Wolfowitz Watch

Blinkered By His Big Ideas

By Sebastian Mallaby
Sunday, April 23, 2006

Way, way back, when President Bush still had political capital to spend, he appointed a neoconservative architect of the Iraq war to head a top multilateral development agency. On the other side of the Atlantic, the news that Deputy Defense Secretary Paul D. Wolfowitz would lead the World Bank was greeted with horror. Speaking for the elites of Europe, a Financial Times editorial complained that a World Bank led by Wolfowitz would be "no more than an instrument of U.S. power," and Le Monde called the appointment "a new manifestation of America's arrogance."

That was March 2005, and much of the European carping seems silly in retrospect. Since taking the helm of the World Bank in June, Wolfowitz has proved willing to differ with the policies of the Bush administration. He resisted its push to weaken the bank's finances by pushing the wrong kind of debt relief and distanced himself from the administration's anti-science faction by committing the bank to an expanded effort against global warming.

But as Wolfowitz co-hosts the World Bank-International Monetary Fund spring meetings this weekend, his critics may be vindicated in one telling way. Wolfowitz, like the neoconservative movement he springs from, represents a strange marriage of brilliance and blind spots. The flaw that led him to misjudge Iraq has come back to haunt him at the World Bank -- particularly in his new crusade against corruption in developing nations.

In his first weeks at the World Bank, Wolfowitz betrayed no signs of radicalism. His arrival was greeted by barbs from the World Bank's satirical staff magazine, which reported that he brought along "a 1768 map of Iraq (with hundreds of red x's denoting 'WMDs,' hundreds of black x's denoting 'Oil Well$,' and one blue x denoting 'decent sushi restaurant')." Seeing what he was up against, Wolfowitz went out of his way to charm and disarm, to listen modestly in meetings, to stress his respect for the bank's formidable brain trust. Because he arrived at the bank with three old associates, two of whom had been involved in the Iraq war, the staff's suspicions lingered, proving that the bank's complaint culture rivals that of the trial bar.

Then, around January, Wolfowitz changed gears. In a series of tough and surprising decisions, he froze loans to India, Bangladesh, Kenya, Chad and Argentina, signaling an upheaval in the bank's approach to corruption. His predecessor, James Wolfensohn, had recognized corruption's importance in holding back development. But that recognition had seldom led the World Bank to cut off loans. The new Wolfowitz approach amounted to a watershed for the bank.

But it was hardly a watershed for Wolfowitz himself, whose track record as a policy insurgent dates to the 1970s, when he arrived in Washington as a young intellectual determined to take on the "realist" foreign-policy establishment led by Henry Kissinger. While Kissinger forged alliances with undemocratic strongmen such as the shah of Iran and pursued detente with the Soviet Union, Wolfowitz and other future neoconservatives viewed Soviet totalitarianism as a modern echo of Nazism and believed in backing only true democracies. Later, when Wolfowitz was a State Department official, the same idealism led him to fight the department's effort to make nice with dictators in China, the Philippines and South Korea.

Wolfowitz's battles molded his mind-set. He acquired a habit of disdaining foreign-policy professionals, of doubting their conventional wisdom and seeking out alternatives. And because his alternatives often proved right -- dictators fell in Iran, South Korea, the Philippines and the Soviet Union -- he came to believe that an idealistic faith in freedom could sweep aside most obstacles.

It was this outlook that led him into trouble on Iraq. He disdained and second-guessed the intelligence establishment, which doubted a link between Saddam Hussein and al-Qaeda, and he ignored the Washington wisdom that building an Iraqi democracy would be hard, preferring to listen to mavericks and exiles who argued the opposite. Hence Wolfowitz's extraordinary prewar statements: that American troops would be greeted as liberators, that Iraq's oil revenue would spare U.S. taxpayers the cost of reconstruction.

Like Wolfowitz's hatred of Hussein, his intolerance of corruption combines idealism with a disregard for details. Hussein was indeed a monster and a sworn enemy of the United States; the problem was that Wolfowitz grasped the big picture without grappling sufficiently with the details of nation-building. Equally, 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?

These questions came to the fore in 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. But thanks to his habitual mistrust of bureaucratic wisdom, Wolfowitz failed to absorb this point from the experts working under him. Instead, he and his immediate circle preached an idealistic message of "zero tolerance" on corruption, reminiscent of the "you're with us or you're against us" rhetoric that Bush used in his early response to terrorism. Because he has failed to lay out a sophisticated framework explaining what degree of corruption merits an aid freeze, Wolfowitz's decisions to cut off certain countries have seemed arbitrary to some critics. In February he 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.

Then, on April 11, Wolfowitz delivered a major speech on corruption -- ironically, in Indonesia. He acknowledged that merely freezing bank projects is not a solution to graft; the World Bank's job is to battle development problems, not to abandon countries that suffer from them. But the speech still failed to explain the criteria under which freezing aid makes sense, and Wolfowitz's promise to deploy teams of corruption experts to poor countries raised more questions than it answered.

For the past 10 years, the bank has tried to reform civil services, foster investigative journalism and promote other policies to fight corruption. But the bank's internal assessors have concluded that few of these projects worked. Again, Wolfowitz does not seem to have listened closely enough to the experts in the bureaucracy he runs. He is too attracted to the grand idea, the idealistic vision.

Wolfowitz has time to correct his errors. But he remains a rebel, a romantic, a professorial dreamer; he is less skilled at the bureaucratic slog of getting ideas implemented. This is not the ideal profile for the leader of an unwieldy multilateral agency -- especially an agency whose poverty-fighting mission is a notorious graveyard of impractical ambition.


Sebastian Mallaby is a member of The Washington Post's editorial page staff and author of "The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations" (Penguin), which will appear in paperback this week.

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