[A-List] World Bank: time to scuttle it

["Michael Keaney" <michael011@xxxxxxxxxxx>]

The World Bank has the perfect standard bearer

The bank's credibility was already fatally compromised by hypocrisies
far greater than those of Wolfowitz

Naomi Klein
Friday April 27, 2007
The Guardian

It's not the act itself, it's the hypocrisy. That's the line on Paul
Wolfowitz coming from editorial pages around the world. It's neither:
not the act (the way he disregarded the rules to get his girlfriend a
pay rise); and not the hypocrisy (the fact that Wolfowitz's mission as
World Bank president is fighting for "good governance").

First, let's dispense with the supposed hypocrisy problem. "Who wants to
be lectured on corruption by someone telling them to 'Do as I say, not
as I do'?" asked one journalist. No one, of course. But that's a pretty
good description of the game of one-way strip poker that is our global
trade system, in which the United States and Europe - via the World
Bank, the International Monetary Fund and the World Trade Organisation -
tell the developing world: "You take down your trade barriers and we'll
keep ours up." From farm subsidies to the Dubai Ports World scandal,
hypocrisy is our economic order's guiding principle.

Wolfowitz's only crime was taking his institution's international
posture to heart. The fact that he has responded to the scandal by
hiring a celebrity lawyer and shopping for a leadership "coach" is just
more evidence that he has fully absorbed the World Bank way: when in
doubt, blow the budget on overpriced consultants and call it aid.

The more serious lie at the centre of the controversy is the implication
that the World Bank was an institution that had impeccable ethical
credentials - until, according to 42 former World Bank executives, its
credibility was "fatally compromised" by Wolfowitz. (Many American
liberals have seized on this fairytale, addicted to the fleeting rush
that comes from forcing neocons to resign.)

The truth is that the bank's credibility was fatally compromised when it
forced school fees on students in Ghana in exchange for a loan; when it
demanded that Tanzania privatise its water system; when it made telecom
privatisation a condition of aid for Hurricane Mitch; when it demanded
labour "flexibility" in Sri Lanka in the aftermath of the Asian tsunami;
when it pushed for eliminating food subsidies in post-invasion Iraq.
Ecuadoreans care little about Wolfowitz's girlfriend; more pressing is
that in 2005 the World Bank withheld a promised $100m after the country
dared to spend a portion of its oil revenues on health and education.
Some anti-poverty organisation.

But the area where the World Bank has the most tenuous claim to moral
authority is in the fight against corruption. Almost everywhere that
mass state pillage has taken place over the past four decades, the World
Bank and the IMF have been first on the scene of the crime. And no, they
have not been looking the other way as the locals lined their pockets;
they have been writing the ground rules for the theft and yelling
"Faster, please!" - a process known as rapid-fire shock therapy.

Russia under the leadership of the recently departed Boris Yeltsin was a
case in point. Beginning in 1990, the World Bank led the charge for the
former Soviet Union to impose immediately what it called "radical
reform". When Mikhail Gorbachev refused to go along, Yeltsin stepped up.
This bulldozer of a man would not let anything or anyone stand in the
way of the Washington-authored programme, including Russia's elected
politicians.

After Yeltsin ordered army tanks to open fire on demonstrators in
October 1993, killing hundreds and leaving the parliament building
blackened by flames, the stage was set for the fire-sale privatisations
of Russia's most precious state assets to the so-called oligarchs. Of
course, the World Bank was there. Of the democracy-free lawmaking frenzy
that followed Yeltsin's coup, Charles Blitzer, the World Bank's chief
economist on Russia, told the Wall Street Journal: "I've never had so
much fun in my life."

When Yeltsin left office, his family had become inexplicably wealthy,
while several of his deputies were enmeshed in bribery scandals. These
incidents were reported in the west, as they always are, as unfortunate
local embellishments on an otherwise ethical economic modernisation
project. In fact, corruption was embedded in the very idea of shock
therapy.

The whirlwind speed of change was crucial to overcoming the widespread
rejection of the reforms, but it also meant that by definition there
could be no supervision. Moreover, the payoffs for local officials were
an indispensable incentive for Russia's apparatchiks to create the
wide-open market that Washington was demanding. The bottom line is that
there is good reason that corruption has never been a high priority for
the World Bank and the International Monetary Fund - their officials
understand that when enlisting politicians to advance an economic agenda
guaranteed to win those politicians furious enemies at home, there
generally has to be a little in it for the politicians in bank accounts
abroad.

Russia is far from unique. From Augusto Pinochet, the Chilean dictator
who managed to accumulate more than 125 bank accounts while building the
world's first neoliberal state, to Carlos Menem, the Argentinian
president who drove around in a bright red Ferrari Testarossa while
liquidating his country, to Iraq's "missing billions" today, there is in
every country a class of ambitious and bloody-minded politicians who are
willing to act as western subcontractors. They will take a fee, and that
fee is called corruption - the silent but ever present partner in the
crusade to privatise the developing world.

The three main institutions at the heart of that crusade are in crisis -
not because of the small hypocrisies, but because of the big ones. The
World Trade Organisation cannot get back on track, the International
Monetary Fund is going broke, displaced by Venezuela and China. And now
the World Bank is going down.

The Financial Times reports that when World Bank managers dispensed
advice, "they were now laughed at". Perhaps we should all laugh at the
World Bank. What we should absolutely not do, however, is participate in
the effort to cleanse the bank's ruinous history by repeating the absurd
narrative that the reputation of an otherwise laudable anti-poverty
organisation has been sullied by one man. The bank understandably wants
to throw Wolfowitz overboard. I say: let the ship go down with the
captain.


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