Dr. Wolfowitz, I Presume

PAUL A. GIGOT – The Wall Street Journal

Copyright The Wall Street Journal
September 24, 2005; Page A10
NEW YORK — When Paul Wolfowitz returned to the World Bank from a trip to Africa in June, he made a presentation to his staff. “I made the mistake of calling on the first questioner, somebody who was obviously even older than I am,” recalls the 61-year-old but freshly minted World Bank president in an interview. “And he said, ‘I’ve been around since 1972 and we’ve heard all this stuff before.'”
Welcome to the soaring idealism of the world’s greatest “development” body. When President Bush appointed Mr. Wolfowitz to run the World Bank last spring, liberal critics quickly attributed it to cynical politics — rewarding an architect of the Iraq War, turning the Bank into a tool of U.S. foreign policy. Mr. Wolfowitz would never say this (or even agree with it), but I think the truth is closer to the opposite.
He’s the idealist. The World Bank is the land of lifers and experts who’ve seen and heard it all before. His mission — since he’s been crazy enough to accept it — is to make the world’s largest development bank believe once again that it really can help the poor. It certainly would be one of history’s larger ironies if the man so reviled by the political left ended up helping more people than all of those who spend their lives attending U.N. conferences.
Regarding his staff skeptic, Mr. Wolfowitz says he replied, “I don’t think so. I don’t think you ever really heard African leaders talking about the essential need to combat corruption. I don’t think you’ve seen African leaders, the way the president of Nigeria recently did, jailing the inspector general of police on corruption. I don’t think you’ve seen things like the president of South Africa dismissing the deputy president because his financial adviser took a bribe, by the way, from a company from a developed country.”
He speaks softly — a trait that can disarm critics who have never met him — but also intensely. “I think, at least in significant parts of Africa, there is something new. I profoundly hope there is something new, because I don’t think it’s healthy for the world for 600 million people to be sinking into deeper misery, which admittedly they are.”
No, it’s not healthy at all. But why would Paul Wolfowitz think that he can do something about it? And why leave a job as deputy secretary of defense — arguably the most famous deputy secretary in American history — to run a bureaucracy notoriously resistant to change and known for chewing up its previous presidents?
The answer includes a desire to finish his career as something more than a loyal number two. Especially after Mr. Bush declined to name him national security adviser — a mistake — the Bank job was at least a chance for Mr. Wolfowitz to run his own show. More than a few of his friends also thought it was time he got out from under Defense Secretary Donald Rumsfeld, who didn’t always agree with his deputy about Iraq strategy. (Mr. Wolfowitz won’t comment on that one.) But there’s also the possibility that he really does believe this stuff about helping Africa, which he is making his top priority at the Bank.
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I’d be more skeptical myself if I hadn’t seen him in action for the last 20 years. We first met in Asia, when he was an assistant secretary of state and I was a reporter in Hong Kong. That’s when I discovered his belief in the strategic uses of democracy, when he helped to fashion the U.S. policy that eased Ferdinand and Imelda Marcos from power in the Philippines, with barely a shot fired.
Next I watched him focus on Iraq over the decade after Saddam Hussein was allowed to retain the helicopters that slaughtered the Shiites and kept him in power. Mr. Wolfowitz was in the Pentagon at the time and has believed ever since that, if we didn’t take out Saddam Hussein, the dictator would someday take his revenge on us. In his new job representing the world, Mr. Wolfowitz has taken a vow of near-silence on Iraq. But suffice it to say he still believes toppling Saddam was the right thing to do.
“I just heard today from Ann Clwyd,” a British Labour politician recently in Iraq, he says, and she “was telling me about the work of the Free Prisoners Association, which documents the death certificates of people executed . . . and she said it’s over 300,000. I mean, if you think it’s bad now — the silence of the world in the face of what was going on before is just stunning.”
A skeptic — never mind a Bank cynic — might point out that in Africa Mr. Wolfowitz has a challenge every bit as difficult as Iraq. Leon Louw, the South African economist, says that in the past 30 years the world has poured $450 billion of aid into Africa, but that average per capita income is lower than it was in the late 1960s. According to the World Bank’s data, 39% of sub-Saharan Africa’s private wealth was somewhere other than Africa in 1990 — compared to 3% for South Asia, and only 10% even for Latin America.
