World Bank Scandal: Reign of Cronies

Paul Wolfowitz’s Fatal Weakness

By Juan Cole

The cronyism that may cost him his World Bank job is also what caused the Iraq debacle.

The executive board of the World Bank mulled a possible vote of no confidence in the leadership of its president, Paul Wolfowitz, this weekend. How did the renowned neoconservative and former deputy secretary of defense, a primary architect of the Iraq war, come to these straits? Is he, as he claims, the victim of a smear campaign by those who dislike his politics? Or do the charges of favoritism and nepotism reflect genuine character flaws?The small morality play unfolding at the World Bank tells us something significant about how the United States became bogged down in the Iraq quagmire when Wolfowitz was highly influential at the Department of Defense. The simple fact is that Wolfowitz has throughout his entire career demonstrated a penchant for cronyism and for smearing and marginalizing perceived rivals as tactics for getting his way. He has been arrogant and highhanded in dismissing the views of wiser and more informed experts, exhibiting a narcissism that is also apparent in his personal life. Indeed, these tactics are typical of what might be called the “neoconservative style.”

Soon after becoming head of the World Bank, Wolfowitz lapsed into his typical favoritism, even while he was, ironically, decrying the technique as practiced by governments of the global South. Instead of having an open search for some key positions and allowing for promotions from within, Wolfowitz simply installed Republicans from the Bush administration in high positions with enormous salaries. He brought Kevin Kellems from Dick Cheney’s office (where he had been communications director) and gave him a tax-free salary said to have been as high as $250,000 a year. As Wolfowitz’s new senior advisor, Kellems was leap-frogged over hundreds of officials with serious credentials in development work, something about which he knew little. When representing Cheney, Kellems went to great lengths to defend the vice president’s implausible conspiracy theory linking Saddam Hussein and Osama bin Laden.

Another controversial Wolfowitz appointment was Robin Cleveland, whom he made his assistant. She had been an aide to Sen. Mitch McConnell and then associate director of the White House Office of Management and Budget. She had been implicated in a corruption and nepotism scandal at the Pentagon, but the Department of Defense had determined it did not have jurisdiction to investigate her. In 2003, while at the OMB, she had lobbied then Secretary of the Air Force James Roche to get her brother a job at defense contractor Northrop Grumman, where Roche had been an executive. Though, like Kellems, she lacked experience in international development, she also received a reported quarter of a million dollars a year in compensation at the World Bank. And also like Kellems, she is alleged to have been an abrasive and abusive boss.

Wolfowitz appointee Juan José Daboub quietly began changing World Bank policy on contraception, presumably as a favor to the Bush administration, which depends heavily on the Christian right for support. Daboub, who had been close to the right-wing government of El Salvador, ordered all references to family planning removed from a strategy document for Madagascar. Bank officials were said by the Financial Times to have been afraid that the World Bank’s long-standing focus on contraception in forestalling disease was being changed by Daboub, and that poor women would suffer as a result. When the story surfaced, Wolfowitz told National Public Radio that the bank had made no changes in policy on contraceptives.

Experienced, high-level World Bank officials began resigning in droves as they saw Wolfowitz institute a reign of cronies with little development experience and massive salaries. The management style of the newcomers, cliquish among themselves and harsh toward outsiders, alienated those who remained.

None of these appointments, however unpopular, proved Wolfowitz’s undoing. It was the provisions he made for his girlfriend, Shaha Ali Riza, that finally blew up in his face. She had been working at the bank since the late 1990s, and the two had become involved when she divorced her husband and he became estranged from his wife. Wolfowitz made his relationship with Riza public when it became clear Bush would nominate Wolfowitz to head the bank. Bank ethics rules did not allow him to oversee a lover and set her salary, though he initially insisted that he could recuse himself from such decisions while functioning as her superior. The bank’s ethics officials said no to this proposed arrangement. He then had her transferred to the Near Eastern Affairs Bureau of the State Department to work with Elizabeth Cheney, the daughter of the vice president. He arranged such extraordinary salary increases for her that she ended up being better paid than Secretary of State Condoleezza Rice.

