October 1, 2006

Weekend Question 3: Guess Who’s Opposing the Fight Against International Aid Corruption?

Filed under: Business Moves,Scams,Taxes & Government,TWUQs — Tom @ 2:02 pm

ANSWER: It’s the countries in the developed world being fleeced.


Paul Wolfowitz had a tough job when he was Deputy Secretary of Defense during the runup to and invasion of Iraq.

His job as the head of the World Bank may be tougher, if the madness he has encountered there so far, chronicled in a Sept. 25 subscription-only editorial in the Wall Street Journal, continues:

Corruption? Ho-Hum

You might think the biggest objections to a World Bank anticorruption push would come from, say, corrupt poor countries in danger of losing international aid. In fact, it’s such donor nations as Britain, France and Germany — and bureaucrats at international aid agencies — that seem to be complaining the loudest.

Welcome to the upside-down world of development aid, where a country’s actual use (or misuse) of money is much less important than how much it receives. Paul Wolfowitz, who took over as head of the World Bank last year, wants to change this paradigm, which won’t be easy. At an annual meeting of bank officials in Singapore last week, European elites let it be known that they much prefer a lending system that gives lip service to ending graft but in fact turns a blind eye to corrupt government officials on the receiving end of billions of dollars in foreign aid.

British Development Secretary Hilary Benn threatened to withhold $94 million in funding next year to protest the transparency and accountability conditions that Mr. Wolfowitz is implementing. Mr. Benn, along with his French and German counterparts who serve on the bank’s board of directors, finally relented after assurances from Mr. Wolfowitz that the board would play an oversight role. So the same countries that say Americans need to throw more taxpayer money at the developing world don’t seem to care how much of it is siphoned off by corrupt governments. The only word for this is bizarre.

Mr. Wolfowitz has said that this anticorruption drive “is about making certain that money goes to schools and textbooks for children, medicines for mothers and creating job opportunities for the poor — not to line the pockets of the rich and powerful.” These days as so often in the past, the latter is the norm.

….. Our guess is that the more than 40% of government revenue that (Cameroon’s ruler Paul) Biya receives each year via foreign aid isn’t doing much for the average Cameroonian, but it is helping Mr. Biya maintain power.

The World Bank says it has uncovered more than 2,000 instances of fraud, corruption and other misconduct related to its projects since 2001, a situation that led Mr. Wolfowitz to suspend more that $1 billion in loans to countries including Kenya, India, Bangladesh and — yes — Cameroon.

….. Mr. Wolfowitz’s detractors characterize his anticorruption efforts as “obsessive.” The Financial Times went so far as to imply that he doesn’t grasp the “complexity” of the problem, as if theft and bribery are difficult concepts.

Mr. Wolfowitz is being attacked precisely because he understands the situation all too well. As he put it last week, “better governance . . . is the key to reduction of poverty.” We’d go further and add that corruption tends to accompany too-powerful governments that give politicians and bureaucracies control over investment and other economic decisions. The World Bank’s own annual “Doing Business” survey documents this problem, even if some on the bank’s board apparently don’t read its own work. The last thing the world’s poor need is international aid organizations that indulge their oppressive governments.

This is beyond ridiculous. If Mr. Wolfowitz is successfully sidetracked in his efforts to make sure that money is spent or loaned as intended, his next “move” should be from the World Bank’s posh headquarters across town to congress — to speak out at hearings suggesting that the World Bank be defunded until its members decide to fight against corruption instead of enabling it.


Previous Related Posts:

  • Aug. 6, 2006 — Column of the Day: Reality-Based Optimism on Ending World Poverty
  • July 6, 2005 — A Kenyan Economist Says “Stop Aid to Africa”
  • July 5, 2005 — Quote of the Day (on African Poverty)

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