and conspiracy to commit
mass murder. Instead, his career, at least in public office, has ended
in a grubby scandal. Wolfowitz will now likely enter the world of well-paid
think tank sinecures and multi-million-dollar book contracts.
Wolfowitz left the Pentagon
to become the US nominee to head the World Bank in early 2005. His selection
was a calculated slap in the face by the Bush administration to the
vast majority of countries and governments which had in one way or another
opposed the invasion of Iraq. It expressed the contempt with which the
US ruling elite views international institutions—even those set
up by Washington in the past and especially those which in any way put
restraints or limits on the exercise of American military, political
and economic power.
The European countries, which
supply twice as much of the World Bank’s financial resources,
accepted this slap in the face under a 60-year-old arrangement in which
Europe selects the managing director of the IMF and the US chooses the
head of the World Bank. This division of the spoils dates back to the
post-World War II settlement, when most of Africa and much of Asia,
nearly half the world’s population, still lived under European
colonial rule and the US routinely established and overthrew governments
in its semi-colonial domain in the Western hemisphere.
The two key leaders in accepting
the Wolfowitz provocation were French President Jacques Chirac and German
Chancellor Gerhard Schröder, whose representatives had opposed
the war in Iraq during the UN Security Council debate leading up to
the US invasion, but who had, by 2005, acceded to the US occupation
and wanted to pull back from any further confrontation with Washington.
They meekly bowed to Bush’s nomination of a notorious war criminal
to head an institution supposedly devoted to combating world poverty.
In the two years that have
passed, the crisis in Iraq has worsened, the Bush administration’s
political base has crumbled, and the world position of American imperialism
has deteriorated in every sphere, from military strength to financial
solvency to moral standing. The Wolfowitz affair, in the final analysis,
is an expression of this decline of the United States and reflects the
greater willingness of rival capitalist powers in Europe and Asia to
push back against the supposed “sole superpower.”
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