To the casual observer, Paul Wolfowitz’s continuing refusal to step down as President of the World Bank is puzzling. Without taking sides in his dispute with members of the World Bank Board regarding alleged violations of ethical rules in arranging a promotion and raise for his girlfriend, Shaha Riza, it is quite clear that Mr. Wolfowitz has lost his ability to be an effective leader of that institution. A significant majority of the Board wants him to step down. The World Bank Staff Association wants him out. Many governments, particularly in Europe, that are major contributors to the World Bank and add credibility to its efforts to implement often controversial anti-corruption programs demand his departure. So, even assuming (which seems unlikely) that strong White House support and vigorous counterattacks from his neoconservative friends allow him to keep his job, what could he accomplish—for himself, for the world’s poor, and for the United States, whose prestige is clearly on the line?

In recent weeks there have been spectacular resignations at two major corporations. Lord John Browne left BP just months before his scheduled retirement and may lose up to $30 million in compensation from his retirement package in the process. His transgression—lying to a court about the circumstances in which he met a man with whom he admitted to having a long-term affair—could be more serious than Mr. Wolfowitz’s improprieties. Still, if he put up a fight, Browne could perhaps have negotiated an agreement to stay for the remaining part of his term and keep some or all of the money.

Chris Albrecht, the Chairman of HBO, stepped down after allegedly committing battery against his girlfriend in a Las Vegas hotel parking lot. He did not put up much of a fight when told by his Time Warner superiors that this was his time to go. (Note that Jeffrey Bewkes, President and Chief Operating Officer of Time Warner, is a member of The Nixon Center’s Board.)

In contrast to Mr. Wolfowitz, who has had few accomplishments at the World Bank, partly due to his short term in office (since 2005) and partly because of his inability to build effective relationships with his career subordinates, Mr. Albrecht and Lord Browne were at the helm of their companies for many years and are widely believed to have delivered impressive results.

So why is Mr. Wolfowitz putting up such a desperate defense, going so far as to launch a vitriolic attack against the very institution he supposedly wants to lead? Mr. Wolfowitz is not accused of any criminal offense. Neither does he face the prospect of civil charges that would require him to pay many millions in fines and legal expenses. As a matter of fact, if he had not hired Washington’s star lawyer/hatchet man, Robert Bennett, Wolfowitz in all likelihood would not have needed to spend much money or time to arrange an honorable exit from the World Bank. He could have denied any wrongdoing, but said that in the name of both American interests and the interests of the institution, he had decided it was the time to move on. And move on he would—with his celebrity status and cohorts of neo-conservative admirers, Wolfowitz was virtually guaranteed a plush fellowship in a prestigious think tank, multiple well-compensated positions on corporate boards, lucrative speaking engagements, and a six—if not seven—figure book deal.

How then to explain the aggressive counter-offensive? First, despite almost saying "sorry", he seems firmly convinced not only of his innocence, but of his inherent virtue. He appears not to have engaged in any introspective reflection about his bad judgment (at a minimum) in arranging an almost 50 percent raise for his girlfriend that resulted in her being paid $10,000 more than the Secretary of State while being detailed to the State Department. Yet, as Mr. Wolfowitz made clear at the time of his appointment, he knew that he was not universally popular at the Bank, that his conduct could easily be put under a microscope, and that he had to be as pure Caesar’s wife to avoid even the perception of impropriety.

Second, Mr. Wolfowitz sounds like he believes he is a victim of a vast conspiracy uniting liberals, Europeans, and World Bank bureaucrats that is exploiting a very minor incident. But here he misses the point. While many were unhappy about his appointment at the Bank, nothing happened until the Riza compensation scandal. And while some facts are in dispute, it is hard to imagine any unbiased observer who would not accept that Mr. Wolfowitz helped to bring all this trouble upon himself.

Last but definitely not least, Mr. Wolfowitz seems to share a neo-conservative world-view that requires a constant sense of a history-shaping mission, of saving mankind from another Holocaust by dividing the world into good and evil, and protecting friends regardless of their conduct. Since he knows he is good, his opponents must be evil. He may even believe that like in a B-movie, he is so good that he is bound to win in the end, once everyone around him finally sees the light. This kind of mindset helped to bring the United States into Iraq and it explains, in my view to a large degree, the vitriolic counterattacks by Wolfowitz and his blind supporters.

The only silver lining is that the stakes at the World Bank are much less than those in Iraq. The Bank is—and was for a long time before Wolfowitz’s arrival—a deeply troubled institution; a collection of social workers pretending to be bankers that has too many people with too great a sense of entitlement and too much compensation for too little in the way of good works. Once the Wolfowitz saga is over, this bigger problem must be addressed. If those insisting on Mr. Wolfowitz’s departure in the name of the Bank’s credibility would stop at arranging his resignation, their hypocrisy would be exposed. And Mr. Wolfowitz would receive at least partial vindication from history.

Posted by Dimitri Simes at 05/11/2007 05:10:26 PM |