How “World Bank War I” Really Ended

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by Paolo von Schirach

May 22, 2007

WASHINGTON – ‘World Bank War I’ is over. President Paul Wolfowitz has been routed. He is out. The Europeans and their allies won. The allegedly unpalatable, non collegial, president has been successfully removed. However, almost all would agree that his baffling bad judgment in the now infamous matter of the overgenerous financial arrangements related to his partner’s secondment -serious as it may be– would have never developed into a crisis in a different political climate. Wolfowitz, representing most of what the Europeans (and others as well) strongly dislike about America’s recent policies, unfortunately, with his own doing, created a valid pretext leading to his removal.

The score is clear: Paul Wolfowitz and President George Bush who sent him there lost. By conceding tactical defeat on Wolfowitz, (thus not forcing an embarrassing vote by the World Bank Board), the Bush White House regained some leverage and the right to put forward another American candidate of its choice.

This is more or less the gist of it.

But there is another level to this story that merits attention. And this is the discrepancy between official acts (the Word Bank Board statement that ended the crisis) and previously declared beliefs and intentions. A hiatus between what is formally declared and what everybody who knows anything knows that the declaration ‘really’ means. The Board v. Wolfowitz case is just one of many instances of a dissonance between the wording of public statements that supposedly should reflect for the record feelings, beliefs and judgments and the actual situations and beliefs. The cognoscenti are fully aware that what is formally stated is not what is meant. And this is perfectly fine. We are so used to this dissonance that it does not provoke any reaction. Those who are dismayed are the naive and the unsophisticated. 

Because this particular case is fresh, it is worth commenting upon. And it is worth commenting upon because it should matter that in our civilized world in which the paramount importance of ‘values’ as the true pillars sustaining societies is so often trumpeted, it is perfectly alright, in fact an indication of superior wisdom and diplomatic mastery, to make statements for the record that would indicate a certain sincere judgment, while everybody knows that this is not what is meant. The realists and the sophisticated really know what is going on. They know the real story and they can read between the lines. As for all the others -well, who cares?

In the case of the World Bank, the realists would say, a crisis has been resolved, without open confrontation and ensuing further embarrassment and weakening of the institution. The intended result (getting rid of Wolfowitz) wanted by the majority has been achieved. The fact that this has been accomplished through an official Board statement that, in its substance, openly contradicts the validity of the initial accusation and findings, apparently, does not matter.

The sequence of events is well known. First the revelations about “the girl friend deal” and the ensuing fracas. Then the results of the formal inquiry that found Mr. Wolfowitz guilty on many accounts were presented to the Board. And then, what happened?.

Well, and then the Board official statement that Wolfowitz in his defense said he acted in good faith and “we accept this”. In a normal world in which words mean what they are supposed to, the Board statement equals to a full and complete exoneration.

The Board’s words mean: “We listened to the report and its conclusions that Wolfowitz acted wrongly on many accounts. But we accept as a fact that he acted in good faith. Furthermore, we (the Board) also accept that there is plenty of blame shared by others. Indeed, the procedures at the origin of this mess are so confusing that the Board thinks that a thorough review of such procedures is now in order.”

 Of course, the Board’s statement does not say that the accusations of the committee are false. However, it says that the good faith of president Wolfowitz is established. It goes on to say that many good things happened during his two year tenure. So, by any reasonable standard, the president of the institution may have materially committed some errors; but his good intentions and his ethics (this is what the inquiry was about) have been affirmed.

And so, in the light of this assessment by the Board, the formally and officially exonerated president resigns? Talk about non sequitur. Well, yes. He goes because this was the deal. He agreed to resign, in a backroom deal negotiated by his lawyers, in exchange for this very statement that would formally exonerate him.

So he can produce for now and for posterity a face saving document, while the Board can produce what (they would argue) really matters: a political result. He is out; and that is what we all wanted, no? The fact that the Board, in order to secure its political end, in complete and utter cynicism, was willing to state as fact what it clearly does not believe in and that, in principle, undercuts the rationale for removing the Bank’s president, shows that principle means nothing whatsoever in this matter.

And all this, let us not forget, in a matter that was about ethics, a matter in which supposedly the Board had to evaluate character and motives, more than just actions.

So, the fact of the matter is that all concerned, friends and enemies alike, know that Paul Wolfowitz, whatever his bad judgment and errors, has been successfully stabbed by a coalition of people who dislike whatever they imagine he represents (the Iraq War, bad management style, arrogance, and, probably central to all this, a real threat to the opaque modus operandi of a complex institution). He has been effectively tarred and feathered and run out of town.

However, both he and the Bush White House can exhibit the only official document that counts in which it is clearly said that his good faith is established, that unknown others contributed to this mess and that the Board praises his two year tenure. So there. Wolfowitz resigned. But the record established with unequivocal words that his bona fides has been recognized. He is a good man who can stand tall. Next question?

Prior to this conclusion, the media had leaked this very scenario: forced departure; but with the fig leaf of formal exoneration. And this is precisely what happened. It is fully understandable that, having lost any residual political support and thus the war, Mr. Wolfowitz wanted to extract at least this token ‘victory’. So, he is being ousted for being a ‘bad guy’, the hypocrite who does not walk the talk when it comes to governance and favoritism; but he can say that “No, this is not true; and I have the Board document that exonerates me”.

The fact that Mr. Wolfowitz wanted this document is understandable, also because he honestly believes this to be the truth. The fact that the Board of Directors of the World Bank, in an issue of ethics and thus transparency, agreed to this sadly demonstrates that they were not really concerned with establishing the truth or in recognizing and assigning blame in a matter of unprecedented gravity, as it had been claimed all along.

They wanted a political result and they got it. The fact that, in order to get what they wanted, they had to officially affirm, for the record, the opposite of what the allegations and the findings had concluded, is a glaring contradiction. Yet, on the whole, this appears to be a trivial detail. So trivial that it has not been noted by most commentators.

Only the radical opponents of Mr. Wolfowitz who most likely believe that he truly is the devil incarnate expressed dismay at the wording used to finally resolve the matter. Indeed the record does not say that he is fired because he is the devil, as it should, according to them. It does not even say that he is a despicable person. So, what was this all about? Where is the indignation of a Board determined to fire Wolfowitz?

Misguided as they may be, at least the “purists” believe in coherent behavior, and thus they cried foul. (However, the indignation of the Bank’s staff, a significant factor in the Wolfowitz crisis, becomes irrelevant when it comes to criticism of the way in which the Board handled the matter).

By choosing to be “realistic” and by accepting this quid pro quo that formally exonerates Wolfowitz, the Board proved that this whole exercise was about politics and not about principle, as it had been declared by the vociferous army of the righteous which includes many of the Goverments represented within the Board. 

Alright, many may conclude. It may very well be so. And so what? All this to make a case about the prevalence of cynicism in politics? ‘What a revelation”! Of course, this is not a great new finding. It is a banal statement of the obvious.

Indeed. But if we think that any principle based political process, at the World Bank, in the US Congress, or in any other democratic institution, western or non western, can thrive in the long run in an environment in which it is established, indeed postulated, that utter insincerity is the norm, we are really kidding ourselves.

Principle based institutions can survive only if there is the shared perception that the principles are truly believed and sincerely upheld, if not by all, at least by most, and not just mouthed. This may very well be banal; but continuing to ignore this truism will not do us any good.

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