Three months before the invasion of Iraq, he dismissed the need to preserve Saddam Hussein's army and his Baath party. "If we go in," he said, "it will be like France in 1944." In other words, 25 million Iraqis will be waiting to greet their American liberators -- and U.S. troops could be home by Christmas.

As the chief architect of Operation Iraqi Freedom under Defense Secretary Donald Rumsfeld, Wolfowitz's golden parachute stunned the global community of staid and stuffy central bankers, finance and foreign ministers. Two years ago, "Wolfie," as both friend and foe call him, landed the ultimate international plum: CEO of the World Bank. Salary: $400,000 tax free, all expenses paid. Employees: 10,000, including Wolfie's lady friend Shaha Ali Riza. The Bank's mission: fight poverty throughout the less developed world. Funds dispensed yearly: about $25 billion.

The global community took an instant and intense dislike to the new leader, who bore the onus of a war despised by almost all the people he had to work with. Adding to the inbuilt friction was a yawning gap between a conservative president and a staff overwhelmingly liberal.

Anyone who has known Paul Wolfowitz for the past quarter of a century has been struck by his superior intellect. But then there is the phenomenon of great brains with mediocre judgment. As President of the World Bank, Wolfowitz led a campaign against corrupt practices in less developed countries, with special emphasis on Africa. One Congolese minister told NPR in French, "We were treated like animals being herded into a pen."

Despite the Bank's many successes in the world's poorer countries, there are still roughly 1 billion people living on less than $1 a day, and 2.5 billion, or 40 percent of the world population, on less than $2 a day.

Meritorious though anti-corruption drives may be in the developing world, hardly a day goes by without headlines in the Financial Times, Wall Street Journal and New York Times about the latest financial scandals in the developed world's business capitals. New York, London, Frankfurt and Milan are now cities where over-the-top year-end bonuses make less privileged denizens feel like paupers. Goldman Sachs' Christmas bonus pot was a staggering $16.9 billion -- not million. City of London financial district bonuses, according to The Economist magazine, were roughly the same as the $18.4 billion the World Bank seeks to raise from 42 governments for its self-loan agency, the International Development Association.

It was probably the anything-goes-if-you're-at-the-top culture that led Wolfowitz to please his squeeze at the World Bank with the equivalent of an almost $400,000 salary (or $193,590 tax free). The affair triggered hostile reactions throughout the 10,000-strong staff at World Bank headquarters in Washington and its 100 offices around the world.

Ms. Riza was not even going to work at the World Bank with those emoluments. "Wolfie" managed to find her a berth alongside Vice President Dick Cheney's daughter Elizabeth at the State Department, hoping this would delete perceptions of impropriety. It only made things worse as she is still on the World Bank payroll. And making $7,000 more than Secretary of State Condoleezza Rice. Wolfowitz's zero tolerance on graft and corruption at the Bank was now not quite zero.

The World Bank's executive board, its governors and the institution's European shareholder countries want the irreparably damaged Wolfowitz out. As does the Office of Institutional Integrity and the employees association. Staff members gathered in the Bank's atrium a block from the White House listened to Wolfie's apology for indiscretion, then heckled him. Graeme Wheeler, one of his two deputies, advised him to throw in the towel.

The lone powerful voice that was still backing him was President Bush. Unless Wolfowitz steps down, some European Bank governors were hinting the time had come to take the presidency away from the United States and give it to a European or Asian. But they also know that without a U.S. president, Congress would most likely cancel America's 16-percent contribution. On the other hand, if Wolfowitz stays, the others may cut back their contributions.

By week's end, Wolfowitz appeared to have reached rock bottom. And he went on digging.

earlier related report
Analysis: No contender yet post-Wolfowitz
by Shihoko Goto
Washington (UPI) April 19 - Whether Paul Wolfowitz resigns under pressure or stays on until his term ends in 2010, one thing is clear: It will not be easy to undo the damage done by the current World Bank president. What's more, it may take some time before the agency's credibility as a champion for the world's poor is restored -- if ever.

