Little African country learns important lesson: Do as rich countries do, not as they say

Ending Famine, Simply by Ignoring the Experts

Evelyn Hockstein for The New York Times

The secret of Malawi’s success: heavy subsidies for fertilizer, farmers say. The World Bank had pressed for their elimination. More Photos >

By CELIA W. DUGGER

Published: December 2, 2007

LILONGWE, Malawi — Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid.

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Ending Famine in Malawi

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Bumper Corn Harvest in Malawi

But this year, a nation that has perennially extended a begging bowl to the world is instead feeding its hungry neighbors. It is selling more corn to the World Food Program of the United Nations than any other country in southern Africa and is exporting hundreds of thousands of tons of corn to Zimbabwe.

In Malawi itself, the prevalence of acute child hunger has fallen sharply. In October, the United Nations Children’s Fund sent three tons of powdered milk, stockpiled here to treat severely malnourished children, to Uganda instead. “We will not be able to use it!” Juan Ortiz-Iruri, Unicef’s deputy representative in Malawi, said jubilantly.

Farmers explain Malawi’s extraordinary turnaround — one with broad implications for hunger-fighting methods across Africa — with one word: fertilizer.

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed this small, landlocked country to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.

Stung by the humiliation of pleading for charity, he led the way to reinstating and deepening fertilizer subsidies despite a skeptical reception from the United States and Britain. Malawi’s soil, like that across sub-Saharan Africa, is gravely depleted, and many, if not most, of its farmers are too poor to afford fertilizer at market prices.

“As long as I’m president, I don’t want to be going to other capitals begging for food,” Mr. Mutharika declared. Patrick Kabambe, the senior civil servant in the Agriculture Ministry, said the president told his advisers, “Our people are poor because they lack the resources to use the soil and the water we have.”

The country’s successful use of subsidies is contributing to a broader reappraisal of the crucial role of agriculture in alleviating poverty in Africa and the pivotal importance of public investments in the basics of a farm economy: fertilizer, improved seed, farmer education, credit and agricultural research.

Malawi, an overwhelmingly rural nation about the size of Pennsylvania, is an extreme example of what happens when those things are missing. As its population has grown and inherited landholdings have shrunk, impoverished farmers have planted every inch of ground. Desperate to feed their families, they could not afford to let their land lie fallow or to fertilize it. Over time, their depleted plots yielded less food and the farmers fell deeper into poverty.

Malawi’s leaders have long favored fertilizer subsidies, but they reluctantly acceded to donor prescriptions, often shaped by foreign-aid fashions in Washington, that featured a faith in private markets and an antipathy to government intervention.

In the 1980s and again in the 1990s, the World Bank pushed Malawi to eliminate fertilizer subsidies entirely. Its theory both times was that Malawi’s farmers should shift to growing cash crops for export and use the foreign exchange earnings to import food, according to Jane Harrigan, an economist at the University of London.

In a withering evaluation of the World Bank’s record on African agriculture, the bank’s own internal watchdog concluded in October not only that the removal of subsidies had led to exorbitant fertilizer prices in African countries, but that the bank itself had often failed to recognize that improving Africa’s declining soil quality was essential to lifting food production.

“The donors took away the role of the government and the disasters mounted,” said Jeffrey Sachs, a Columbia University economist who lobbied Britain and the World Bank on behalf of Malawi’s fertilizer program and who has championed the idea that wealthy countries should invest in fertilizer and seed for Africa’s farmers.

Here in Malawi, deep fertilizer subsidies and lesser ones for seed, abetted by good rains, helped farmers produce record-breaking corn harvests in 2006 and 2007, according to government crop estimates. Corn production leapt to 2.7 billion metric tons in 2006 and 3.4 billion in 2007 from 1.2 billion in 2005, the government reported.

“The rest of the world is fed because of the use of good seed and inorganic fertilizer, full stop,” said Stephen Carr, who has lived in Malawi since 1989, when he retired as the World Bank’s principal agriculturalist in sub-Saharan Africa. “This technology has not been used in most of Africa. The only way you can help farmers gain access to it is to give it away free or subsidize it heavily.”

“The government has taken the bull by the horns and done what farmers wanted,” he said. Some economists have questioned whether Malawi’s 2007 bumper harvest should be credited to good rains or subsidies, but an independent evaluation, financed by the United States and Britain, found that the subsidy program accounted for a large share of this year’s increase in corn production.

The harvest also helped the poor by lowering food prices and increasing wages for farm workers. Researchers at Imperial College London and Michigan State University concluded in their preliminary report that a well-run subsidy program in a sensibly managed economy “has the potential to drive growth forward out of the poverty trap in which many Malawians and the Malawian economy are currently caught.”

Farmers interviewed recently in Malawi’s southern and central regions said fertilizer had greatly improved their ability to fill their bellies with nsima, the thick, cornmeal porridge that is Malawi’s staff of life.

