L’Affaire Wolfowitz: Venality as metaphor

May 4, 2007

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Arrogance and cupidity
Rajeev Srinivasan
There are echoes of the Gilded Age and the Roaring Twenties in the US these days. The Dow Jones Index has hit several all-time highs, and a few hedge-fund managers took home a billion dollars each last year. Yet, Toyota just overtook General Motors as the biggest car-company in the world and US industry continues to hollow out. April has been a cruel month, with the Virginia-Tech shootout and the increasing number of American bodybags coming home.
 
The continued decline of the dollar and the apparently unstoppable rise of China and India are alarm signals for the health of the US economy. But the political situation is even more fraught, as Iraq is rapidly becoming this generation’s Vietnam, and the lame-duck Presidency of Mr George W Bush is on a self-destructing spiral, the latest example being ex-CIA honcho George Tenet’s broadside against his former boss and colleagues in the Bush White House. Meanwhile, Bush acolyte and World Bank president Paul Wolfowitz is at the centre of a raging scandal.
The Wolfowitz scandal is extremely embarrassing, because it shows that Bush team members can be, and have been, as venal as any regime in some benighted underdeveloped nation. It has been an axiom that, while there is corruption on a grand scale in the US, there is none of the petty, nickel-and-dime, endemic corruption that is the bane of poorer countries. But Mr Wolfowitz’s brazen nepotism towards his girlfriend, and the Republican response thereto, degrade the entire political system. Ceaser’s wife should be above suspicion: American moralising and posturing will attract ever fewer takers.
 
This spectacle comes at a time when the World Bank and the IMF are at a crossroads. Their relevance is being called into question. A number of critics – particularly Mr Joseph Stiglitz, a Nobel laureate in economics – have suggested that their prescriptions may do as much harm as good. Their taste for ‘shock treatments’ and for giant, ecologically catastrophic projects have not endeared them to poor nations, often the targets of their advice.
 
What has rankled in particular is the fact that the World Bank for all intents and purposes advances American interests while masquerading as a multilateral and neutral body. Why, for instance, must the head of the World Bank be by default an American at all times? Why is this person nominated, often as a political favour, by the serving American President?
 
What qualified Mr Paul Wolfowitz, not an economist but a politician, to be head of the World Bank, other than his being one of the Vulcans, the neo-conservative praetorian guard? What emboldened Mr Wolfowitz to treat the World Bank as his personal fiefdom, and to indulge in a picayune act of corruption relating to someone he was having sex with?
 
The simple answer appears to be that Mr Wolfowitz, and more generally the Bush Administration, did not recognise that there was a difference between their personal interests and those of the nation. Furthermore, they were supremely confident that they would not get caught. This is a dangerous combination, this arrogance and cupidity. It makes the casual observer wonder what other skeletons will tumble out of closets: Right now, there is also the unhappy saga of Attorney General Alberto Gonsales’ exploits.
 
The World Bank was one of the quangos (quasi-NGOs) pilloried in the 1989 expose “Lords of Poverty” that showed how some 80 per cent of the budget of the aid industry goes into comfortable salaries, first-class travel, and expensive consultants, rather than on useful projects. Similarly, Mr Wolfowitz has justified his girlfriend’s $193,000 salary (tax-free) by claiming that 1,000 Bank employees make that kind of money. Well, that is 1,000 too many.
 
The Wolfowitz saga is just one example of a tendency among the powers-that-be in the US to misuse their positions for personal gain. There have been accusations about contracts in Iraq going to friends of insiders. Indeed, the entire Iraq mess may well be the result of oil greed and ideology blinding people to reality. That was also the allegation made by Mr Tenet, who pulled no punches while promoting his new book, At the Center of the Storm: My years at the CIA. They, in particular Vice-President Dick Cheney, conveniently ignored the fact that there was no evidence about WMD, claims Mr Tenet, although Mr Tenet, amusingly, did say that Iraq was going to be a ‘slam-dunk’.
 
That Mr Wolfowitz is a leading hawk and an architect of the Iraq war makes his position precarious. Europeans are unhappy about American domination of the World Bank; many Americans oppose the Iraq war, and for all of them, attacking Mr Wolfowitz is a low-cost way of scoring debating points. Mr Bush is already on the defensive, and was forced to veto a Bill that calls for a timetable to pull out of Iraq; he will probably have Mr Wolfowitz fall on his sword. In general, the Republican response to this whole saga has been tepid, with Mr Bush offering mild support, while the Democrats, naturally, demand Mr Wolfowitz’s head.
 
The man’s anti-corruption drive (ironic, in the circumstances) has also made him enemies: China has been notably peeved about an initiative to tie loans to borrowers cleaning up their act.
 
There is great animosity towards Mr Wolfowitz inside the World Bank as well. An open letter published in the Financial Times (April 23) by 42 former senior employees at the bank shows they resented his dictatorial ways and his tendency to bring in his friends on highly-paid sinecures. They advised him to quit – or be fired. Says the letter, in part: “(Mr Wolfowitz) has lost the trust and respect of bank staff at all levels, provoked a rift among senior managers, … damaged his own credibility on good governance – his flagship issue – and alienated some key shareholders…”
 
There is also considerable evidence that Mr Wolfowitz and friends used their positions as bully-pulpits for pushing the Bush agenda of opposing abortion and family planning, and downplaying the ill-effects of global warming.
 
There is a lesson in all this for India’s ‘natural rulers’ and their assorted camp-followers, something about hubris. It is not the case that personal aggrandisement is equal to the national interest. There used to be a 1950s slogan: “What is good for General Motors is good for America”. Not quite, it turns out. There will be a day of reckoning when that inevitable nemesis catches up with you. After all, the Roaring Twenties ended with the Great Depression.
 
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