 Elizabeth Cheney

This spring, the World Bank Group Association, which represents the institution’s 13,000 employees, sent around a memo pointing out that the pay raises received by Riza were twice what bank rules allowed. Charges of nepotism and corruption flew. Then renewed attention was given to a 2003 incident in which Douglas Feith, at the time Wolfowitz’s deputy, had briefly detailed Riza to a Defense Department contractor as a consultant on Iraq democratization, and arranged for her to receive $17,000 for a month’s worth of work.

A special subcommittee of the executive board of the bank found late last week that Wolfowitz had in fact broken ethics rules. He has been insisting that he will not resign, even though large numbers of his own employees are openly signing petitions against him. The aide he brought in from Cheney’s office, Kellems, did resign. Few think that he is a big enough sacrificial lamb to feed such a large and hungry party. The full executive board will make its decision on Tuesday. Although member states may be reluctant to simply fire Wolfowitz, given President Bush’s backing for him, they might engineer a vote of no confidence as a way of making it difficult for him to stay on.

The management techniques that got Wolfowitz in trouble at the World Bank mirrored those he used at the Pentagon to get up the Iraq war. Without cronyism, tag-teaming, and running circles around opponents of the war such as Secretary of State Colin Powell and CIA Director George Tenet, the pro-war cabal could never have persuaded Bush to launch the conflict or persuaded the American public to support it. State Department officials have complained bitterly to me about meetings called by Wolfowitz and others on Iraq in 2002, to which some relevant officials were pointedly not invited, or where the agenda was prearranged and rigidly stage-managed so as to ensure that only neoconservative points of view were heard. Other officials have spoken of being spied on by the neocons at the Department of Defense, to the point where they were reprimanded for cartoons or posters that they had hung on their office doors.

“I Just Don’t Understand Why We Are Beginning by Talking about this One Man bin Laden”

When Donald Rumsfeld appointed Wolfowitz his deputy in January 2001, the latter plumped to have his longtime associate Feith installed as assistant secretary of defense for policy and planning. Feith was an odd choice to be the No. 3 man at the Pentagon, given that he opposed much official US government policy. He was, among other things, a diehard opponent of the Oslo peace accords between the Israelis and the Palestinians. Feith then appointed his former boss, Richard Perle, also close to the Israeli right and a man who had advocated an Iraq war for Israel’s benefit, to head the Defense Policy Board, a civilian oversight body for the Pentagon.

Just as Wolfowitz brought in Daboub at the World Bank to enforce narrow ideological programs such as gutting family planning, so he had earlier politicized intelligence at the Pentagon. Wolfowitz’s tendency toward clientelism made him vulnerable to groupthink based on unexamined premises. In the case of Iraq, the consequences were tragic.

Wolfowitz and his cronies were fixated on overthrowing the government of Iraq. Richard Clarke detailed in his memoirs, “Against All Enemies,” how he had enormous difficulty in calling a meeting of high Bush administration officials to discuss the threat of al-Qaida in spring of 2001. When Clarke finally had the opportunity to make his case to them, Wolfowitz “fidgeted” and “scowled” and attempted to shoot him down. “I just don’t understand,” complained Wolfowitz, “why we are beginning by talking about this one man bin Laden.” Clarke says he explained that he was talking about al-Qaida “because it and it alone poses an immediate and serious threat to the US.”

Clarke alleges that Wolfowitz responded, “You give bin Laden too much credit,” and insisted that bin Laden’s success with operations such as the 1993 World Trade Center bombing would have been impossible without a “state sponsor.” He added, “Just because FBI and CIA have failed to find the linkages does not mean they don’t exist.”

 Laurie Mylroie

The theory that Saddam was actually behind almost all the terrorist attacks on the United States from 1993 forward had been laid out by wild-eyed crank and supposed Middle East expert Laurie Mylroie in her “Study of Revenge: Saddam Hussein’s Unfinished War Against America,” which was published by the American Enterprise Institute (neocon central) in 2000. Peter Bergen has pointed out that the author thanks Wolfowitz and his then wife, Clare Selgin Wolfowitz, saying that Mrs. Wolfowitz had “fundamentally shaped the book,” while Wolfowitz himself “provided crucial support.”