In the hamlet of Mthungu, Enelesi Chakhaza, an elderly widow whose husband died of hunger five years ago, boasted that she got two ox-cart-loads of corn this year from her small plot instead of half a cart.

Last year, roughly half the country’s farming families received coupons that entitled them to buy two 110-pound bags of fertilizer, enough to nourish an acre of land, for around $15 — about a third the market price. The government also gave them coupons for enough seed to plant less than half an acre.

Malawians are still haunted by the hungry season of 2001-02. That season, an already shrunken program to give poor farmers enough fertilizer and seed to plant a meager quarter acre of land had been reduced again. Regional flooding further lowered the harvest. Corn prices surged. And under the government then in power, the country’s entire grain reserve was sold as a result of mismanagement and corruption.

Mrs. Chakhaza watched her husband starve to death that season. His strength ebbed away as they tried to subsist on pumpkin leaves. He was one of many who succumbed that year, said K. B. Kakunga, the local Agriculture Ministry official. He recalled mothers and children begging for food at his door.

“I had a little something, but I could not afford to help each and every one,” he said. “It was very pathetic, very pathetic indeed.”

But Mr. Kakunga brightened as he talked about the impact of the subsidies, which he said had more than doubled corn production in his jurisdiction since 2005.

“It’s quite marvelous!” he exclaimed.

Malawi’s determination to heavily subsidize fertilizer and the payoff in increased production are beginning to change the attitudes of donors, say economists who have studied Malawi’s experience.

The Department for International Development in Britain contributed $8 million to the subsidy program last year. Bernabé Sánchez, an economist with the agency in Malawi, estimated the extra corn produced because of the $74 million subsidy was worth $120 million to $140 million.

“It was really a good economic investment,” he said.

The United States, which has shipped $147 million worth of American food to Malawi as emergency relief since 2002, but only $53 million to help Malawi grow its own food, has not provided any financial support for the subsidy program, except for helping pay for the evaluation of it. Over the years, the United States Agency for International Development has focused on promoting the role of the private sector in delivering fertilizer and seed, and saw subsidies as undermining that effort.

But Alan Eastham, the American ambassador to Malawi, said in a recent interview that the subsidy program had worked “pretty well,” though it displaced some commercial fertilizer sales.

“The plain fact is that Malawi got lucky last year,” he said. “They got fertilizer out while it was needed. The lucky part was that they got the rains.”

And the World Bank now sometimes supports the temporary use of subsidies aimed at the poor and carried out in a way that fosters private markets.

Here in Malawi, bank officials say they generally support Malawi’s policy, though they criticize the government for not having a strategy to eventually end the subsidies, question whether its 2007 corn production estimates are inflated and say there is still a lot of room for improvement in how the subsidy is carried out.

“The issue is, let’s do a better job of it,” said David Rohrbach, a senior agricultural economist at the bank.

Though the donors are sometimes ambivalent, Malawi’s farmers have embraced the subsidies. And the government moved this year to give its people a more direct hand in their distribution.

Villagers in Chembe gathered one recent morning under the spreading arms of a kachere tree to decide who most needed fertilizer coupons as the planting season loomed. They had only enough for 19 of the village’s 53 families.

“Ladies and gentlemen, should we start with the elderly or the orphans?” asked Samuel Dama, a representative of the Chembe clan.

Men led the assembly, but women sitting on the ground at their feet called out almost all the names of the neediest, gesturing to families rearing children orphaned by AIDS or caring for toothless elders.

There were more poor families than there were coupons, so grumbling began among those who knew they would have to watch over the coming year as their neighbors’ fertilized corn fields turned deep green.

Sensing the rising resentment, the village chief, Zaudeni Mapila, rose. Barefoot and dressed in dusty jeans and a royal blue jacket, he acted out a silly pantomime of husbands stuffing their pants with corn to sell on the sly for money to get drunk at the beer hall. The women howled with laughter. The tension fled.

He closed with a reminder he hoped would dampen any jealousy.

“I don’t want anyone to complain,” he said. “It’s not me who chose. It’s you.”

The women sang back to him in a chorus of acknowledgment, then dispersed to their homes and fields.

Original article posted here.

The Dying Role of the World Bank and the IMF, and the Birth of the Bank of the South

Bank of the South: Toward Financial Autonomy

Written by Raúl Zibechi

The launch of the Bank of the South is an ambitious and strategic gambit in regional integration, one that could result in a truly regional development bank. Despite Brazilian concerns, this new institution is ready to be launched.

"Positive," Joseph Stiglitz, Nobel Laureate in Economics, concluded in a recent speech to the Argentine business association in Buenos Aires. He noted that the new Bank of the South (BoS) would allow South American nations to assist each others' economies, adding that a major obstacle for emerging markets is a lack of long-term financing, and development banks have been successful in the past at filling this void.

