Wolfowitz cronies rile World Bank

World Bank president Paul Wolfowitz faces mounting criticism from directors of the international lending organization, who say he relies on a coterie of political cronies who are advisers with little expertise in development while driving away seasoned managers. Half of the bank's 29 highest-level executives have departed since Wolfowitz, the former US deputy defense secretary and an neo-conservative architect of President George WBush's invasion of Iraq, took office in June 2005.

Among them was Christiaan Poortman, vice president for the Middle East and a 30-year World Bank veteran, who left in September after resisting pressure to speed up the pace of lending and adding staff in Iraq.

"It was very sad to see someone of Mr Poortman's caliber leaving," said Eckhard Deutscher, one of 24 executive directors who oversee the management of the Washington-based lender. "The bank needs to be very careful not to lose too much of its human capital."

The exodus is damaging the world's leading poverty-fighting institution, which last year contributed US$23.6 billion (HK$184.08 billion) for projects such as schools and clinics, say directors and outside observers.

Three directors said they are concerned governments might be less willing to contribute because of unhappiness with Wolfowitz, who came to the bank with a bad reputation.

The only other World Bank chief to sweep aside as many senior managers was his predecessor, James Wolfensohn, said Devesh Kapur, a former economist at the lender and author of The World Bank: Its First Half Century. He said the difference is that Wolfowitz appointees are short on expertise and long on political connections.

New faces include counsellor to the president Robin Cleveland, who as associate director of the White House Office of Management and Budget helped secure congressional funding for the wars in Iraq and Afghanistan.

Kevin Kellems, a former spokesman for US Vice President Dick Cheney, was named director of external strategy. Suzanne Rich Folsom, a lawyer who joined in 2003 and is the bank's chief corruption fighter, is married to George Folsom, who was principal deputy director of the Iraq Reconstruction Management Office and served as president of the International Republican Institute.

Wolfowitz, 62, "has placed considerably more trust in a small group of outsiders from the Republican Party than in the seasoned experts in the bank," said Alison Cave, head of the World Bank staff association, which represents more than 13,000 employees.

"The changes under Wolfowitz are unprecedented in the calculated manner in which inexperienced or ideological replacements are being placed in senior positions," said Kapur, a professor at the University of Pennsylvania.

Among those who left the bank after disagreements with Wolfowitz are Roberto Danino, general counsel and a former prime minister of Peru; Ian Goldin, vice president for external affairs; and Gobind Nankani, vice president for Africa. Of the 14 executives who left, three had reached mandatory retirement age, according to the staff association.

Poortman, the bank's Middle East chief, resigned rather than accept an assignment in Kazakhstan, according to a colleague. Poortman declined to comment on that claim.

Wolfowitz, in a written statement from his press office, said plans for a "modest, incremental upgrading" of Iraq operations came in response to donor nations and were approved by the Middle East department.

And Kellems said that "change in senior posts throughout the bank has been more gradual than most people expected, and the senior management team is very international and composed of experienced professionals from a wide range of backgrounds and viewpoints."

Why Doesn’t Aid Work?*

http://www.cato-unbound.org/2006/04/03/william-easterly/why-doesnt-aid-work/

by William Easterly
Lead Essay
April 3rd, 2006

I am driving out of Addis Ababa, Ethiopia to the countryside. An endless line of women and girls is marching in the opposite direction into the city. They range in age from 9 to 59. Each one is bent nearly double under a load of firewood. The heavy load propels them forward almost at a trot. I think of slaves driven along by an invisible slave-driver. They are carrying the firewood from miles outside of Addis Ababa, where there are eucalyptus forests, across the denuded lands circling the city. They bring the wood to the main city market, where they will sell the load for a couple of dollars. That will be it for their day’s income, as it takes all day to heft firewood into Addis and to walk back.

I later found that BBC News had posted a story about one of the firewood collectors. Amaretch, age 10, woke up at 3 a.m. to collect eucalyptus branches and leaves, then began the long and painful march into the city. Amaretch, whose name means “beautiful one,” is the youngest of 4 children in her family. She says:

I don’t want to have to carry wood all my life. But at the moment I have no choice because we are so poor. All of us children carry wood to help our mother and father buy food for us. I would prefer to be able to just go to school and not have to worry about getting money. [1]

The two tragedies
UK Chancellor of the Exchequer Gordon Brown recently gave a compassionate speech about the tragedy of extreme poverty afflicting billions of people, with millions of children dying from easily preventable diseases. He called for a doubling of foreign aid, a Marshall Plan for the world’s poor. He offered hope by pointing out how easy it is to do good. Medicine that would prevent half of malaria deaths costs only 12 cents a dose. A bed net to prevent a child from getting malaria costs only $4. Preventing 5 million child deaths over the next 10 years would cost just $3 for each new mother. A program to get Amaretch into school would cost little.

