Forces of Darkness- Wolfensohn

[Eugene Coyle <eugenecoyle@xxxxxxx>]

>From NY Times

September 7, 2001

World Bank Presses Inquiry on Economist Who Dissents

By JOSEPH KAHN

                          ASHINGTON, Sept. 6 ? The World Bank is
conducting a disciplinary investigation of one of its highest-ranking
economists, who sharply criticized
                          the bank's record on fighting poverty in a
recent book and newspaper opinion article.

The economist, William Easterly, came under investigation by the bank's
office of business ethics and integrity after he wrote an article in The
Financial
Times that summarized views expressed in his book, several bank
officials said. They said the inquiry, which has not yet concluded, was
started because Mr.
Easterly did not receive the required permission to write an article in
a general-interest publication.

In the article and the book, Mr. Easterly harshly assessed the bank's
half-century history of fighting poverty, arguing that it has pursued a
long list of failed
elixirs and systematically ignored the poor results of its programs.

He said the bank should encourage countries to adopt traditional
free-market policies and stop lending to corrupt and incompetent
governments.

The investigation of Mr. Easterly, which a bank spokeswoman described as
a routine enforcement of the World Bank's media and communications
policies,
is being conducted at a time when its president, James D. Wolfensohn,
has come under attack from numerous critics.

Right-wing economists say he has led the bank far astray of its
traditional mission to enhance economic growth around the world, while
those on the left
say the bank under his leadership remains a top- down institution that
does too little to respond to the needs of the poor. Critics have also
put pressure on
Mr. Wolfensohn to forgive more third world debt.

Several bank officials said that Mr. Easterly's case is one of several
recent examples of how Mr. Wolfensohn has sought to assert more control
over a raging
debate within the bank as he battles outside critics.

The timing of the dispute is particularly sensitive because thousands of
protesters are expected to gather in Washington later this month at the
annual
meetings of the bank and the International Monetary Fund to oppose the
way the lending institutions do business.

Some protesters argue that the bank and the I.M.F. have failed to
alleviate ? and may have worsened ? poverty in developing countries.
Environmental,
human rights and social activist groups have also sought to force the
bank, which is controlled by member governments, to disclose more
documents and
allow the public to express views about policies before they become
final.

Separately, President Bush and his top advisers have pressed the bank to
rethink its antipoverty strategy. Mr. Bush proposed replacing as much as
half of
the bank's loans to developing countries with outright grants, a change
that the World Bank leadership has resisted.

Two influential opinion journals, Foreign Affairs and Foreign Policy,
have lengthy articles in their most recent issues that question the
direction Mr.
Wolfensohn has taken the bank.

Although many of its critics have conflicting views about what is wrong
with the bank and what should be done to fix it, the flurry of internal
dissent and
outside attacks have sapped morale and created a sense of crisis,
several people who work there say.

One close supporter of Mr. Wolfensohn said the bank was "under attack by
the forces of reaction," who are trying to undo the changes Mr.
Wolfensohn has
brought since he took office six years ago.

Mr. Easterly's views are among the most pointed. As a senior adviser in
the bank's research group, he has helped shape antipoverty strategy for
16 years.

In his recent book, entitled "The Elusive Quest for Growth," Mr.
Easterly argues that the World Bank has systematically failed to raise
growth rates in the
countries it seeks to help. He wrote that two generations of bank
leaders have been deluded by supposed panaceas for growth, like
increasing business
investment, improving education, limiting population growth, changing
government policies and forgiving past loans, all of which ultimately
failed to raise
growth rates.

The developing world, including Africa, Latin America, South Asia, East
Asia outside Japan and former Communist nations in Europe, grew at an
average
annual rate per capita of 0.1 percent from 1980 to 2000, according to
the bank's statistics. East Asian nations grew relatively quickly, but
in the other regions,
living standards declined.

"Consider the facts and it soon becomes evident," Mr. Easterly wrote in
the op-ed page article, "that the $1 trillion spent on aid since the
1960's, with the
efforts of advisers, and foreign aid givers, have failed to attain the
desired results."

He proposed that the bank instead focus on creating incentives for poor
countries to adopt free-market policies, largely by halting loans to
nations that do
not manage their economies effectively and increasing loans to those
that do.

Mr. Easterly declined to comment on his views or the bank's
investigation.

The agency's chief spokeswoman, Caroline Anstey, said it supports Mr.
Easterly's right to publish his book. She said the inquiry into his
newspaper article
followed standard practice, and was not intended to suppress dissent.

"This isn't about academic freedom," Ms. Anstey said. "Our guidelines
state simply that staff need to inform their managers of contacts with
the press,
preferably before an interview, but if not, afterward."

She said the inquiry involving Mr. Easterly had not concluded, so it was
unclear if he would be disciplined.

Several other people who work at the bank say its top officials have
recently taken a hard line on employees who violate guidelines for
communicating with
the press.

In one recent case, Robert Wade, a professor at the London School of
Economics who has served as a paid consultant to the bank, was cited for
violating
disclosure policies when he wrote an opinion piece supportive of a bank
lending program in China that was canceled under pressure from outside
critics.

"They are going to be tough on anyone who says anything that has not
already been vetted," Mr. Wade said.