Tuesday, September 19

Educate us, Mr Mallaby: how much is too much intolerance for corruption?

A Tibetan once told me the difference between a friend and an enemy: "An enemy is, no matter how much good he does you say, 'Must be something wrong.' A friend is, no matter how much bad he does you say, 'Must have had a good reason.' "

By that definition I am a friend to Paul Dundes Wolfowitz. But in 2004, when I could no longer ignore that Wolfowitz had placed unjustified faith in Ahmed Chalabi, I mournfully observed, "Time to take down the poster and votive candles."

This April I gleefully replaced my idol to his pedestal after reading Sebastian Mallaby's sputtering lecture that Wolfowitz had been Blinkered By His Big Ideas because he failed to take into account the nuances of corruption when he froze World Bank loans to India, Bangladesh, Kenya, Chad and Argentina on the grounds that the governments were massively corrupt.
[...] corruption in poor nations indeed destroys entrepreneurial incentives and swallows development assistance. But the fight against corruption involves vexing dilemmas: All countries have some corruption, so which ones should the World Bank cut off? How do you deal with a borrower who steals a quarter of your aid but uses the other three-quarters effectively?
Now let us be clear that by corruption we're not talking about a box of Godiva chocolates handed under the table or a few tons of steel filched from a Bank construction project. We're talking about so many US dollar billions that only a computer can imagine the amount. Above all, we're talking about the rape of the world's poorest people.

By a conservative estimate the World Bank -- one development bank out of many -- is responsible for losing 100 billion dollars to corruption since 1946, which is nearly 20% of the Bank's total lending portfolio, according to a US Senate committee report in 2004. That was $100 billion slated for development in the world's poorest nations.

In arguing against Paul Wolfowitz's zero tolerance for corruption, Mallaby hauls out the totally inappropriate example of Indonesia:
[In the mid-1990s] The World Bank's officials recognized that corruption in the country had risen to threatening levels -- some 20 to 30 percent of project loans were being stolen. But the officials also knew that projects in Indonesia nonetheless got done, and a lot faster than in other developing countries. Moreover, Indonesia was a stunning development success; each year it lifted a million people out of poverty. After some internal agonizing, the World Bank carried on its Indonesia programs. Corruption did not seem to warrant a rupture in relations. So, responding to corruption is complicated.
No it's not complicated, Mr Mallaby, if you understand that Indonesia's oil meant that commercial banks raced to buoy the Indonesian government's worst errors and smooth over gouges that the government's massive theft ripped in Bank-sponsored projects.

It's not complicated, if you understand that by looking the other way on Indonesia's corruption, this made it impossible for the Bank to check corruption in other governments that stole from their own people and the taxpayers who contributed to World Bank funds.

Yet Sebastian Mallaby is only expressing the view of Brussels, which sees in Paul Wolfowitz's uncompromising approach to dealing with corruption the same problem they see plaguing the Bush administration: Paul, and President Bush, must learn that all true leaders are actually followers. Now why is this? Because if you lead as a leader, this will inevitably bring you into conflict. And setting off conflict, Mallaby warns Wolfowitz, is no way to fight corruption:
In February [Wolfowitz] launched a richly justified effort to postpone debt relief to the super-corrupt Republic of Congo. But the government officials who sit on the bank's board pushed back, turning the normally formulaic board meeting into an all-day fight and forcing Wolfowitz to backtrack.
They forced him to retrench, but it is the horror of being pushed back that all leaders must seek to avoid by not pushing in the first place.

Now why are we discussing Sebastian Mallaby's gobbledygook at this time? Because -- horror of horrors -- there has been a big push back against Paul Wolfowitz's crackdown on corruption, which we will discuss on Thursday.

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