On May 22 in Asunción Paraguay, the six founding states—Argentina, Brazil, Bolivia, Paraguay, Ecuador, and Venezuela—reached an agreement on the Bank of the South after two months of negotiations. The BoS will begin operations in 2008. It was to be formally presented to the public in the next presidential summit in Venezuela on June 26, although the date has been delayed. Unlike the International Monetary Fund (IMF) and World Bank, the BoS assigns a single vote to each member country, independent of the size of its financial contribution.
The First Steps

Venezuelan president Hugo Chávez initially proposed the idea of the Bank of the South. Argentine president Nestor Kirchner soon followed suit.

The first step was to throw down the gauntlet. Chávez and Kirchner did this on Feb. 21 in Puerto Ordaz, Venezuela, during the inauguration of the first active oil well in a joint venture between their two state energy companies, Energia Argentina S.A. (Enarsa) and Petroleos de Venezuela S.A. (PDVSA).

The two presidents proposed creation of an institution to quickly and effectively finance regional development projects in a more independent manner. Currently there are two regional banks. The River Plate Basin Financial Fund (FONPLATA), consisting of Argentina, Bolivia, Brazil, Paraguay, and Uruguay, has a mere US$410 million at its disposal. The Andean Promotional Corporation (CAF) manages US$10.5 billion, available for investment in infrastructure. Both banks are related to the World Bank and the IMF, and are structured along the same lines.

During the annual governing meeting of the Inter-American Development Bank (IADB), held in March 2007 in Guatemala, the Argentine and Venezuelan finance ministers made some progress on technical matters and solidified objectives for the proposed institution. In early May, representatives of the six countries reached a consensus known as "The Quito Declaration" that proposed the creation of the Bank in the first quarter of 20071. They also agreed to a stabilization fund designed to aid countries suffering international speculative attacks, and to develop a regional currency. The critical challenge was bringing Brazil on board.
Difficulties and Obstacles

There are two countries professing left-wing progressive governments that are notably absent from the bank's founding members—Chile and Uruguay. The former has a bilateral trade agreement with the United States and applies neoliberal economic policies. The latter, although a full member of the South American Common Market (Mercosur), has serious political issues with its neighbors, Brazil and Argentina. Uruguay has collided repeatedly with Brazil on trade issues and resents the fact that its powerful neighbor announced its refusal to accept Uruguay's intention of signing a unilateral trade agreement with the United States. In Argentina's case the main issue is a dispute over a new paper pulp mill built on the Uruguayan bank of the river that forms Uruguay's western border with Argentina.

Another difficulty relates to the situation in Brazil. Brazil already has its own development bank, the National Bank of Social and Economic Development (BNDES), and does not need to create a new regional financial entity. It may also be that Brazil would be required to supply more funds than it might expect to receive.

The BNDES currently handles more funds than all other regional development organizations put together, including the IADB2. For this reason Brazil is leaning toward the reactivation of currently existent banking entities.

Despite frictions on economic issues, the main problems confronting the Bank of the South are political. In May two positions evolved: the first was that of the Venezuelan and Argentinean finance ministers, the second, that of Ecuador. Each group drafted documents reflecting their views. According to the Ecuadorian documents, the joint Argentine/Venezuelan position lacked environmental protection, cultural, and educational policies. Furthermore it took the position that each nation's vote should be allotted according to the funds provided. In general their criticism was that much of the proposed ordinances were carbon copies of those of the World Bank, the IMF, and the IADB3.

The document presented by Ecuador proposed three pillars: a regional monitory fund, the BoS, and a regional currency. It bases these on the guiding principle that "the implementation of economic instruments should bring about the guarantee of fundamental human rights."4 This perspective implies that the bank's clients should not be large corporations; rather it should give loans "to the public sector, to small producers, to local communities, to municipalities, and to states or provinces."5

Finally the document asserts that BoS should not be a behemoth like the World Bank with its 13,000 employees, and it should account for operations and activities on an annual basis. It required an annual public debate for the bank to explain its activities to the citizenry whose taxes it used.

The two concepts of the BoS are clearly contradictory and it does not seem possible to arrive at a consensus. To date all parties have agreed to some of the Ecuadorian proposals, such as equal voting rights. What remains to be decided is whether the bank has responsibility for intervening in financial crises (à la IMF) or whether it be viewed as a partner in economic development.

Brazil and Argentina are working toward a regional currency for Mercosur countries within the next four years. This year the two countries will launch a bilateral exchange of currencies. Whatever happens, it seems clear that the foundation and consolidation of the BoS shall depend on the ongoing volition of regional governments. Also necessary is that the majority of the countries involved maintain their current political orientation, which is not a sure thing, especially in the case of the all-important Brazil.
A New Financial Architecture

The founding documents of the BoS propose the creation of a financial architecture that will bring greater autonomy to the region, buffering it from international capital markets. "To break the vicious circle of financing in the region, where our reserves are placed in northern banks at interest rates below what we are charged when they lend to us," the document states6. In short, the new bank offers the dual benefits of escaping the financial controls exercised by developed countries and capital markets. The six member countries currently have US$164 billion deposited in northern developed countries.