On Jan. 22, 2002, Wolfowitz wrote Feith, “We don’t seem to be making much progress pulling together intelligence on links between Iraq and Al Qaeda … We owe SecDef [Secretary of Defense Rumsfeld] some analysis of this subject. Please give me a recommendation on how best to proceed. Appreciate the short turn-around.”

Feith created within the Near East and South Asia bureau at the Department of Defense a body he called the Office of Special Plans that cherry-picked intelligence for any indication, however unfounded, of a connection between Saddam Hussein and al-Qaida. This propaganda effort came in response to Wolfowitz’s special pleading. He did not ask whether such evidence existed. He simply instructed Feith to pull it “together.”

The effort was aided by corrupt financier and Iraqi expatriate politician Ahmad Chalabi and his Iraqi National Congress. Chalabi et al. supplied endless reams of lies to Wolfowitz and others about Iraq’s alleged nuclear weapons program and ties to terrorism, which Wolfowitz accepted uncritically. He even believed it when they told him that Iraqi Shiites were secular. For their disinformation, Chalabi and the INC were as well rewarded as other Wolfowitz cronies. The INC received $340,000 a month from the Pentagon even after the overthrow of Saddam.

The tight network of neoconservatives, linked by their background in the 1960s and 1970s as Democratic Party hawks, by their devotion to right-wing Israeli politics, and by their previous alliances and networking during the Reagan administration, proved able to “stove-pipe” analysis and so-called intelligence to the office of Vice President Cheney and thence to George W. Bush. Once the stove-piped intelligence had helped to bring about the desired war with Iraq, any dissenters from that preordained policy had to be punished. Domestic critics were accused of treason; historical allies were marginalized. When he could not strong-arm French President Jacques Chirac into supporting his illegal war on Iraq, Wolfowitz told the US Senate, “I think France is going to pay some consequences, not just with us but with other countries who view it that way.” It was not enough that Chirac lost the battle to stop what he saw as a ruinous Middle East war that would likely blow back on France. Paris had to “pay.”

Wolfowitz’s record of favoritism, ideological blinders, massive blunders and petty vindictiveness has inflicted profound harm on two of the world’s great bureaucracies, the U.S. Department of Defense and now the World Bank. He has left both with thousands of demoralized employees and imposed on both irrational policies that pandered to the far right of the Republican Party. He has, in addition, played a central role in destabilizing the Middle East and in leaving one of its major countries in ruins.

Many of his Himalayan-size errors were enabled by his careful placing of close friends and allies in key and lucrative positions. In the end, his career suffered remarkably little from his substantive policy mistakes. But once he moved beyond the forgiving world of high Republican Party politics, his dependence on cronyism finally caught up with him. That he ran into such trouble at the World Bank for behaving in ways that apparently were business as usual for him at the Department of Defense only underlines how corrupt the Bush administration really is.

http://www.spiegel.de/international/0,1518,482945,00.html

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~ by r7fel on May 20, 2007.

3 Responses to “World Bank Scandal: Reign of Cronies”

  1. Great story. Khalil Fareed

  2. It is true that the Bush administration is corrupt. Politics is full of corruption, dating back to biblical days and the Roman Empire. We seek the lesser of evils, and so the Republicans, corrupt as they are, are less corrupt than the Democrats. The Democrats gave us the ‘War Against Poverty’ which increased crime, poverty and illegitimate pregnancies and twenty million illegal aliens. The Democrats want to get enough ‘poor’ and ‘disenfranchised’ votes to gain power, raise taxes, increase regulation and destroy the economy— increasing the population of the poor, so they can recreate the Welfare State and victim psychology, such as we see in the remnants of New Orleans.

    At least Bush has the balls to stay in the war and beat the Iraqi insurgents and Al Qaeda.

  3. No, Bush is a coward and a war criminal. He has absolutely no business in Iraq. Never in a million years will BushCo. defeat the Iraqi resistance. The illegal, criminal occupation is hanging on by it’s nails even as we speak.

    I’m not a Democrat, but, it makes more Christian sense to help people (Welfare State) than it is to murder innocent people globally. The Bush Administration is a complete disaster and it has been a bane on global peace.

    We need a conservative, mind-your-own-business candidate like Chuck Hagel or Ron Paul. To say that the BushCo. is corrupt is false…they are criminals and enemies of our’ Constitution.

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