• Why They Fight

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    Watching Paul
    Wolfowitz, exposed in a sex and corruption scandal involving fellow
    World Banker and private squeeze, Shaha Ali Riza, grappling for
    several weeks now to save his super-cushy job at the World Bank
    has brought to mind the infamous quote Ron Suskind teased from a
    neocon senior aide to George W. Bush, "We’re an empire now,
    and when we act, we create our own reality…and you, all of you,
    will be left to just study what we do."

    Regarding reality,
    Wolfowitz, it seems, has had to call in re-write (and not for the
    first time).

    By requesting
    his resignation, the Bank’s Board demonstrated to any clear-eyed
    neocon that they were not studying the correct material. Wolfowitz,
    instead of acting upon the Board’s decision as he previously indicated
    he would, has hired lawyer-insider Robert Bennett to represent him
    before that same Board.

    Wolfowitz knows
    the big script, history, clearly has him strategically placed at
    the World Bank, in control of $25 billion in lending per annum and
    holding a magic stick of "corruption charges" with which
    to prod borrowers and trim staff, thereby riding out the Bush administration’s
    departure, especially with a second, possibly even a third, five-year
    appointment, thereby extending his own foreign policy impact well
    into the future.

    Going forward,
    the job may prove only a fringe presence in the high-powered world
    of Washington policymaking, but for Wolfowitz, losing it would be
    a personal disaster. Bush’s political clout is in decline, leaving
    little chance the president could deliver a comparable perch even
    if persuaded to expend some of his dwindling power trying. The man
    himself couldn’t survive a hearing for congressional approval which
    the very best government jobs require, and he sure can’t get himself
    elected. What to do? A sinecure at AEI? How very bleak.

    Even were the
    deluded Wolfowitz to beat the unjustly-enriching-girlfriend-with-other-peoples’-money
    rap, his behavior in the breech insures he’ll never salvage his
    job. (Today the ministers of the European Parliament have called
    for his ouster.) If the Bank were the corpse it deserves to be,
    its president’s current behavior would have it turning over in its

    Clumsily, Wolfowitz
    has attempted what he and his neocon pals managed to do to the Pentagon
    and the CIA, but unlike those weenies, World Bank staff fought back,
    proving the old saw, "The price of privilege is eternal vigilance."
    In an uncharacteristically noisy string of special meetings, memos,
    reports, internet message boards, chat rooms, public hissing displays
    and press leaks, they refused to be intimidated while their institution
    is made a shell and re-designed from within. No "Office of
    Special Plans Under Construction" sign on their premises!

    What Wolfowitz
    wants — the re-politicization and militarization of the Bank on
    behalf of a neocon-inspired global imperium centered in Washington
    preferably no more than a short limo ride from his personal residence – is not what the 10,000 member World Bank staff want. Nor, it seems,
    is it what the majority of the184 other member nations of the World
    Bank want.

    Just when the
    entire global gang was coming to town for the Spring Meetings, the
    damning details of Wolfowitz’s years of living large spilled out
    in news reports along with his initial denials and, later, acceptance
    of the reported facts after a botched cover-up. Handing out territory
    and cash flows like a Mafia don, he saw to the girlfriend’s interests,
    those of his favored defense department aides’, along with his own,
    negotiating out-sized salaries, guarantees and privileges. In a
    nice Trotskyite touch, he further made the appointment of a Republican
    operative and White House pal as director of the Department of Institutional
    Integrity where, staff says, said agent is to function as Wolfowitz’s
    personal spy on all of them.

    A funny turn
    of events. Republican neocons pulled the congressional dogs off
    the international institutions just when the Republican Senate’s
    Cox Committee was establishing the abject failure of both the Bank
    and the Fund in the Russian reform masquerade of the 1990s, which,
    in turn, threatened both institutions’ future funding, possibly
    even their existence. Neocons, sensing the Republican 2000 victory
    for the White House, wanted both institutions along with the US
    bilateral foreign aid infrastructure available for their own use
    once they had control of the executive branch.

    Lucky thing
    that – just when Iraq started to go south, James Wolfensohn’s retirement
    from the Bank offered an ideal hiding place from an increasingly
    inquisitive congress and media. The candidate for the Bank’s presidency
    did not require congressional approval, and traditionally the appointment
    has always been the American executive’s. (How terrifying it must
    be for Wolfowitz to contemplate the current humiliation of Alberto

    Once installed,
    Wolfowitz decided to focus on Africa, a public relations success.
    Even now, it continues paying dividends as what support he has received
    to stay on at the Bank has mostly come from Africa. But as the Bank’s
    very first priority Wolfowitz chose to expand on his predecessor’s
    anti-corruption initiative.