In some ways, the Bank of the South forms part of the process of distancing their economies from neoliberal economic policy that has characterized many of the countries in the region to one degree or another. In 2006 both Brazil and Argentina paid off their IMF loans ahead of schedule and began to withdraw in practice from that institution. Last March, the eleven countries of the Union of South American Nations (formerly the CSN) proposed the creation of a regional stabilizing fund of US$5 billion7 to prevent speculative attacks on national currencies. According to the member countries, this was a means to avoid dependence on the IMF in crisis situations, thereby creating a complementary mechanism to that proposed in the Bank of the South.

Nevertheless, in order to comply with its charter the BoS should not simply play a regional financial role but should counteract the effects of decades of deregulation and reduced economic protection. Neoliberalism is not just an economic creed but a determining factor in all facets of society. For that very reason the BoS cannot limit itself to competing with the IADB, the World Bank, and the CAF in financing development projects, but should instead question the core definition of the term "development" as understood by these organizations8.

To begin with, the new bank should confront the process of converting the planet into an object of international finance, which is a key precept of neoliberal policy. Also, it should provide an impetus for development based on sovereignty of the peoples and integration that is not founded on free market precepts but on egalitarian and fraternal relations between peoples, regions, and nations.

As such, the financing of large infrastructure projects—one of the main themes for all regional banks—should give priority to internal development. Until recently, the common interpretation of the term infrastructure was that of finding the best way to link regional countries with markets in the developed world to export their raw materials to serve multinationals and northern markets.

Argentine economist Aldo Ferrer writes, "The Bank of the South should not be considered as an alternative to the IMF purely in the sense of its financial operations, instead it should be viewed as a bank for investment in technological and social change.9" Energy will be one of the first priorities of the new bank and one of its first projects will be to finance the proposed South American Gas Pipeline, which will link Venezuela with Argentina, passing through Brazil. This will be a real regional integration project because the gas transport is oriented toward regional economic development as opposed to exporting it to markets in the developed world.

Finally the Bank of the South can play a decisive role in reuniting a region divided by decades of neoliberalism. To implement the neoliberal model, its main beneficiaries—the financial institutions and monopolistic corporations—have weakened or dismantled the power of the nation state. It may be that one of the primary tasks of the BoS could be rebuilding state control and regulations10.

These types of questions are at the center of the Latin American regional agenda. The Bank of the South should not be considered an end in itself but rather a tool to further the changes currently underway. This is its main potential. It is coming into being to accomplish this, and all other tasks should be considered secondary.

It will be, above all, a different kind of bank: its members shouldn't see it as a way of advancing their personal careers, its funds should not be destined to accumulate maximum earnings but dedicated to fulfilling the needs of the peoples and those who have historically been excluded.
End Notes

1. The Quito Declaration can be found at: http://www.cadtm.org/
2. Brazil's BNDES has US$120 billion for use strictly within Brazil and the IADB has US$100 billion for the whole region.
3. See Eric Toussaint's article, co-editor of the Ecuadorian document.
4. Ibid.
5. Ibid.
6. Argentine newspaper La Nación, March 25, 2007.
7. Argentine newspaper Página 12, March 17, 2007.
8. See: Pablo Dávalos, ob. cit.
9. Mercosur press agency, May 26, 2007.
10. Ibid.

Translated for the IRC Americas Program by Tony Phillips.

Raúl Zibechi is a member of the Editorial Council of the weekly Brecha in Montevideo, Uruguay, a teacher and researcher focused on social movements at the Multiversidad Franciscana de América Latina, and adviser to social groups. He is a monthly collaborator of the Americas Program (www.americaspolicy.org).


For More Information

Mercosur Press Agency: www.prensamercosur.com.ar

Eric Toussaint, "Sobre las circunstancias que afectan a la creación del Banco del Sur", www.cadtm.org.

Javier Blanco, "Los financiamientos regionales son ¿un castillo de arena?", 'La Nación', Buenos Aires, March 25, 2007.

Pablo Dávalos, "Banco del Sur: ruta hacia una nueva arquitectura financiera", ALAI Press Agency, March 16, 2007, available at www.alainet.org.

Original article posted here.

Shuffling fascists and cronies

World Bank Report on Wolfowitz' Corruption

Full report here.

Wolfowitz's Blame Game

by Harkavy

If the time finally comes when Paul Wolfowitz is forced to publicly account for his role as chief architect of the Iraq invasion, look for him to blame everyone else but himself.

He'll blame his attackers. And if he can possibly do so, he might very well blame his girlfriend. That's what he's doing in his wrangle with the World Bank.

