FROM THE DESK OF THE SECRETARY-GENERAL

Wolfowitz must resign to regain World Bank’s credibility  

Release Date: 25 April 2007

By Kumi Naidoo, CIVICUS Secretary-General

Dear e-CIVICUS Subscriber,

In the last few weeks there have been a number of media reports about the corruption allegations leveled at the President of the World Bank, Paul Wolfowitz.  Many of these have highlighted calls by the World Bank’s Staff Association as well as some NGOs for Wolfowitz to step down.  The spark that lit the fire is that the Bank President who had made anti-corruption his signature area was himself not above bending the rules for personal gain.  

How does this issue affect civil society organisations? Does it affect all of us or only those who specifically monitor the activities of the World Bank and other International Financial Institutions?  

Several years ago CIVICUS played a coordinating role between civil society organisations and the World Bank, facilitating a dialogue on how the World Bank should engage with civil society.  We went into this work with some trepidation knowing the diversity in civil society organisations’ perspectives on the question of how to engage with institutions such as the World Bank.  We can summarise three broad approaches: Principle Non-Engagement - those are organizations who believe the WB is fundamentally undemocratic, is part of the problem not the solution to global poverty, and should be shut down or significantly transformed; Selective Engagement- those organizations that share the beliefs of the non-engagers, but who treat every potential to engage on a case by case basis; and Engagement - those who believe the World Bank is a reality that we have to contend with and engage with even if only to limit the Bank’s potential to do harm, along with others who broadly accept the Bank’s role and work.   

Understandably, we were criticised by some of our colleagues in civil society for undertaking this work, which culminated in a set of recommendations on how the WB needed to change the way it engaged with civil society. The report itself (see www.civicus.org/new/media/World_Bank_Civil_Society_Discussion_Paper_FINAL_VERSION.pdf) was relatively well received even if the process was somewhat controversial. In the course of these discussions which were led by the former President of the World Bank James Wolfensohn, civil society organisations were interested not just in substantive engagement but more than that we were concerned about greater transparency and accountability of the Bank’s policy-decision making and investment operations as well as its governance.  

When it was known that Jim Wolfensohn was stepping down, many of us called for doing away with the undemocratic tradition of the US President having the right to propose the new President.   We also wanted to break with the pattern of the President of the World Bank needing to be a US citizen even though this decision is made without the informed consent of the citizens of the USA .  CIVICUS has argued that the World Bank is a global public institution and cannot be regarded simply as a Bank when it makes decisions that affect millions of people all around the world. The fact that the Bank’s Board of Governors is governed on a one dollar one vote basis clearly violates the principle of multilateralism. CIVICUS, long with many other critics, strongly believes that the governance of the Bank is set in the geopolitics of 1944/5 when these institutions were founded and that this must be transformed.  

Civil society’s views on the current leadership crisis at the World Bank has to do with both short and long term issues of legitimacy and accountability. In the short term, the issue has to do with whether or not President Wolfowitz should resign for more than one reason. First reason is he breaking of staff rules to ensure that his partner got vast salary increases. Yet a second reason to question Wolfowitz leadership is the lack of both substantive and procedural accountability of his senior appointments that lead selective attempts to push back strategies on family planning and climate change.  

In the long term, the issue goes back to the fundamentally flawed governance structure of the World Bank including the appointment of its President. It just does not make ethical sense for the World Bank to preach good governance when its own governance is undemocratic and often non-transparent. Now too, it is clear that the World Bank cannot be lecturing on anti-corruption when its own head has used his power to advance a personal interest. Corruption everywhere starts with good people accepting and tolerating individual acts of corruption and making excuses for it.  

If there is one good thing that can come out of the current leadership crisis of the Bank it should be this: that the new President of the World Bank should be appointed via a global search, not restricted by nationality, and not at the behest of the President of one member state of the World Bank - even if they are the major financial contributor. For this to have any substance the voting shares on the Bank’s Board must be made more equitable and the Board needs to understand that they are not there to advance the interests of the dominant financial contributors but to fulfil a global mandate, which is A WORLD FREE OF POVERTY -- a slogan so prominently displayed at the Bank’s headquarters.   

With regard to President Wolfowitz’s own predicament, let’s be frank -- he was not a popular choice to lead the World Bank in the first place given his role as the chief architect of the Iraq War which we now know beyond any doubt was executed on a false premise.  He was one of the people who spoke about a quick military overthrow of Iraq that would be characterized by “shock and awe.” His walking away from the catastrophe and tragedy that today is Iraq and into the institutional safety of the World Bank irked many within civil society.  However, after the shock of his appointment sank in we had to accept this choice of no choice.  

I wish to pay tribute to the Staff Association of the World Bank for standing up courageously and taking a principled position on the untenable situation the World Bank President finds himself.  The WB has long had a legitimacy deficit. If President Wolfowitz is to stay in office, with the support of the US President, the World Bank’s credibility will be further eroded.  If President Wolfowitz genuinely places the interests of the World Bank above that of his own, the only honourable thing for him to do is resign.   

Warmest regards,  

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