In November 1991, Larry Summers — the future United States Treasury secretary and president of Harvard University — became Chief Economist of the World Bank. At his first management meeting, he placed a tin of Coke on the teak conference table in front of him. No one said a word, but everyone stared at him disapprovingly. Quietly, he put the soft drink on the floor. Before the meeting was over, news of the indiscretion had swept through the corridors of the institution. It was his first encounter with the strong, and sometimes hidebound, culture of the World Bank. Months later, Summers signed a memorandum arguing that polluting industries in the West should be shifted to poor countries in Africa where the value of human lives was much lower. When the memo leaked, causing an international hullabaloo, Summers said it was a joke. No one believed him.
Getting off a plane in Zimbabwe, the World Bank president was asked what he thought. ”I’ve learned,” he said, ”that brilliant people are capable of the most stupid mistakes.”
Paul Wolfowitz’s departure from the international scene will not solve the nettlesome issue that eventually engulfed him: how to combat corruption without weakening the fight against poverty? To hear some recent commentators, you would think that Wolfowitz had invented the subject. In fact, he was following in the footsteps of the previous bank president, Jim Wolfensohn, who described corruption in 1996 as the ”cancer” of development and put a once-taboo subject on the public agenda.
Even he was pushing on an open door. World Bank staff were always upset about corruption and the fact that it was ”impolite” to talk about it. And, throughout its history, the bank cancelled contracts and even entire projects that were tainted with kickbacks or overcharging. bank staff knew that a great deal of cheating went on under the radar screen, and they were frustrated that nothing could be done to fight the more general ”culture” of corruption in many countries. Wolfensohn, not Wolfowitz, changed that, and the ”new” anti-corruption policy recently introduced by the Bank is merely a summary of what the institution has been doing for 10 years to fight the many-headed dragon that has been trampling over good intentions for so long.
The new element Wolfowitz introduced was fairness, or lack thereof. In extreme cases, it is possible to shut down entire country lending programmes, but you need a consistent set of rules to avoid arbitrariness and double standards. Under Wolfowitz, bank decisions suddenly seemed more in line with US foreign policy than dispassionate judgements about right or wrong. And Wolfowitz blew hot and cold, first cutting off aid to Chad when it violated its agreement on the use of oil revenues, then backing off when the country’s president threatened to close its oil pipeline to the coast; objecting to debt relief for the Republic of Congo but letting it through for Cameroon; helping Kenya — a country that donors had punished for years for its persistent graft — just days after the country’s anti-corruption czar, forced to flee to London to speak freely, accused three ministers of grand theft; and suspending projects in India’s education sector, but leaving China untouched.
I happen to agree with most of Wolfowitz’s decisions. Countries such as Chad and Congo and Uzbekistan should not be helped until they have shown that they are serious about the public interest. I would go further, and cut off aid to any country whose president is corrupt or which puts a single journalist in prison. But those are my views, and others will disagree with them. Without clear rules, the world will increasingly reflect US Vice- President Richard Cheney’s attitude last year, when he criticised democracy in Russia and the very next day saluted the dictator of Kazakhstan as a friend of the US.
Unfortunately, the road ahead can only get messier, and there is nothing in the ”strengthened” World Bank policy on governance and corruption that will make life easier for Wolfowitz’s successor. Instead, there are potentially troubling references in the policy to working with local ”champions” and ”expanding” the constituencies for reform in developing countries. This recognises that better governance is a highly political matter, but also flies in the face of the bank’s own founding charter that it remain politically neutral. There is also an element of still having to move large amounts of money out the door. Even in extreme cases, we are told, where weak governance and widespread corruption block development, where government leadership has no commitment to reform, and where the bank and the government cannot agree on priorities, the bank will engage in areas ”where adequate governance arrangements are possible” or with ”institutions outside of central government”. These devices may allow the bank to continue to commit its money, even in dire circumstances, but they will not improve the climate for private investment or really help the poor, who seldom benefit from aid projects and continue to pay the price of systemic corruption.
The world — and the World Bank — must now accept that working around corruption is no longer an option. No country — including rich ones — can eliminate corruption altogether. But it is not too complicated to decide which countries are serious about fighting it. Accepting indifference to it at the highest level, and working with pockets of honest people further down the line, is not a recipe for reform. And the poor are not likely to be impressed. They need solutions of a different kind: less emphasis on higher aid volumes and more attention to using existing aid budgets more successfully.
Robert Calderisi served at the World Bank for more than 20 years and is the author of The Trouble with Africa: Why Foreign Aid Isn’t Working (Yale University Press)