The World Bank panel's final report on Wolfowitz's shoddy, unethical behavior regarding his sweetheart deal for his sweetheart, Shaha Ali Riza, heavily criticizes Wolfowitz from dragging the institution through the mud. And it, in effect, brands him a liar.

So, don't wait for his book on Iraq — or for his 60 Minutes interview touting that book. Go right to the bank panel's report on the tenets Wolfie followed. I noted late yesterday some of the panel's harsh findings.

A closer look at the report confirms that Wolfowitz never had any business being "selected" (named by Dick Cheney and the others for whom George W. Bush is front man) to head the World Bank in the spring of 2005.

Fresh from helping initiate the invasion of Iraq, in which the U.S. flouted international rules of conduct, Wolfowitz apparently believed that the World Bank's rules didn't apply either. From the bank's Ad Hoc Group investigating panel:

The Ad Hoc Group would note that the documents it has reviewed leave the Group with the impression that Mr. Wolfowitz, from the outset, challenged the way in which the Bank's internal governance rules regarded personal relationships.
The report continues:

Mr. Wolfowitz regarded the relationship [with his girlfriend] as possibly giving rise to an "appearance" of a conflict of interest. In the view of the Ad Hoc Group, the relationship he disclosed went beyond creating an "appearance" and gave rise to an "actual" conflict. By resisting the Bank's prohibition on "professional contact" and arguing that recusal only from personnel matters would suffice, Mr. Wolfowitz placed himself, in a matter in which he had a personal interest, in opposition to the established legal framework of the institution he had been selected to head and in a conflict of interest situation even in the domain where he had proposed to recuse himself.

When the whole situation started to unravel (started initially by my September 2005 story about his sweetheart's sweetheart deal to go work with Cheney's daughter Liz at the State Department), Wolfowitz responded like any other petty despot: He attacked his attackers. The bank panel notes:

The Group is troubled by Mr. Wolfowitz's own public statements as well as those of his lawyer made on his behalf . . . Of greater concern to the Group is the attitude it reveals about the nature of the process currently underway. It has turned an internal governance matter into an ugly public relations campaign in which Mr. Wolfowitz believes he is being publicly attacked and therefore has resorted to public attacks of his own which denigrates the very institution he was selected to lead. The statements ridicule the governance framework and process established by the 185 member countries of the Bank.

The Ad Hoc Group believes that this is of concern for a variety of reasons: 1) it places Mr. Wolfowitz's personal interests ahead of institutional interests; 2) it casts Mr. Wolfowitz as an adversary of the World Bank when, as noted above, the process underway should not be regarded as adversarial; 3) it results in the institution being seen in a bad and unfair light in the public eye; and 4) it has produced an environment that, put mildly, is not conducive to maximum work efficiency or positive staff morale.

The Group believes that the President's actions are inconsistent with his obligation to "maintain the highest standards of integrity in [his] personal and professional conduct and observe principles of good governance" as required by the Code of Conduct.
Principles? Codes? Wolfie's current position is laughable. As the report says (and as I noted yesterday):

Mr. Wolfowitz has taken the position that there were no rules that applied to the situation, and therefore no rules could have been broken in resolving the matter as he did.
The bank panel says he couldn't be more wrong about that:

Instead of setting the example of adhering to the highest (and in this case well-established) standards, he initiated a negotiation with the institution he was to lead and then sought to dilute the standard the Bank had adopted for itself. The Ad Hoc Group is troubled by these actions coming as they do from the person responsible for setting the "tone at the top" and the example that all staff should follow.
Shaha Riza is bound to be troubled, too. Wolfie claimed to the bank's investigating panel that the bank's ethics panel was afraid to deal with Riza because she was "angry and upset" over her past treatment. Hey, Wolfie, stop projecting. You're the one who's afraid of her temper. But, true to your bungling, you're just going to make her madder by thus blaming her for part of this situation.

You don't have to be a psychologist to parse this passage in Peter Goodman's story in this morning's Washington Post:

The ethics committee told Wolfowitz he could not directly supervise Riza, who also worked at the bank, after he arrived in 2005. He said, however, that the panel declined to oversee her job transfer and compensation, instead ordering him to handle those tasks.

"Its members did not want to deal with a very angry Ms. Riza, whose career was being damaged as a result of their decision," Wolfowitz said in his response to the investigating committee's report. "It would only be human nature for them to want to steer clear of her."
Wolfie sounds as if he speaks from experience. She gets that pissed off, eh? Wait till she reads the report and sees that you have blamed her supposed wrath for your own foolish actions.

Maybe that will solve the conflict of interest problem. No girlfriend, no conflict of interest. Case closed.

No, that won't happen — publicly, at least. The next big thing to happen publicly will be Wolfowitz's exit from the bank. But the longer he stays around, the more difficult it is to get him to withdraw gracefully.

