Tuesday, May 15, 2007

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The Wolfowitz Bush managerial style

The pressure is growing on Paul Wolfowitz to leave the World Bank. The Financial Times' Krishna Guha and Eoin Callan -- rapidly becoming the World Bank's internal newsletter -- lays out the situation:

Paul Wolfowitz’s handling of a secondment deal for his girlfriend Shaha Riza broke the World Bank’s code of conduct, three staff rules and the terms of his contract as bank president, the final report by a panel investigating his role has concluded.

The report asks the bank’s board to consider, in the light of its findings, “whether Mr Wolfowitz will be able to provide the leadership needed to ensure that the bank continues to operate to the fullest extent possible in achieving its mandate”.

It suggests that the board should take into account in making this judgment the “damage done to the reputation of the World Bank group and its president, the lack of confidence expressed by internal and external stakeholders in the present leadership, the erosion of operational effectiveness...and the important strategy and governance challenges the World Bank group is facing”.

also asks the board to undertake a review of the bank’s governance structures “with the aim of ensuring that it is capable of effectively dealing with the challenges raised for the institution”.

The report’s findings – released by near unanimous demand of the board – will lend enormous momentum to the European-led push for Mr Wolfowitz to resign or be forced out.

The US is expected to try to schedule a conference call of deputy finance ministers from the Group of Seven industrialised nations to address the crisis at the bank on Tuesday, after failing to set up such a call on Monday....

Robert Bennett, a lawyer for Mr Wolfowitz, declined comment on the specific findings of the report, but said that overall it was ”clear that the ad hoc committee has simply ignored the overpowering case we presented that he was acting in good faith”.

Tyler Cowen sums up the problem with Wolfowitz:
As an outsider it is hard to judge many aspects of Wolfowitz's tenure. I take his continuing unwillingness to resign to be the biggest argument against his managerial abilities. He has lost the public relations battle and can no longer be effective. Why should he want the job any more? The obvious hypothesis is that he is emotionally committed to a losing battle, and is not placing much weight on the long-term interests of the institution he is running.
Cowen's argument could be extrapolate to apply to the Bush administration as well. Consider the Justice Department. At this juncture, it appears that the White House's revealed preference is to have a loyal but incapacitated and incompetent leader of that department over making any kind of concession to Congress.

What's so amazingly boneheaded about this "double-down" strategy is that, inevitably, the White House will lose on both issues. Which means they will not only lose on these personnel questions, they will lose in a way that further exposes their unique mixture of incompetence and political weakness.

Oh, and lest one think that Wolfowitz's insistence o keeping his job is not hurting the Bank's mission, click here.

UPDATE: The Economist's Free Exchange blog provides another knock against Wolfowitz.

posted by Dan on 05.15.07 at 08:07 AM


Are you saying its better just to let them frame him and then have him bend over and take it?

I would argue that having the organization incapacitated may be a strategic improvement.

posted by: Anon on 05.15.07 at 08:07 AM [permalink]

Agree with Anon. It appears that a kangaroo court was convened to rule against Wolfowitz once it became clear he would not bow out "gracefully." Perish the thought in today's world that someone would defend to the end his reputation against a smear campaign. Then he should resign because the smear campaign resulted in the loss of confidence regardless if he is eventually vindicated. Rewarding the leakers (who violated Bank rules)for creating the "no-win" situation is absurd but everyone is capitulating for the good of the "Bank." Sounds like the wrong people are being hung out to dry.

It seems to me that the situation escalated because the Europeans never expected a fight because Europeans would have reacted differently than the American Wolfowitz. World Bank officials must institute more multicultural sensitivity training to overcome this ignorance.

posted by: Jaybo on 05.15.07 at 08:07 AM [permalink]

Why won't you just lay down and die?

posted by: Mitch H. on 05.15.07 at 08:07 AM [permalink]

"Are you saying its better just to let them frame him and then have him bend over and take it?"

Exactly. But that's always the way with the squishy middle - folks like Drezner. Never stand up for principle; never fight back against the people who are in the wrong; etc.