Why invest in Africa if Africans won’t? “It’s a very fair question, and I think part of the answer is to deal with the kinds of regulations and taxes that I’ve been talking about,” Mr. Wolfowitz says. “I’m absolutely sure that part of the answer is dealing with the corruption factor.”
His favorite new source book is the World Bank’s “Doing Business” report, an annual guide to the obstacles that countries impose on their own entrepreneurs. The 2006 version is just out, and for the first time Mr. Wolfowitz had it rank countries, from 1 to 155, on the “ease of doing business.” New Zealand ranked first, and the U.S. third (after Singapore), but African nations held down 25 of the last 30 places.
Take Burkina Faso, a landlocked West African country that came in at . . . 154. “If you were in a food supply business,” Mr. Wolfowitz says, “registering a business would require minimum capital equal to nearly five times annual income. Fees alone cost 1½ times income per capita . . . to register your land, you have to pay fees, 16% of the value of the land. So the result is in a country of 12 million people, only 50,000 are in the formal” economy.
So why is he optimistic? Burkina has grown for the last decade, he says, and the country has political cohesion. “I had a great meeting with the president of Burkina” on a recent trip, and “I shouldn’t say this, but I want to find a way to communicate these results to him and say, do something about it, your country will grow even more.”
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Harder even than changing African policies, however, will be changing World Bank culture. The Meltzer Commission recommended in 1999 that the Bank focus on sub-Saharan Africa. But as with any political body, it seeks to satisfy all clients. The Bank even continues to lend to China and Brazil, two “middle-income” countries that can easily tap private capital markets. It does so in part because the interest on those market-priced loans keeps the Bank and its 10,000 employees in business. Seven thousand of them work in Washington and many earn salaries that are tax-free, including 31 vice presidents who earn the equivalent of more than $225,000 after taxes. (It’s safe to say the Bank itself has no “culture of poverty.”)
Shouldn’t the Bank get out of those richer countries? “I don’t think so,” Mr. Wolfowitz says. “I need to understand that one better.” Aren’t resources finite? “Grant resources are finite,” he concedes, but the income from those loans finances operations elsewhere. “Where there may be a case is the intellectual resources” of the Bank “get spread around over a lot of different regions . . . and I definitely want to take a look at whether we are applying the right proportion of the Bank’s own resources to Africa.”
Mr. Wolfowitz also has a chance to reform the Bank’s International Finance Corp. unit, which often invests as partners with such unpoor, unsmall outfits as General Motors Acceptance Corp. “I want to push harder,” he says. “I mean, I’d like to see the IFC much more engaged in Africa and much more looking at getting small businesses starting rather than making — you’ve got to get the balance right here.” In a lucky break of timing, Mr. Wolfowitz was recently able to name a new IFC head, Swedish businessman Lars Thunell.
“I remember George Shultz,” whom he once worked for, “was once asked how he would compare management in the private sector, public sector, and academics,” Mr. Wolfowitz says. “In the private sector you better be careful what you ask for because people are going to go out and do it. . . . The government, you don’t have to worry about that. You tell people do something and you check back two months later and nothing’s happened. But in the academic world, you tell people to do something and they look at you strangely and they say, ‘Who the heck do you think you are giving us orders?'”
This is meant as a joke, but it’s also a measure of Mr. Wolfowitz’s challenge. “Hard and slow, and you’ve got to be persistent,” he says about the way to change a giant public bureaucracy. “I did it in a university [Johns Hopkins’ School of Advanced International Studies]. It took seven years.”
In public institutions, he adds, “you’ve got to focus much more on getting people agreeing on the mission.” At the Bank, “they are, I think, overwhelmingly people who really want to see that their work makes a difference, and if we can set — if there is a culture of getting money out the door, I think we can change that culture and get people looking more at the results.” As I say, Paul Wolfowitz is nothing if not an idealist.
Mr. Gigot is the Journal’s editorial page editor

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