Kind of like Iraq.

Original article posted here.

Little monkey Wolfowitz throwing feces against the wall

Angry Wolfowitz in four-letter tirade

Richard Adams in Washington

An angry and bitter Paul Wolfowitz poured abuse and threatened retaliations on senior World Bank staff if his orders for pay rises and promotions for his partner were revealed, according to new details published last night.

Under fire for the lavish package given to Shaha Riza, a World Bank employee and Mr Wolfowitz's girlfriend when he became president, an official investigation into the controversy has found that Mr Wolfowitz broke bank rules and violated his own contract – setting off a struggle between US and European governments over Mr Wolfowitz's future.

Sounding more like a cast member of the Sopranos than an international leader, in testimony by one key witness Mr Wolfowitz declares: "If they fuck with me or Shaha, I have enough on them to fuck them too."

The remarks were published in a report detailing the controversy that erupted last month after the size of Ms Riza's pay rises was revealed. The report slates Mr Wolfowitz for his "questionable judgment and a preoccupation with self-interest", saying: "Mr Wolfowitz saw himself as the outsider to whom the established rules and standards did not apply."

The report brushed off Mr Wolfowitz's defence that he thought he had been asked to arrange Ms Riza's pay package, observing that "the interpretation given by Mr Wolfowitz ... simply turns logic on its head".

The investigators have sent their completed report to the bank's governing board, containing a string of withering criticisms of Mr Wolfowitz's behaviour and casting doubt on his ability to continue running the bank, a multibillion-pound international agency with 12,000 staff based in Washington.

According to the report, Mr Wolfowitz's actions "had a dramatic negative effect on the reputation and credibility" of the bank.

It concluded that "the damage done to the reputation of the World Bank group" should lead the bank's board to "consider whether Mr Wolfowitz will be able to provide the leadership needed to ensure that the bank continues to operate to the fullest extent possible".

It also said: "Mr Wolfowitz's contract requiring that he adhere to the code of conduct for board officials and that he avoid any conflict of interest, real or apparent, [was] violated."

Despite the weeks of turmoil within the bank, Mr Wolfowitz may still keep his job if the US government is prepared to stick by him.

Mr Wolfowitz still enjoys support from the Bush administration, where he served as deputy defence secretary at the Pentagon during the invasion of Iraq.

Yesterday vice president Dick Cheney defended Mr Wolfowitz, saying: "Paul is one of the most able public servants I've ever known .... I think he's a very good president of the World Bank, and I hope he will be able to continue."

The US treasury secretary, Hank Paulson, was yesterday said to also be drumming up support for Mr Wolfowitz, while European governments increasingly despair of US intransigence in allowing Mr Wolfowitz to hang on.

The angry comments attributed to Mr Wolfowitz came from damning testimony by Xavier Coll, head of human resources at the bank, who provided investigators with his notes of a meeting with Mr Wolfowitz last year. The notes directly contradict Mr Wolfowitz's assertions that the details of Ms Riza's treatment were properly shared with senior bank officials.

In March last year, when a mention of Ms Riza's secondment outside the bank to avoid rules about partners was first published in the magazine US News & World Report, an angry Mr Wolfowitz accused Mr Coll of leaking the information.

According to Mr Coll's notes: "At the end of the conversation Mr Wolfowitz became increasingly agitated and said that he was 'tired of people ... attacking him' and 'you should get your friends to stop it'. Mr Wolfowitz said, 'If they fuck me or Shaha, I have enough on them to fuck them too'," naming several senior bank staff he felt were vulnerable.

Mr Wolfowitz appears before the bank's executive board today to make a final defence of his actions, with the board meeting tomorrow to consider the report and make a statement later in the week.

With Mr Wolfowitz so far refusing to step down, the board may need to take radical action to break the stalemate. Members have discussed a range of options, including sacking Mr Wolfowitz, issuing a vote of no confidence or reprimanding him. Some board members argue that a vote of no confidence would make it impossible for him to stay in the job.

Original article posted here.

How many people need to tell this bastard to go home?

World Bank board majority want Wolfowitz to resign

By Lesley Wroughton

WASHINGTON (Reuters) - A majority of countries on the World Bank board believe Paul Wolfowitz should resign as President of the World Bank, bank board sources from rich and developing nations said on Friday.

"It is now very clear that a majority of members think Mr. Wolfowitz must resign," said one board source from a developing country, which received instructions from its capital this week not to support Wolfowitz's continued leadership.

"We believe that the World Bank cannot continue under the leadership of Mr. Wolfowitz," the source told Reuters.

The bank's 24-nation board this week delayed a final decision until next week over Wolfowitz's future, which hangs in the balance over a pay and promotion deal he approved for his companion, Shaha Riza, a World Bank Middle East expert.

The high-paying promotion sparked calls by the bank's employee association for Wolfowitz to resign and has paralyzed the institution, the globe's largest poverty-fighting agency.

