One can almost hear critics of the neoconservative movement sharpening their knives, as one of the group’s leading generals is caught in an unseemly mess. Paul Wolfowitz, now president of the World Bank (WB) and deputy defence secretary in the Bush administration when the Iraq invasion was planned, is facing a barrage of criticism because he used his influence to get his girlfriend, who was with WB, a plum job with the US State Department.
It is ironical that the man who has led an anti-corruption crusade in his two years at WB is now himself accused of corruption. One of Wolfowitz’s pet themes has been to link aid to governance standards. He said WB should not lend to countries where corrupt politicians and officials are likely to misuse the money. But he has few qualms about misusing his own official position. Wolfowitz’s actions have been unethical and he should be asked to leave.
Yet, there are some things Wolfowitz has undoubtedly got right during his two-year tenure. While the anti-corruption drive and the larger attempt to change WB’s culture reek of neocon arrogance— which is essentially a desire to refashion the world according to the radical objectives of the movement—there is little doubt that Wolfowitz is on the right track on the corruption issue. Too much aid money has been wasted, as development economists such as William Easterly have untiringly pointed out. Peter Bauer once caustically described aid as a method of transferring money from the poor in rich countries to the rich in poor countries.
True, Wolfowitz’s choice of targets has sometimes been odd. WB cancelled a plan to support a health programme in India. Joseph Stiglitz, a Nobel laureate and former chief economist of WB, has said that the Indian government asked for proof of corruption. None was offered. This is not to say that India is not a corrupt country, but the WB has had no qualms about lending to the likes of Iraq, which is also corrupt but happens to be an American ally.
But it seems WB has changed Wolfowitz as much as he has changed the Bank. The former true-blue neocon has broken ranks with his friends and urged governments to take action against global warming. He has been sympathetic to the needs of ravaged regions such as Africa, and has even called for more aid to the continent.
Corruption in Africa may seem to worry him less than corruption in India. But last week, during the annual meeting of the International Monetary Fund and WB, Wolfowitz was all praise for India, saying it is an inspiration for other poor countries. He also mentioned how he learnt a lot during a recent visit to micro-finance groups in Andhra Pradesh.
So, Wolfowitz is neither a knight in shining armour nor a sorcerer peddling dark magic. We should give him credit where it is due.
The consensus in development economics has changed over the years. It is not just a lack of capital that keeps countries poor. Institutions too matter. And while it would be wrong to insist that developing countries ignore their own institutional arrangements and embrace what the rich countries have, there are certain common concerns. Corruption is one of them.
Most Indians should readily agree with what Wolfowitz is trying to do at WB. The suspension of funding to one of our health programmes should not come in the way of seeing the larger point—that investment normally works better when there is a free market and high-quality institutions.
Let’s not confuse the message with the messenger.
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