The Right Way and the Wolfowitz’s Way to Deal with Corruption
By Paul
In a previous post I commented about Wolfowitz finding his top priority at the World Bank; battling graft. Finally the Economist magazine has catch up with the story and talks about it in the latest edition.
“CORRUPTION” was once a word that the World Bank did not use. Its staff spoke instead of “implicit taxes” or “rent-seeking behaviour” lest they be accused of meddling in politics. A decade ago James Wolfensohn, then the Bank's president, broke the taboo with a speech about the “cancer of corruption” and began a campaign to improve poor countries' governance…To lead the anti-corruption drive, Mr Wolfowitz has beefed up the Bank's Department of Institutional Integrity, an internal watchdog set up by his predecessor. The unit now has 22 investigators and will get 12 more. Staff have been told to get involved in the preparation of projects rather than simply react to concerns about graft….
Mr Wolfowitz's management style has added to the concern. He relies heavily on a small group of advisers he brought with him, none of whom are development experts. Bank insiders complain that the newcomers have no idea how to run the organisation and that their corruption drive is aimed more at impressing America's Congress than at helping the world's poor. Several top veterans have left….
Dennis de Tray who recently left the Bank to join Centre for Global Development argues, “more practical advice and less rhetoric would be a good way to increase our effectiveness in the fight against corruption,” and “Dealing with corruption and poor governance is tantamount to dealing with development. This is a long-term agenda, not a go or no-go variable except in extreme cases,”…. “If we are not careful in the way we deal with corruption, we will set up even sincere and committed leaders for failure and could end up creating just the failed states we are trying to prevent.”
He may have a point; recently the Bank held up more than $800 of money for Indian health care and a recent Bank report suggests that India has levels of child under-nutrition double those of Sub-Saharan Africa and the country has almost 40 percent of the world’s malnourished children. It is alleged by the Economist that concerns about debt relief to Congo was raised in the last minute after revelations of a newspaper report that the country’s president spend over $ 81,000 on hotel bills in a trip to New York. Without a clear criteria, there will always be charges of arbitrariness; there are plenty of leaders of poor countries who doesn’t worry much about their spending habits.
The Economist has got good advice for Mr. Wolfowitz;
- Bank's experts need to create more objective and nuanced gauges of graft.
- needs to lay out guidelines governing the Bank's lending. Just how much graft is tolerable in a country before the Bank pulls the plug?
- to concentrate on the vulnerable parts of the economy. The Bank already seeks transparency in oil and other extractive industries. It should demand equal scrutiny in public infrastructure, such as road building. And where countries score badly, it should not lend money.
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