Wolfowitz has said he took the advice of the board's ethics committee on Riza and that the row is part of a smear campaign designed to undermine his leadership.

Asked how many member countries thought Wolfowitz should resign, the source told Reuters: "More than 50 percent."

But another board official from a developed country cautioned that Wolfowitz's departure was not yet a foregone conclusion and he should be given time to respond properly to findings by a panel that his actions in the Riza's promotion broke bank rules.

He is expected to present his response to the panel by the end of the day today.

It was unclear whether the meeting of the board will decide Wolfowitz's future by consensus or whether it may be forced into a vote, which would be an unusual move.

There is concern among some board officials that a vote could further divide the bank by pitting allies of the United States against Europe and its supporters.

IRAQ WAR ARCHITECT

The official said among the issues being weighed by member countries was whether Wolfowitz's continued leadership of the World Bank would damage its ability to raise funds for anti-poverty projects, hurt the morale of the staff and further damage the bank's reputation.

The row over Wolfowitz has stirred lingering unhappiness, mainly among European countries, about his nomination to the job in 2005 because of his role as architect of the Iraq war.

Despite the private disquiet among Europeans at the time, Wolfowitz's appointment to the bank was confirmed without dissent on March 31, 2005. He has remained a controversial figure, locking horns with the bank's membership on such issues as his good governance and anti-corruption campaign.

Board sources said Canada and Japan would support the United States in its backing for Wolfowitz together with countries in Africa, where Wolfowitz has focused much of his attention.

The sources said Europe's push for Wolfowitz to resign was supported by Brazil, South Korea, India, Russia, Argentina, Saudi Arabia and Kuwait.

Exactly where China, Malaysia, Pakistan and Mexico stood remained unclear.

The White House has repeated almost daily that U.S. President George W. Bush has confidence in Wolfowitz, but this week referred the matter to the U.S. Treasury Department, which is responsible for U.S. World Bank policy.

U.S. Treasury Secretary Henry Paulson has stressed that it is important to preserve the World Bank's standing in the world and that Wolfowitz deserved a fair process.

U.S. Secretary of State Condoleezza Rice has been quietly discussing the issue with her European counterparts as recently as Thursday, according to a European source.

Rice's access to European capitals provides an opportunity for the Bush administration to gauge how serious the opposition is to Wolfowitz's continued leadership.

Original article posted here.

How many people need to tell this rat to scram?

MEPs call on Wolfowitz to resign

European pressure on Mr Wolfowitz is growing

The European Parliament has added its voice to those calling on World Bank boss Paul Wolfowitz to resign over a promotion row involving his partner.

MEPs voted by 332 to 251 to ask Germany, which currently holds the EU Presidency, to call for his departure at next week's EU-US summit.

Their resolution states his resignation would be a "welcome step" in supporting the body's anti-corruption strategy.

Mr Wolfowitz is accused of intervening to secure a big salary for Shaha Riza.

'Undermining policy'

The former US deputy defence secretary has been under pressure since it emerged that he sought a promotion and a $200,000 (£100,000) salary for Ms Riza in 2005.

Mr Wolfowitz has apologised for his actions and pledged "major changes" in the way that his office is run in light of the episode.

But his position at the head of the global lending body remains insecure with unions, former bank officials and politicians across Europe calling for him to step down.


Our message for him must be it is time for you to go
Graham Watson, MEP

He has hired a leading US lawyer to defend him while the Bank's board of directors considers his long-term future.

The motion passed by the European Parliament stated that Mr Wolfowitz's "withdrawal from the post would be a welcome step towards preventing the bank's anti-corruption policy from being undermined".

During a debate on the issue, a succession of MEPs called on him to stand down.

"Our message for him must be it is time for you to go," said Graham Watson, leader of the liberal and democrats' alliance.

Martin Schulz, leader of the socialist group, said Mr Wolfowitz's position was "untenable".

US support

The parliament's action is likely to have little direct impact on Mr Wolfowitz's fate.

But its symbolic significance will renew the pressure on the World Bank ahead of President George W Bush's meeting with European Commission President Jose Manuel Barroso and German Chancellor Angela Merkel on 30 April.

The US government, a powerful voice within the World Bank, has backed Mr Wolfowitz, saying that it has "full confidence" in him.

Original article posted here.

One less string holding up dangling Wolfie

Germany says Wolfowitz situation unacceptable

BERLIN (Reuters) - Germany believes Paul Wolfowitz's position at the helm of the World Bank has become unsustainable, a German minister was quoted as saying on Sunday.

Wolfowitz, a former U.S. deputy defense secretary who helped plan the invasion in Iraq, has faced calls by World Bank staff to step down and questions about his leadership over his handling of a promotion he approved for his girlfriend.