The people who should be resigning are the World Bank staff who made this bogus charge are have issues with the direction the boss is taking the Bank. But I guess to some, its better to let the inmates run the asylum than to upset our wonderful European friends.

posted by: A.S. on 05.15.07 at 08:07 AM [permalink]

I'd hardly characterize DD as "squishy."

But what does Wolfowitz have to lose? Or Bush for that matter? Both of them will soon be out of public service. What does it cost them to go down swinging? Granted their stubbornness is affecting plenty of other people, but that doesn't seem to concern them as much as it might.

Gonzalez on the other hand is puzzling. Bush's loyalty to Gonzo seems to be driven purely out of friendship. I don't see what message Bush is trying to send by keeping Gonzalez around.

posted by: kwo on 05.15.07 at 08:07 AM [permalink]

"Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats."
H. L. Mencken

I guess I'm normal, since I can see *exactly* where PW is coming from.

I think that he is going to force them to fire him, and then sue the sheite out of them in a US court.

posted by: bud on 05.15.07 at 08:07 AM [permalink]

Frankly, at this point, I'm happier with a lame duck Gonzales than a new AG who would go about thinking he can be doing something, like infringing more on the rights of Americans.

posted by: wph on 05.15.07 at 08:07 AM [permalink]

Isn't there a lady's honour at issue here as well? Is that what Cowen means by "emotional" investment?

posted by: PD Shaw on 05.15.07 at 08:07 AM [permalink]

White House Spokesman Tony Snow:

"There are two tracks going on right now: Number one, we've made clear that we support Paul Wolfowitz. And the separate track is what is gonna be best for the World Bank."


I work with World Bank staff pretty regularly, and as such I sympathise with PW to some extent. But he cant remain a leader now - I dont think anyone thinks he can except those who want to see the world bank incapacitated - this group may large, but i still think theres not much cross-over.

posted by: George on 05.15.07 at 08:07 AM [permalink]

This isn't really about Wolfowitz anymore. It's about Euro-US relations. There ought to be a bipartisan consensus that if Wolfowitz is railroaded out by the Euros then the Bank will not be receiving further US financial or diplomatic support.

The World Bank doesn't perform a critical function in any case, and foreign aid is domestically unpopular (especially in the protectionist parts of the country that look like swing congressional districts), so this threat should be more than credible. It's a win either way--Wolfowitz stays or we get to stop subsidizing futile aid projects.

posted by: srp on 05.15.07 at 08:07 AM [permalink]

Wow. Some strong comments above. I guess I have a different take on this issue than most of the people reading this blog.

1. The Executive Board of the World Bank is not a "kangaroo court." The Executive Board is made up of representatives of the member states of the Bank. It has been delegated the authoirty by the member states to hire and fire the president. It also has the authority to create committees to gather information and write a report. As almost all the member governments have said during the past two weeks, "Let's allow the Board to do its work." None of the member governments, including the U.S., have questioned the procedures used by the Board in this situation.

2. The U.S. and some of the Europeans have made their preferences clear on this issue long before the report was issued. But Japan, Canada, and some of the African governments have not. Their reaction to the report will determine the fate of Wolfowitz. It appears to me that the only thing that can save PW is all of these governments agreeing to back the U.S. position in this case. I doubt seriously if this will happen. The Canadians will look at this report and conclude that Wolfowitz's position as the leader of a large organization is simply untenable. The Africans will split -- some will be disgusted by the hypocrisy of the Bank preaching strict accountability and good governance for recipients, but then permitting rule violations and nepotism from the Bank's leadership. Other African governments will be convinced that Wolfowitz has been responsible for the massive shift in WB resources toward sub-saharan Africa. Since the two EDs representing sub-saharan Africa both represent large numbers of different governments, it is not obvious how they will vote. The Japanese would never lead the charge on a coup in opposition to the U.S. government, but you will note they have also not yet come out in support of Wolfowitz keeping his job. If the Japanese go wobbly, it is all over for PW. Probably over anyway.