    The centerpiece
    of the policy worked out last September is a Voluntary Disclosure
    Program (VDP) under which firms, NGOs or individuals who work as
    contractors on Bank projects are to report their corrupt acts regarding
    Bank projects for the last five years. In return, the penitents
    receive confidentiality and the right to continue bidding on Bank
    projects, all of which actually immunizes wrong-doers while allowing
    the Bank to cover up its own negligence and/or political agenda.

    Hmmm. Written
    confessions on file. Another nice touch that.

    speaking, the program is just dumb. Corruption is part of the organizing
    structure in the developing world. If you are opening a prenatal
    care center or a silver mine, doesn’t matter which, and the local
    chief wants his palm greased to demonstrate to the tribe your desire
    to be part of the community, you are not going to waste the daily
    cost of labor, of maintaining site infrastructure, and of interest
    on business loans, to march back to the capital and file a complaint.
    You are going to darken that man’s palm, viewing it not as a bribe
    but as a tax, and one with the advantage of being directly negotiated.
    Under Wolfowitz’s plan, any rational expediency or opportunity cost
    could be labeled as criminal conduct.

    Wolfowitz has
    cut off funds to Chad, delayed projects to Kenya, and ordered a
    stoppage of funds to the Congo and Ecuador (which expelled their
    in-country World Bank representative today) over various corruption
    issues and charges, which have mostly served to create confusion
    and resentment. Critics charge that his concerns regarding what
    are inarguably high levels of corruption in World Bank projects
    evaporated when considering lending for Iraq, Pakistan and Afghanistan.
    Money further flowed to the countries Wolfowitz once recruited to
    sign on to Washington’s counter-terrorism agenda. In the same vein,
    he elevated nationals from Spain, from San Salvador, and from Jordan
    — all nations that strongly backed the US invasion of Iraq — to
    extremely sweet positions within the Bank hierarchy. In contrast,
    when Uzbekistan denied landing rights to American military aircraft
    he promptly suspended their Bank program.

    By demonstrating
    that good things and huge streams of cash flow to those countries
    and individuals that sign on to U.S. aggressions, Wolfowitz is slowly
    laying the basis for a new exploitation, i.e. the option of contributing
    troops to US global adventures via an expanded Nato in return for
    grants. (Grants are flexible, they can be loaded with extraneous
    political conditions. Loans are precise, legal documents with troublesome
    consequences if defaulted.)

    It might seem
    surprising but the bank has always had a problem with lending. It
    was never much of a force in the reconstruction of European industry.
    By the early ’50s there was little demand for its lending; it should
    have been dismantled then.

    Instead, to
    solve its problem, the Bank cooked up a new agency funded through
    the donations of wealthy nations that would subsidize credit at
    zero percent interest on 50-year loans! Thus was born the International
    Development Association (IDA) which is the funding that allowed
    the Bank to plunge into the developing world, where it has been
    disastrously wasting money and harming developing countries ever
    since, not to mention taxpayers, who are compelled to bail out the
    bankers cyclically.

    The Bank is
    completely unnecessary. In a world in which central banks are pumping
    out money and global liquidity at tsunami levels, there certainly
    is no need for preferential government-organized taxpayer-subsidized
    loans. The poor would have been much better served over the decades
    by arranging for loans on a commercial basis as the discipline required
    to fulfill standard obligations would represent an economic and
    political advance for a developing nation, the right of contract
    being essential to prosperity.

    Currently the
    Bank is in an IDA donor drive, an every third year affair. Contributions
    are way, way down.

    The U.S.’s
    16% ownership of the Bank puts it in the institution’s driver’s
    seat. Wealthy countries are not eager to donate money for the as
    yet unknown specifics of what is now viewed as an alarming US foreign
    policy. Why should anyone sign on to possible future U.S. aggression
    indirectly through World Bank lending?

    agenda puts at risk a very cozy world based on the post–World
    War II modus operandi in which dollar loans are extended to undeveloped
    and impoverished nations in order to grab control over their resources
    and governments. The main point is the loan, not the borrower’s
    ability or commitment, but the lender’s claim on national collateral.
    The corruption emerges from institutional action, action inherent
    in and according to the World Bank’s design as a political lender
    masquerading as a humanitarian enterprise, and nothing effective
    can be done about it as long as the institution exists. Reform is
    not an option, only elimination.

