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New Yorker: Paul Wolfowitz at the World Bank

Author: John Cassidy
April 9, 2007

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In The New Yorker, John Cassidy analyzes Paul Wolfowitz's anti-corruption crusade at the World Bank.

Excerpt: "In the first half of last year, Wolfowitz stepped up his anti-corruption campaign, suspending aid projects in India, Kenya, and Cambodia until allegations of corruption were resolved. (In these and other cases, the bank and the governments involved eventually settled their differences, and lending was resumed.) “What Paul is doing,” Karl Jackson, the bank consultant, told me, “is moving toward a system that says to poor governments, ‘If you want to steal from a project, we all’—the whole development community—‘will say that we are not going to lend you any more money until you demonstrate improved governance.’” Expressed this way, Wolfowitz’s actions seem eminently reasonable. “Transferring large amounts of money to corrupt governments isn’t just a waste of money; it is counter-productive,” Roger Bate, an expert on development policy at the American Enterprise Institute, said. “I’ve seen that in Nigeria, Uganda, and Ethiopia. But it takes a lot of courage to say we are going to withhold funds. There is a lot of pressure to continue business as usual.”

However, current and former World Bank officials, as well as a number of bank shareholders, have questioned Wolfowitz’s actions. Why were projects being suspended in India and not in Indonesia, which by many measures is more corrupt? Why Uzbekistan and not Tajikistan? Why Congo-Brazzaville and not the Democratic Republic of the Congo? “No one in the development community really understands what criteria we should use to withhold lending from poor countries,” Nancy Birdsall, the head of the Center for Global Development, a Washington think tank, said. “And they certainly didn’t understand what criteria were being used at the bank in the past year or so.” Roberto Daņino, the bank’s former general counsel, who resigned last year, said, “Paul needs to adopt a more balanced approach. Anti-corruption is not a silver bullet. You can have a country that is transparent, with no corruption problem, but if it doesn’t follow the right economic policy it won’t grow. That is what he is missing.”

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