3. The U.S. government, and perhaps surprisingly this Administration, has invested a great deal of energy in reforming the IDA recipient selection process. They have gotten a lot more of what they wanted than observers expected 3-4 years ago. IDA is not the MCC, but the selection criteria for recipients have become much stricter, as have the oversight mechanisms. The U.S. government actually believes that IDA financing does much more good now than it did 10 years ago because of these reforms. IDA financing is crucial to U.S. development policy in Sub-Saharan Africa. Bottom line: The Bush Administration does care about the success of the current IDA replenishment drive (IDA needs to get rich donor countries to cough up money that will be given away at highly subsidized rate by IDA). Guess what? Nobody is going to give IDA any money as long as Wolfowitz is the President of this institution. The U.S. knows this.

Some time today or later this week some administration spokesman will suggest that perhaps it is time to PW to consider the future of the institution even if the charges against him are not all that serious. That will be the signal for Wolfowitz to resign. If he refuses, then their will be a vote and the Executive Board will probably vote to fire him. EVERYONE on the Board would like to avoid this outcome and would rather do a deal that would involve the U.S. maintaining a special role in the nomination process. If the U.S. does not strike such a deal soon, it will not only lose this WB president, but will also lose its traditional special role in the selection of the next president.

Tony Blair will be out of work soon. If I were in the Bush Administration, I could not think of a more acceptable non-American to serve as World Bank President.

The sooner Wolfowitz leaves the Bank, the better for the Bank and the better for U.S. influence in the Bank going forward.

Mike T.

posted by: Mike Tierney on 05.15.07 at 08:07 AM [permalink]

Hurt the Bank's mission? You mean those overpaid international bureaucrats might have to actually do something? PW should resign and Bush should cancel the American govt. monies somewhere else!

posted by: Jean Arrache on 05.15.07 at 08:07 AM [permalink]

If PW should go, I have the perfect candidate to replace him: Jacques Chirac, reliably anti-american and totally corrupt, he's a natural for the World Bank!

posted by: Jean Arrache on 05.15.07 at 08:07 AM [permalink]

Thought experiment: Imagine that the World Bank President was not American, and same set of facts emerged as we have seen in this case. How would the Wolfowitz defenders above react? They would call him a typical corrupt international bureaucrat.

And they would be right.

posted by: KenS on 05.15.07 at 08:07 AM [permalink]

Despite all the great comments here, in the end it matters much less for American people whether PW remains or goes. Anti Bush people like me will be simply happy because life has become tougher to likes of PW and Bush who never practiced any balanced campaign against their political opponents all these years. Bush and PW are getting back what they practiced - unfair political attacks. So much fun!

Dan wondered who will be first - PW or AG Gonzales. Looks like AG also will not be far away. Reading former Deputy AG’s testimony in Congress (published in NYT), it is hard to imagine GOP Senators would back him. Current AG will go too, quite likely.

All body blows to Bush Administration.

posted by: Umesh Patil on 05.15.07 at 08:07 AM [permalink]

I've always liked the idea of charging into battle against effete Europeanized international bureaucrats on behalf of a good cause. The right of a pampered refugee from the Bush administration to push large amounts of cash at his current inamorata and stash her in a make-work job at our State Department is not the kind of cause I had in mind.

Paul Wolfowitz's use of the same lawyer Bill Clinton used to dodge charges of sexual harassment doesn't win him any points from me either. In a remarkably short time we have seen the return in Wolfowitz's case of the same kind of arguments that used to be made on Clinton's behalf: "well, you know, what he did may have been wrong, but it doesn't rise to the level of a firing offense" and "his accusers aren't saints either, you know." Swell.

Look, if this were just a matter of interpreting World Bank rules it wouldn't be a big deal -- though as an American has always headed the World Bank since its founding following the rules shouldn't be a big deal for its president either. Self-dealing in public officials, though, is really something we ought to discourage. That's the issue here; Wolfowitz miscalculated what World Bank officials were prepared to let him get away with in terms of rewards for his....luv interest, but arranging for her to cash in on his appointment was not just what he did on becoming World Bank president, it was about the first thing he did on becoming World Bank president.