"The situation, as it is, is no longer acceptable," German Development Minister Heidemarie Wieczorek-Zeul, told the Financial Times Deutschland (FTD), in an early release of an article to run in its Monday edition.

"My conclusion is that Wolfowitz should do the bank a service and take the consequences himself. The sooner, the better."

The FTD headline to the story read: "Government expects Wolfowitz's resignation". Wieczorek-Zeul is Germany's minister responsible for World Bank issues.

Wolfowitz, whose appointment to the World Bank presidency in mid-2005 was controversial because of his role as an architect of the Iraq war while at the Pentagon, has refused to step down.

The U.S. government has backed Wolfowitz and urged leading European countries to withhold judgment until the World Bank's 24-nation board decides on his future.

Original article posted here.

The latest hypocrisy and corruption of the neo-Con

World Bank board debates Wolfowitz's fate

Richard Adams in Washington
Friday April 13, 2007
Guardian Unlimited

Paul Wolfowitz's position as head of the World Bank looked increasingly untenable today after he was forced to retreat from a meeting after being booed by his employees and the bank's governing board met overnight to decide his fate.

The 24-member executive board met late into the evening yesterday debating how to handle the matter. At around 10pm Washington time, the bank released a letter sent by Mr Wolfowitz to the board, asking that "all the documents related to the board's current review of the case" be made public - prompting another round of discussions.

The unprecedented events, amid calls for his resignation, were the latest twist in the saga that saw Mr Wolfowitz yesterday repeatedly apologise for his role in arranging a promotion and pay rises for his partner, in possible violation of bank rules.

Mr Wolfowitz's position was further undermined by a tepid response from the Treasury, which deals with the bank for the US government. Asked if the Treasury had confidence in Mr Wolfowitz, a senior official said: "There is a mechanism in place, and I am going to allow that mechanism to work rather than inject myself into the middle of it."

Attempting to address around 200 World Bank employees gathered in the atrium of the bank's plush Washington headquarters yesterday afternoon, Mr Wolfowitz quickly left after a knot of staff began chanting "resign, resign" while others also hissed and booed.

One staff member who was in the atrium said: "To see the bank's president being heckled by his own staff was amazing. He looked shocked, very shocked, by the reaction and the anger."

Earlier, the bank's staff association - which represents the majority of the bank's Washington-based employees - called on Mr Wolfowitz to "act honorably and resign", saying it was "impossible for the institution to move forward with any sense of purpose under the present leadership".

Alison Cave, the head of the staff association, said: "The president must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank and has destroyed the staff's trust."

Calls mounted for his resignation after revelations this week that Mr Wolfowitz personally intervened to secure a substantial pay rise - from $132,660 to $193,590, tax free - for his girlfriend Shaha Riza, a bank employee, when Mr Wolfowitz was first appointed president in 2005. Bank rules forbid couples from working together.

Mr Wolfowitz wrote a memo to the bank's head of human resources detailing salary increases for Ms Riza - contradicting earlier claims that the matter was dealt with by others.

Aid agencies said the controversy was distracting the institution from carrying out its role as a leader in development at a vital time. "The world's poor cannot afford a lame duck president at the World Bank," said Oxfam.

In a strongly worded editorial, the Financial Times also called on Mr Wolfowitz to stand down. Calling the controversy "lethal" to the bank's credibility, the paper's leader column said: "In the interests of the bank itself, he should resign. If he does not, the board must ask him to go."

During a highly charged press conference in Washington, Mr Wolfowitz apologised for becoming involved in his girlfriend's compensation, but denied that he had done so voluntarily or for personal reasons. "In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations," he said.

Mr Wolfowitz's fate now lies in the hands of the bank's executive board members, each representing the World Bank's major donor nations, ranked by shares reflecting the importance of their stake. The bank's regulations allow the president to be dismissed by a simple majority of votes by shareholders - the US being the largest with 16% of shares.

So far, individual countries have not voiced any public support for Mr Wolfowitz, with executive board members awaiting instructions from their country's finance ministers, who are gathering in Washington this weekend for meetings.

While there is a real possibility the board will ask Mr Wolfowitz for his resignation, or otherwise make his position untenable, it may simply reprimand Mr Wolfowitz, thus allowing him to step down in a few months time when attention has died away.

A controversial figure since his role as a leading advocate of the US invasion of Iraq, during his time as deputy defence secretary in the Bush administration, Mr Wolfowitz was appointed by President Bush to the post at the World Bank.

That appointment, and Mr Wolfowitz's subsequent behaviour, has strengthened calls for changes to be made to the way that the World Bank's president is appointed, with aid agencies such as Oxfam calling for the appointment to be made on merit.

The whole affair is a huge embarrassment for the bank and Mr Wolfowitz, especially given his desire for a tough stance against corruption and rewards for good governance. Critics say that Mr Wolfowitz's own actions have now made a mockery of those aims.

Original article posted here.