Odious Debts Online
April 15, 2005

Outgoing World Bank president James Wolfenshohn has fired a parting shot at British Prime Minister Tony Blair, reports The Australian.

According to Mr. Wolfensohn, Mr. Blair’s credibility has been
jeopardized by his foundering attempts to relieve poverty
in Africa, even though Mr. Blair has made Africa a focus of Britain’s
turn as chair of the Group of Eight nations and the European Union this
year.

Mr. Wolfensohn also lamented he had spent the last five years of his
presidency at odds with the George W. Bush administration, which he
says kept him at arm’s length, The Australian reports.

“The Bush administration had less confidence in me . . . although I am
saddened by it because I was never partial to Democrats or
Republicans,” said Mr. Wolfensohn, who will be replaced by US Deputy
Secretary of Defence Paul Wolfowitz in June.

“We got our work done but I never had the backing . . . and in the case
of most presidents of the bank, they have been backed by somebody,” Mr.
Wolfensohn said.

“That is not a bad thing but it would have been very comfortable if I
could have called somebody and said ‘I need your help on something’.”

Mr. Blair is not the only one facing criticism; the World Bank’s record
on poverty reduction under Mr. Wolfensohn has also been subject to
scrutiny, even from within its own ranks.

Addressing a US Senate roundtable discussion last year on multilateral
development bank corruption, Stephen Berkman, a former World Bank
official, said
the World Bank’s considerable potential for alleviating poverty and
suffering in the Third World had been needlessly squandered due to a
“plethora of human, political and bureaucratic factors that have played
into the hands of corrupt individuals at the receiving end of the
Bank’s lending program.”

Mr. Berkman, who worked on 110 development projects during his twelve
years with the bank, said the bank had become a “bloated bureaucracy”
and “a vehicle whereby funds are loaned to Third World governments to
encourage policy reforms that are often ignored, conduct research that
is seldom applied, purchase equipment that is not put to use, and build
infrastructure that quickly deteriorates.”

In the end, he said, “the money, and all that it can do for development, is gone and nothing is left but corrupt and
dysfunctional public institutions, decaying infrastructure, huge debts, and the dashed hopes of the indigenous populations.”

However, Mr. Berkman did observe that whenever outside experts looked
into the bank’s lending operations, the bank’s attention to better
fiscal control seemed to increase.

Manish Bapna, the executive director of the Bank Information Center – a
Washington-based monitor of international financial institutions –
described Mr. Wolfensohn’s legacy as “mixed.”

Referring to critics who have argued that Mr. Wolfensohn’s emphasis on
poverty reduction remained “largely rhetorical” and failed to challenge
“the prevailing economic policies and development paradigm of the
Bank,” Mr. Bapna said:

“Although we may have had Wolfensohn’s ear or his sensitivity towards
some issues, it is not clear to me how well he brought the institution
with him when he came to listen.”

An ongoing investigation by the US Senate Foreign Relations Committee
into allegations of corruption in development projects funded
by multilateral development banks is scheduled to be completed soon and
a proposed set of reforms to encourage increased bank accountability is
expected.

Some analysts have suggested the Wolfowitz nomination to lead the World
Bank might have been intended by President Bush as a move to deepen the
bank’s focus on issues of transparency, accountability and governance,
a direction initiated by Mr. Wolfensohn.

In the past, Mr. Wolfowitz has said he has seen “first-hand the harm
that corruption and weak institutions can inflict to defeat development
and poverty reduction” while working on economic development in the
Philippines and Indonesia.

Mr. Wolfensohn also advocated for the cancellation of Iraq’s debt, publicly describing the debt in a way that indicated it
was “odious.”