The dangers of crying Wolfowitz

In the heated discussion of the scandal leading to Paul Wolfowitz’s resignation as World Bank chief the true victims of the affair were rarely mentioned: the poorest people of the world.

For Wolfowitz’s critics, which included most European governments and World Bank staff, the affair was seen as part of a valiant crusade against corruption. They criticised Wolfowitz for helping his girlfriend, Shah Riza, a former World Bank staffer, get a better and more highly paid job in America’s State Department. In their view he was guilty of hypocrisy for campaigning against corruption in the Third World while being involved in disreputable practices himself.

Wolfowitz’s defenders, and there were relatively few of them, argued that he was unfairly picked on. The Wall Street Journal made much of the fact that many of his most vociferous critics were rich European governments. They portrayed him as the victim of a witch-hunt who was persecuted as a result of trivial indiscretions (1).

The arguments between the two sides were often so vociferous it was easy to miss what they had in common: an unhealthy obsession with corruption. Both see corruption as a key problem facing the poorer countries. And both argue more elaborate systems of control – or ‘governance’ – are needed to regulate the behaviour of Third World states.

The obsession with corruption goes back to the mid-1990s when James Wolfensohn, Wolfowitz’s predecessor, became president of the World Bank. Corruption was until that time seen primarily as a matter of politics rather than of economic development. But in 1996 Wolfensohn gave a high profile speech to the annual meeting of the World Bank and International Monetary Fund, which condemned the ‘cancer of corruption’. (2) From that time on fighting corruption became central to the World Bank’s mission.

When Wolfowitz took over as the head of the World Bank in 2005 he too made corruption central to his approach. The differences between himself and Wolfensohn on the issue were of detail rather than substance. Where they did differ was on their political affiliations. Wolfensohn was widely seen as a liberal. Wolfowitz, in contrast, was vilified as a neo-conservative representative of the Bush administration and architect of the Iraq invasion of 2003.

No doubt it was the Bush connections that made Wolfowitz unpopular with many European governments and World Bank staff. They disliked him before the scandal over his girlfriend’s job broke. The dispute over her finances simply provided an opportunity for the critics to attack his integrity. Rather than question his political approach, they simply accused him of hypocrisy.

This attack on individual moral failures follows a pattern that has become established in Western countries in recent years. In Britain, New Labour was a pioneer of this approach. Back in the mid-1990s the Labour party, then in opposition, campaigned against what it called Tory ‘sleaze’. Conservative politicians were routinely accused of dishonesty (3).

In the short-term New Labour’s sleaze-busting was a dramatic success. It allowed Labour to get elected into government after 18 years in opposition. But at the same time it deepened cynicism about politics. It meant that all politicians – including Labour MPs – were routinely seen as corrupt. What passes for politics became a flurry of accusations about the moral failures of different politicians.

In America the vocabulary is slightly different but the discussion is similar. There is much talk of a ‘culture of corruption’ in Washington DC and in corporate America. Lobbyists are attacked for distorting the political process and companies are seen as rife with scandal (4).

The Wolfowitz scandal brings this kind of approach inside the World Bank. It has succeeded in ousting one of George W Bush’s key lieutenants from a powerful position. If that was the end of the matter it would be a relatively unimportant case of factional in-fighting. But the campaign against ‘hypocrisy’ has strengthened the idea that corruption is a problem. It has reinforced cynicism about development and legitimised even more intrusions into poorer countries by the West.

To the extent that corruption is a problem it is a symptom rather than a cause of underdevelopment. The lack of all-round development can create incentives for individuals to filch money. Weak institutions can also make it easier for people to get away with such practices. But the solution is more development rather than less. Relatively rich societies suffer less from such problems precisely because they are wealthy.

In contrast, the mainstream approach to corruption is for Western governments and institutions such as the World Bank to impose ever more detailed conditions on poor countries. For the poor to receive finance they have to spend a huge amount of effort conforming to these stipulations and accepting the development priorities of their donors. And even then they are only allowed to consider ‘poverty reduction’ rather than full-blown economic development.

The obsession with corruption originates in the West. It says more about the cynicism and moral cowardice that are rife among the Western political class than it does about Africa. But it is the poorest countries of the world that suffer as a result of low horizons and increased interference in their affairs.

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(1) See Africans for Wolfowitz, Wall Street Journal, 27 April 2007 and World Bank justice, Wall Street Journal , 21 May 2007

(2) James Wolfensohn’s presidency. For a discussion of the Wolfensohn era, see The World’s Banker, Culture Wars, 16 August 2005

(3) Bore us no more with sleaze, please, Mick Hume, 7 December 2001

(4) It’s cynicism that’s corrupting politics, Daniel Ben-Ami, 23 June 2006