Paul Wolfowitz Is Having Problems As World Bank Head

A hot seat for the World Bank's new president

http://www.usnews.com/usnews/biztech...8worldbank.htm

By Edward T. Pound
Posted 3/28/06

In the 10 months that Paul Wolfowitz has been president of the World Bank, there's been a whole lot of sniping going on.

The bill of particulars drawn up against him by some career bank staffers, sometimes in passionate denunciation, goes something like this: too much reliance on a few crafty conservative Republicans he brought with him; too little use of the bank's brainy economists, senior managers, and technocrats; and too much emphasis on corruption-busting to the exclusion of development.

Wolfowitz, the former No. 2 official in the U.S. Department of Defense, is shaking things up at the World Bank, a pivotal player in the global war on poverty. Simply put, it's the entrenched bureaucracy, or the old guard, versus the reformers, or new guard, in this case Wolfowitz and his inner circle.

"This is the empire striking back," says Robert Holland, the U.S. representative on the 24-member bank executive board, in describing Wolfowitz's critics.

But to some old bank hands, it's not quite that simple. Top managers with years of development experience, they say, have lost influence and power on Wolfowitz's watch.

Jean-Louis Sarbib, a bank vice president, argues that the Wolfowitz team has unfairly tarred many staffers with the brush of corruption.

"The backlash is because people feel that there has been too much of an implication that corruption is rampant," Sarbib said in an interview, "and for a lot of staff this really does not jibe with their experience with the place."

However this conflict plays out, it is clear that Wolfowitz doesn't have confidence in some of the bank's top managers and that they, in turn, don't have much use for him and his inner circle. Not only that, but he's taking flak from some on the bank's executive board, which is composed of directors from various countries and oversees day-to-day operations. One reason: his decision to withhold funds from some borrowers that bank investigators have implicated in alleged corruption schemes.

The World Bank is the premier multilateral development institution in the world, one of five such organizations operating in developing countries. It provides more than $20 billion annually in loans and grants to needy countries.

Many bank-funded projects, operating in lands controlled by dictators, are riddled with corruption. Wolfowitz became the bank's president last June. Following in the steps of his immediate predecessor, James Wolfensohn, he launched an aggressive campaign against corruption.

Wolfowitz's heavy reliance on an inner circle of Republican advisers who have had no prior bank experience has generated controversy. These strategists include Kevin Kellems, who shadows Wolfowitz wherever he goes and tends to his image, and a policy aide named Robin Cleveland.
Both Kellems and Cleveland worked on Capitol Hill. Kellems also served as an adviser to Wolfowitz at the Defense Department and was a spokesman for Vice President Cheney.

Cleveland, who worked closely with Wolfowitz as a senior budget official under President Bush, takes the brunt of the criticism. Staffers who asked not to be identified say she is heavy-handed and does not listen to other viewpoints. "I can't see how he [Wolfowitz] makes a success of his presidency as long as Robin Cleveland is there," says a longtime bank staffer.

In an interview, Cleveland said, "You don't always get to deliver good news in an organization with limited assets and limited budgets." She added "You are going to have people who question what your objectives are" and who "feel they have more experience than those of us who have never worked at the bank."

Critics have an important ally in the former No. 2 official at the bank, a man named Shengman Zhang. Zhang worked for Wolfensohn and left the bank last year to join Citigroup in New York City. Zhang, who was a powerful figure in the bank, never established a close relationship with Wolfowitz.

A Chinese national, Zhang rarely gives interviews but agreed to discuss Wolfowitz's stewardship in a series of telephone conversations with U.S. News. "The mood, the atmosphere, people are living in fear, almost like terror in the place," Zhang charged.

He went on to say that Wolfowitz's team is "operating like a government within a government to the exclusion of everybody else" and added, "I think they are clearly perverting the purpose of the place . . . [the bank needs] to be tougher on corruption, but this is a development organization. They are confusing being tough as being right."

Wolfowitz, informed of Zhang's comments, refused to be drawn into a fight. "Many of the best staff around here have commended Shengman to me as somebody who brought a certain order to this place that was badly needed," Wolfowitz said. "But I think it's unfortunate if people feel they need to fuss around in that way, and I don't have time for it."

For all the carping, the bank has been down this road before, the last time when Wolfensohn ran the place. Wolfensohn, an investment banker, took over as president in June 1995 and a year later began developing his anticorruption campaign.

Many bank staffers were aghast at his aggressive style, but Wolfensohn pushed ahead anyway, establishing an investigative operation to uncover corruption on bank-financed projects and within the bank itself; he also set up a sanctions committee to bar corrupt contractors from doing business with the bank.

Wolfowitz and his close advisers know this history, and perhaps that is why he doesn't seem too worried about all the griping.

"If you use the supertanker analogy, the bank is underway in more or less the right direction," he said in an interview. "The important thing is to pick up speed, not to get distracted from the main mission." When asked if he relied too much on his inner circle, Wolfowitz said that such criticism is "kind of silly." He said he also relies heavily on career bank staffers.

As recently as early this week, he sent a message to World Bank staff applauding it for its "dedication, commitment, and passion that you bring to our work."