Now Wolfowitz is a creature of the Washington culture of entitlement, and that culture couldn't thrive as it now does were there not plenty of Americans willing to stand up for Big Men and whatever their ambitions, or appetites, lead them to do. I admit to finding this pretty creepy, in this country I mean. In Zimbabwe it's what you expect, also in parts of Central Asia. And maybe Louisiana, though the rest of the country tries hard not to think about that. But it probably isn't the face we want to show to the world -- not that we can avoid it altogether as long as George Bush is President, but we can try. Trying starts with kicking Paul Wolfowitz to the curb, and making sure his paramour and Bill Clinton's lawyer go with him.

posted by: Zathras on 05.15.07 at 08:07 AM [permalink]

Dear Sir,

I have dug 'neath my couch cushions and come up with a principle: I firmly believe that our planet would be worse off without the World Bank, that it is better to reform institutions than destroy them, and that man is judged first by his fellows and then by God. And while my middle may be squishy, that in no way reflects my politics.

Shall we stand upon our principles until the sun sets for the last time, or is it possible for us to find some middle point -- not far enough to constitute abandonment, surely -- and compromise? Or must we resort to rhetorical (and worse yet, digital!) fisticuffs without any consideration of the matter at hand?

Algernon Nonnimouse, Earl of Whiskerton

posted by: Algernon on 05.15.07 at 08:07 AM [permalink]

Blair for the World Bank: seconded. Come on Tony (i'm sure you read this blog), help everyone out here.

posted by: George on 05.15.07 at 08:07 AM [permalink]

The game is up for Wolfie, who has to be aware he has no basis of authority to run the organization any longer. All that remains is the size of the severance package. Once that becomes large enough, it will be surprising how amicable everyone will be.

posted by: Appalled Moderate on 05.15.07 at 08:07 AM [permalink]

that it is better to reform institutions than destroy them

Which is, of course, why we ought to have pushed for reform of the Fascist Party instead of just letting the commies hang Mussolini, right? Or, to get even more Godwinian, retained the National Socialist Party in post-war Germany under, oh, I don't know, Speer.

There's something about transnational organizations, their staff, and their supporters which brings out the Samson in me. I find myself wanting to pull the pillars down on everyone's heads.

And for the record, Drezner is as squish as they come. He makes Arlen Specter look like a block of granite.

posted by: Mitch H. on 05.15.07 at 08:07 AM [permalink]

"Baghdad will be much like Paris in 1944"...and testifying to congress that war in Iraq will cost "15-20 billion...50 at the outside" and Iraqi oil "should easliy cover it" - Paul Wolfowitz

If miscalculation like these can't get one banished from positions of import why should some simple nepotism?

posted by: centrist on 05.15.07 at 08:07 AM [permalink]

Zathras simply has the facts wrong. Wolfowitz didn't even want to move his paramour out of the Bank--that was imposed on him. He didn't want to get involved in setting her salary--that was imposed on him. The ethics people pressured him to do exactly what they are now attacking him for. The whole thing looks like a setup.

posted by: srp on 05.15.07 at 08:07 AM [permalink]

It appears to have been true that Wolfowitz wanted to maintain a professional relationship with his woman by keeping her at the Bank, something that is against the rules of many organizations as well as those of the Bank. Whether one believes that Wolfowitz was "forced" to shovel cash at the Riza woman against his own preferences depends on whether one takes him and his greasy lawyer at their word, something there is no reason whatever to do.

Of course he will claim to be a victim. I fully expect to hear the phrase "vast [fill in the blank] conspiracy" at any moment.

posted by: Zathras on 05.15.07 at 08:07 AM [permalink]

You can tell that Zathras is grasping when he resorts to innuendo against a lawyer rather than discussing the merits of the case against the principal. BTW, there was no shoveling of cash; the ethics committee argued that if the subordinate was to have her career derailed and her work interrupted, she needed a raise to compensate her. These letters have been made public--the "greasy" lawyer has nothing to do with it. Zathras is acting as though Wolfowitz took the job in order to become her boss, which strikes me as beyond ridiculous.

If there were some general rule that a long-standing and successful employee should be immediately cashiered because his or her significant other has been appointed from the outside at a higher level, then that would be a stupid and counterproductive rule. Apparently no such rule existed, however, as the "ethics" people referred to the unprecedented and delicate nature of the problem in their memos.

posted by: srp on 05.15.07 at 08:07 AM [permalink]

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