Calls for the former U.S. deputy secretary of defense to resign from his post has intensified over the past fortnight after it was revealed that he had pushed the bank to give a pay raise far beyond the agency's normal salary scale to his girlfriend and fellow employee. The rallying cry to oust Wolfowitz continues to grow, even after he publicly apologized for authorizing a raise of $60,000 to bolster Shaha Riza's paycheck to nearly $200,000 as she was seconded to the U.S. State Department in order to avoid a conflict of interest between him and his paramour.

Even before he was appointed president in June 2005, Wolfowitz was a controversial nominee from the Bush administration, not least given his key role in the U.S. invasion of Iraq. But in light of his anti-corruption campaign in developing countries since taking the helm of the world's biggest developing lending agency, attacks against him have only intensified, calling him a hypocrite for telling poor nations to be more transparent on the one hand while being less than forthright about how he secured his girlfriend a lucrative deal with the bank after he came to power.

Yet even as pressure mounts on him to leave, there have not been many names bandied about as people who might replace him, in part because the bank is seen as far too big a bureaucracy mired with too many problems to begin with for one person to change. In addition, many in Washington are as of yet still of the wait-and-see mode, unwilling to hedge their bets on any individuals before the likelihood of a changeover becomes clearer.

Still, even those who are seemingly above such petty politics are also unwilling to name names.

"This isn't about personalities," said Sameer Dossani, director of the 50 Years Is Enough: U.S. Network for Global Economic Justice non-governmental coalition that focuses on bringing change to the bank as well as its sister organization, the International Monetary Fund. "Reform is needed ... and it can't come from the top down."

Dossani argued that the Wolfowitz fiasco should give impetus for calls to make the bank's board meetings and other policymaking discussions open to the public, in part by putting in television cameras just as the C-SPAN television network covers the U.S. Congress live each day.

Meanwhile, Ian Vasquez, director of the Washington-based think-tank Cato Institute's Center for Global Liberty and Prosperity, said flat out that it was a mistake to think that any single individual could actually make a significant difference to the bank, given its need for a fundamental overhaul. Moreover, Vasquez argued that bank staff as well as borrowers and non-governmental organizations dealing with development aid were using the latest girlfriend scandal to "get back" at Wolfowitz for curtailing existing lending programs and introducing other changes to the institution, particularly as the board had actually approved Wolfowitz's pay increase proposal itself.

That view was shared by Brett Schaefer, a fellow at the Heritage Foundation.

"There's a lot of ill-will towards Wolfowitz" for trying to tackle corruption and focus more on lending to the world's poorest, particularly in Africa, Schaefer argued, adding that the fracas over Riza would not have "received the attention it has if it weren't for the underlying hostilities" towards the president.

Whether or not the girlfriend scandal has been blown out of proportion remains to be seen, but timing will play a key role in deciding who may replace Wolfowitz. Most analysts agree that regardless of criticisms regarding the practice of having a U.S. national head the World Bank, the United States will be highly unwilling to relinquish that custom. That in turn would mean that if Wolfowitz were to ride out his presidency until the end of the term in June 2010, then the president after George W. Bush would have the final say in nominating the appointee.

Bill Clinton has been named as a potential candidate among Democrats, and Claudena Skran, an associate professor of government at Wisconsin's Lawrence University, pointed out that the former president was very popular in the developing world, particularly in Africa, and he would be able to master the policy details needed to understand how the institution operates.

Clinton "can raise the prestige ... and raise more money" for the bank to lend more to developing nations, Skran said. After all, the bank needs to be able to raise more capital to be able to be an effective financial institution. But she also pointed out that leaders of multinational organizations might be equally suited to run the organization.

"The bank is a highly bureaucratic agency ... a corporate experience would be very helpful" to navigate the internal politics, Skran said, adding that a more market-oriented approach to development could prove beneficial to the bank's longer-term growth prospects as well.

Regardless of whom and when someone succeeds him, Wolfowitz will certainly come under further scrutiny Saturday, when he will be one of the numerous celebrity guests at Washington's annual White House correspondents' dinner.

Email This Article

Related Links
The Economy