$30,000. That is the sum at the heart of the nasty dispute that is consuming the World Bank, as an assortment of Democrats, journalists and World Bank officials work together to smear Bank president Paul Wolfowitz.
The facts are as follows: Wolfowitz, even before arriving at the World Bank, disclosed his personal relationship with Bank employee Shaha Riza to the Bank’s ethics committee. At first he tried to handle the conflict by offering to recuse himself from all personnel matters pertaining to Riza. But the committee advised Wolfowitz to reassign her to a position outside the Bank — for example, the State Department, which is where she ended up. This was done in order to give her a promotion for which she was due, and to resolve the matter with an eye toward compensating her in a way that recognized “her record and career perspectives.”
No one disputes any of these facts. The arguement, rather, concerns the size of the raise that accompanied Riza’s promotion. Wolfowitz says the ethics committee instructed him to compensate Riza for the disruption to her career, so he gave her what amounted to a 35.5-percent raise, bringing her yearly pay to $180,000. Notably, no one is arguing that $180,000 is an unusually high salary for a World Bank employee at Riza’s grade. What they are saying is that World Bank rules should have limited Riza’s raise to 12 percent, or $30,000 less than Wolfowitz agreed to.
Wolfowitz’s accusers — chief among them Ad Melkert, chairman of the ethics committee — now argue that the committee never approved a pay increase as large as the one Riza got. But Melkert doesn’t explain why he took no action when he received an anonymous e-mail over a year ago detailing the pay raise and objecting to it. Nor has Melkert offered an explanation of why, if the raise was so troubling, he wrote to Wolfowitz after receiving the anonymous e-mail and explained that, following “a careful review,” he had concluded that the allegation “did not contain new information warranting any further review by the committee.”
Wolfowitz’s accusers have also criticized him for his involvement in working out the details of Riza’s raise and promotion. But he says he had no choice. The ethics committee informed Wolfowitz that it could not take part in staff interactions, and that he would have to resolve the matter himself. Wolfowitz says that he protested, sensing the appearance of conflict this would create, but that the committee gave him unambiguous written instructions that “Xavier [Coll, the Bank’s vice president of human resources,] should act upon your instruction.”
After Wolfowitz publicly offered this defense, a spokesman for Melkert said: “Charges that Mr. Melkert somehow ‘made’ Mr. Wolfowitz get involved in Ms. Riza’s pay and promotion package are also false. The ethics committee presented Mr. Wolfowitz with options for avoiding a conflict of interest. Which option he chose, and how he chose to implement it, was completely up to Mr. Wolfowitz.”
Message: It was your choice to take our advice, and it’s our choice to use it against you now. Of course, it’s not difficult to imagine the storm of criticism that would have ensued if Wolfowitz had rejected the committee’s advice.
This looks suspiciously like a deliberate coup against Wolfowitz: First float the absurd charges against him, then argue that, whatever their merit, there is such a “cloud” over Wolfowitz that he can’t continue. Wolfowitz’s original sin, in the eyes of his critics, was supporting the Iraq war. He compounded this sin by campaigning against corruption in regimes to which the Bank lends money, thus challenging the Bank’s practice of judging its performance simply by how much money it shoves out the door.
This is not to say we endorse every aspect of Wolfowitz’s World Bank presidency. He has called for huge increases in foreign aid, even though such aid — good intentions notwithstanding — historically has done nothing so much as subsidize the world’s worst kleptocracies and backward economies. Like other forms of welfare, foreign aid fosters dependency. As long as the World Bank keeps writing the checks, broken governments in the developing world have little incentive to implement the difficult reforms needed to break the cycle. Cajoling countries to curb corruption or liberalize their markets, as Wolfowitz has done, is a commendable strategy, but it is not nearly as effective as turning off the aid spigot would be.
Europeans couldn’t care less about that, of course, as they pursue their power play against Wolfowitz. Several European nations are considering withholding their funds if Wolfowitz remains in office. The New York Times quoted a senior European development official as saying, “We are seeing countries becoming more hesitant. They are saying that they have a lot more options available for their money.” If it becomes impossible for Wolfowitz to remain at the World Bank, Bush should consider putting America’s money where the Europe’s mouth is. We certainly have “a lot more options” — and better ones — than the World Bank on which to spend it.