However, Gordon Brown was silent about the other tragedy of the world’s poor. This is the tragedy in which the West already spent $2.3 trillion on foreign aid over the last 5 decades and still had not managed to get 12-cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get $4 bed nets to poor families. The West spent $2.3 trillion and still had not managed to get $3 to each new mother to prevent 5 million child deaths. The West spent $2.3 trillion and Amaretch is still carrying firewood. It’s a tragedy that so much well-meaning compassion did not bring these results for needy people.

The West’s efforts to aid the Rest have been even less successful at goals such as promoting rapid economic growth, changes in government economic policy to facilitate markets, or promotion of honest and democratic government. The evidence is stark: $568 billion spent on aid to Africa, and yet the typical African country no richer today than 40 years ago. Dozens of “structural adjustment” loans (aid loans conditional on policy reforms) made to Africa, the former Soviet Union, and Latin America, only to see the failure of both policy reform and economic growth. The evidence suggests that aid results in less democratic and honest government, not more. Yet, unchastened by this experience, we still have such absurdities as the grandiose plans by Jeffrey Sachs and the United Nations to do 449 separate interventions to reach 54 separate goals by the year 2015 (the Millennium Development Goals), accompanied by urgent pleas to double aid money.

Economic development happens, not through aid, but through the homegrown efforts of entrepreneurs and social and political reformers.
(snip)

The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good (Hardcover)
by William Easterly

http://www.amazon.com/White-Mans-Burden-Efforts-Little/dp/1594200378/sr=8-1/qid=1166026693/ref=pd_bbs_sr_1/103-2670570-1077453?ie=UTF8&s=books

Editorial Reviews

From Publishers Weekly
No one who attacks the humanitarian aid establishment is going to win any popularity contests, but, neither, it seems, is that establishment winning any contests with the people it is supposed to be helping. Easterly, an NYU economics professor and a former research economist at the World Bank, brazenly contends that the West has failed, and continues to fail, to enact its ill-formed, utopian aid plans because, like the colonialists of old, it assumes it knows what is best for everyone. Existing aid strategies, Easterly argues, provide neither accountability nor feedback. Without accountability for failures, he says, broken economic systems are never fixed. And without feedback from the poor who need the aid, no one in charge really understands exactly what trouble spots need fixing. True victories against poverty, he demonstrates, are most often achieved through indigenous, ground-level planning. Except in its early chapters, where Easterly builds his strategic platform atop a tower of statistical analyses, the book's wry, cynical prose is highly accessible. Readers will come away with a clear sense of how orthodox methods of poverty reduction do not help, and can sometimes worsen, poor economies. (Mar. 20)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From The Washington Post's Book World/washingtonpost.com
This is the season for critiques of global misadventures, and William Easterly has written a valuable one. His target in his puckishly titled The White Man's Burden is the spirit of benign meddling that lies behind foreign aid, foreign military interventions and such do-gooder institutions as the World Bank, the International Monetary Fund (IMF) and the United Nations. In his account, such efforts are fatally contaminated by what the philosopher Karl Popper called "utopian social engineering." Easterly's list of well-meaning villains stretches from the economist Jeffrey Sachs to the rock singer and charity impresario Bono.
His analysis is depressing but quite readable -- thanks largely to his skill in giving lively names and conceptual handles to his explanations for why the West's charitable works in fact accomplish "so much ill and so little good." The do-gooders' fundamental flaw, he argues, is that they are "Planners," who seek to impose solutions from the top down, rather than "Searchers," who adapt to the real life and culture of foreign lands from the bottom up. The Planners believe in "the Big Push" -- an infusion of foreign aid and economic advice that will lift poor countries past the poverty trap and into prosperity. But the Planners are almost always wrong, Easterly contends, because they ignore the cultural, political and bureaucratic obstacles that impede the delivery of real assistance (as opposed to plans for such assistance) to the world's poor. "The right plan is to have no plan," he asserts, in an economist's version of a Zen koan.