    For the well-positioned
    second-raters that people the Bank, there’s no advantage in trading
    in a country club existence and perfumed reputation just to browbeat
    and bludgeon troops out of poor nations in return for dollar grants.
    It’s so much more agreeable to posture as a helping-hand, hiding
    the nasty imperial bits in the loan covenants. True, the policies
    the loans require often lead to public riots, and to resource, land
    and territorial wars among their clients, but the mainstream media
    never connects the loans to their bloody consequences. At worst,
    details of the borrower’s thievery leak out.

    What’s really
    at stake for staff is the richest, absolute best government plantation
    in the entire world. World Bankers, along with IMF, IFC and EBRD
    employees, enjoy a mem-Sahib lifestyle; tax-free six-figure salaries,
    foreign expeditions involving first-class travel, five-star hotels,
    generous per diems, lavish banquets, and — if one is obliged to
    "stay on" overseas for "mission" work — extensive
    local staff and personal aides, language tutors, tuition support
    for the children, numerous mandated vacations home per annum, residential
    rent subsidies, full insurance packages, diplomatic mail for those
    legally-dubious art acquisitions, the best address, and fancy invites.

    If you are
    a foreign national lucky enough to escape your native backwater
    for an assignment in Washington, or London, or Paris, or Geneva
    — all the best places! – there is no treachery you wouldn’t commit
    to stay in place. (The very best institutional reform scheme ever
    put forward was Christopher Fildes’s suggestion to move the Bank’s
    headquarters to Bangladesh.)

    If you are
    a consultant, or an academic "adviser," you’ll keep your
    honest opinions to yourself, and do the job, no matter how mad or
    useless. There’s no way your university could, or your firm would,
    roll out a red carpet like the World Bank does.

    If you are
    a Third World borrower and a government official and therefore advantageously-positioned
    to skim the loans and use the principal for purposes more useful
    to you and your continuing hold on power than to the nation, the
    World Bank is your literal lifeline. Without scads of dollars to
    hand out, an honest election or worse – open revolt – are always

    If you are
    a large, richly-endowed private corporation with an eye on the profit
    possibilities in some foreign hellhole, you’ll play along, doing
    your bit to legitimize, publicize and generally support the Bank.
    After all, those giveaway loans may well be your critical leverage
    indirectly. Tit for tat. Loan for license.

    Clearly, there’s
    a lot of mouths to be fed. Luckily for the class of useless hors
    d’oeuvre eaters, there is China.

    China is a
    rare creature in the World Bank firmament in that it is a large
    and paying customer, taking full advantage of the Bank’s subsidized
    loans despite having an unprecedented $1.2 trillion in reserves.
    The income China represents to the World Bank is critical; already
    the Bank’s sister institution, the IMF, an agency China does not
    patronize, is unable to make enough of a return on its international
    loans to pay its costs and is currently floating the idea of selling
    a portion of the Fund’s contributed gold horde for cash to pay for
    their jobs and privileges.

    The World Bank
    does not wish to be similarly indisposed.

    There really
    wasn’t much heat in the Shaha Riza story. After all, a couple of
    middle-aged parasites and public policy bores divvying up a big
    bag of other peoples’ money while giving free reign to their shared
    delusions of bayonet democracy and the Middle East is somehow depressingly

    But in the
    initial scandal data dump to the Washington Post on 12 April
    ("World Bank Chief’s Leadership Role Called Into Question"),
    one sizzling fact leaked out apparently by mistake as it was never
    mentioned again in future reports. The maverick leak was an e-mail
    "noting that the bank had received a warning from China that
    it might halt future borrowings if Wolfowitz refused to curb anti-corruption

    is toast.

    Alas, the Bank
    is not. Not yet, anyway.

    If we must
    have a World Bank, and I am pained to write that it seems we must
    apparently right up until the very instant of our coming national
    insolvency, then let it be the redundant, inefficient, indulgent,
    corrupt waste currently on offer.

    A militant,
    lean and mean neocon lending machine would be far worse.

    28, 2007

    Williamson [send her mail]
    has been observing the international aid institutions since their
    arrival in Russia after the 1991 collapse of the Soviet Union. Currently
    she is expanding and revising her opus on the post-Cold War era,
    Contagion: The Betrayal of Liberty; the United States and Russia
    in the Post-Cold War World, to be published by Poor Richard’s
    Press this coming autumn. She no longer lives in the United States.
    This article was originally published by Sanders
    Research Associates

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