WORLD BANK MEETING Policy board tries to stay focused despite Wolfowitz
Sunday, April 15, 2007 1:04:00 PM
WASHINGTON (Thomson Financial) - World Bank officials are debating strategies here to overcome poverty and spur development, trying to stay focused on policy as speculation mounted on the fate of their embattled leader Paul Wolfowitz.
Wolfowitz, facing mounting pressure to resign, is due to appear at a news conference later, closing out the three day meetings here of top finance chiefs from the bank, the IMF and the Group of Seven industrialized powers.
While the weekend has featured much talk of currency volatility, trade liberalization, institutional reform and hedge-fund regulation, it was the fate of Wolfowitz -- and by extension the World Bank -- that has concentrated minds.
The 63-year-old bank chief is under fire from staffers and advocacy groups clamouring for his resignation after revelations he helped arrange a hefty pay hike for his partner, former World Bank press officer Shaha Riza, when she was transferred to the US State Department in 2005.
His future is now in the hands of the bank's 24-member executive board and Wolfowitz, who has admitted that mistakes were made in the promotion procedure, has pledged to abide by the panel's decision.
But the fear now in World Bank circles is that the turmoil will undermine the institution's core anti-poverty lending and development activities.
'The controversy is distracting the World Bank from its mission,' German Development Minister Heidemarie Wieczorek-Zeul told reporters.
Meanwhile, the UK's International Development Secretary Hilary Benn said 'this whole business has damaged the bank and should not have happened.'
US Treasury Secretary Henry Paulson, addressing the World Bank's policy-setting Development Committee on Sunday, argued that success in the fight against grinding poverty 'will require that we remain focused in our purpose and efficient in our methods.'
One initiative in particular under threat from the Wolfowitz affair is a campaign, actively backed by the bank head himself, to stamp out corruption in countries receiving World Bank loans.
But the programme had drawn sharp criticism even before the allegations of favouritism emerged and the campaign has had to be repeatedly watered down in the face of virulent opposition.
At the September meeting of the bank and IMF in Singapore major European powers such as Britain lined up with developing nations to assail Wolfowitz's strategy as misguided.
In going after graft, the World Bank risked jeopardizing its development work among some of the planet's most needy people, they argued.
While the bank executive board has backed the scheme, criticism has not gone away, as was apparent in remarks from some Development Committee members on Sunday.
'The bank must stick must unswervingly conform to its articles of agreement and mandate, stick to development as the bank's core mission, abide by the principle of non-politicisation (and) respect country ownership and leadership of its members,' insisted Chinese Vice Minister of Finance Li Yong.
Clearer support came from Spanish Finance Minister Pedro Solbes Mira who said that 'strengthening good governance and fighting corruption is necessary to reduce poverty.'
Canadian Finance Minister James Flaherty contended that the bank's credibility could be enhanced if greater attention were paid to the voices of developing countries.
Flaherty in particular cited the procedure under which the president of the bank is chosen, with the post traditionally reserved for a US citizen.
'The discussion in the bank should include consideration of how to improve transparency and accountability in selecting the president,' he said.
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The World Bank is becoming a joke. They are supposed to help poor underdeveloped countries and all the while they are increasing their salaries.