Think of Easterly as a kind of anti-Thomas L. Friedman. His dyspeptic view of globalization contrasts with the optimism of the New York Times columnist, but he has written his broadside in a brisk, Friedman-esque style of aphorisms, anecdotes and witty headings. Some of his section and chapter titles convey the breezy tone in which he delivers his gloomy analysis: "Why Planners Cannot Bring Prosperity"; "The Legend of the Big Push"; "The Rich Have Markets, the Poor Have Bureaucrats." Scattered throughout the book are upbeat "Snapshots" of poor Africans and Asians whom Easterly, now an economics professor at New York University, met on his travels during more than 16 years spent working as a World Bank development economist; he also offers portraits of the "Searchers" who are helping the developing world.

I confess that I occasionally began to find all the aphorisms and snapshots annoying; there actually is such a thing as a book about development economics that is too readable. And I would have been happier if his sainted Searchers had been subject to a bit more of the same skepticism that Easterly applies to the odious Planners. Not to diminish the "social entrepreneurs" whom Easterly celebrates, but their well-publicized efforts are a bit of a racket too. I've met with and marveled at some of the same African and Asian innovators Easterly applauds, but it is a tad utopian to think that these little examples will add up to big changes, absent the fundamental reforms for which Easterly has such scorn. For instance, he praises the success of an NGO called Population Services International in finding a way for poor Africans to make a profit distributing the bed nets that can prevent malaria. But surely the challenge for development economists is to find ways to replicate such efforts on a larger scale, which involves the dreaded "P" word.

What makes this book valuable is its devastating detail. Easterly, the author of an influential previous book, The Elusive Quest for Growth, has assembled overwhelming evidence of how little has been accomplished with the hundreds of billions of dollars in aid money, the thousands of advisory missions, the millions of reports and studies. Rebutting the "Big Push" idea favored by World Bank planners, he notes that 22 African countries spent $342 billion on public investment from 1970 to 1994 and received another $187 billion in foreign aid over that period. But the productivity gain from all this investment was zero. As an example of the Planners' folly, he cites the $5 billion spent since 1979 on a publicly owned steel mill in Nigeria that has yet to produce any steel.

Easterly's critique of the World Bank and the IMF is persuasive. He argues that the IMF's structural-adjustment lending -- in which indebted countries get more money on the condition that they agree to Planners' free-market reforms -- simply hasn't worked. One big reason is that the IMF, like the World Bank, is always fudging its failures, finding excuses for why past aid and advice haven't worked, discovering reasons to pump in even more assistance. Indeed, Easterly finds a freakish correlation between IMF interventions and failed states. He notes the role corruption has played in distorting foreign aid and the growing insistence of aid donors on "good governance." But he cautions that attempting to change political cultures from afar often produces a show of good governance -- like the 2,400 reports Tanzania must produce every year for aid donors -- rather than the real thing. The absurdity of this hortatory culture emerges in his observation that among the 185 actions recommended by the 2002 Johannesburg Summit on Sustainable Development was "efficient use of cow dung."

With all of Easterly's aid-bashing, one might imagine that he is a conservative promoter of market solutions. But some of his most powerful criticism is reserved for the Planners who advocated "shock therapy" free-market reforms in Eastern Europe and the former Soviet Union. Free markets can't be imposed from outside, he insists, citing the example of the inefficient Soviet-era plants that survived their entry into the market era via their communist bosses' genius for bartering and cronyism. "The Soviet-trained plant managers at the bottom outwitted the shock therapists at the top," he writes. He finds a similar failure of free-market diktats in Latin America. The best era for Latin American growth was 1950 to 1980, the heyday of state intervention, while growth slowed in the market-reform years of the 1990s. As a result, Easterly argues, "the backlash against free markets is unfortunately now gaining strength in Latin America."

So what works? Easterly's argument is that if it's imposed from the outside, almost nothing works -- in either the economic or political sphere. It's no accident, he argues, that the great East Asian economic success stories of recent decades -- Japan, China, Taiwan, South Korea, Thailand -- all took place in countries that were never successfully colonized by the West. These nations evolved their own cultures, rules and disciplines and built an indigenous foundation for rapid economic growth. The region's laggard is the one nation that was colonized: the Philippines.

Easterly's dissection of the interventionist impulse of the Planners is powerful. His enthusiasm for the bottom-up successes of the Searchers is less so. He's looking hard for something encouraging to say, but it's a measure of the potency of his corrosive analysis that the good news isn't very convincing.

Reviewed by David Ignatius

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.