Two years after a deadly bombing caused the World Bank to pull its staff out of Iraq, bank President Paul D. Wolfowitz is considering sending it back, according to bank officials.
The matter has taken on new urgency because the World Bank's board last week approved a plan for using as much as $500 million in loans to the Iraqi government. An internal bank report outlining the plan warns that "there are high and unprecedented risks" to the bank's work in Iraq, arising partly from the inability of bank experts to travel around the country and make sure that aid is being used properly and effectively.
Kevin S. Kellems, a senior adviser to Wolfowitz, wrote in an e-mailed statement yesterday that no decision has been made on whether the bank's aid operations "could be made more effective, safely, by establishing a presence inside Iraq."
The issue of the bank's role in Iraq is particularly sensitive for Wolfowitz, the former deputy defense secretary who was a prime mover behind the U.S. war on Saddam Hussein's regime.
Any move seen as aggressively expanding the bank's activities in Iraq could lead to criticism that Wolfowitz, who was chosen by President Bush in March to head the global lender, is using his new post to further the Bush administration's foreign policy aims. Wolfowitz has gone to great lengths to stress that in his new capacity he is an international civil servant and will give top priority to the bank's mission of fighting poverty.
If evidence were to emerge that the bank was allowing its aid to Iraq to be wasted or siphoned off by corrupt officials, Wolfowitz's reputation and the bank's could be tarnished.
The World Bank left Iraq after the August 2003 attack on the United Nations compound in Baghdad that killed 22 people, including the U.N.'s top envoy. The bank's office was in the compound. Since then, the bank, which is administering projects worth about $360 million financed by donor countries through a trust fund, has operated in Iraq through an interim office in Amman, Jordan. It has used videoconferencing to talk to Iraqi officials and relied on a handful of Iraqi employees and consultants who remain inside the country.
In a meeting with members of the bank's staff association this month, Wolfowitz was asked about rumors that the bank is on the verge of sending staff members back into Baghdad, according to sources who spoke on condition of anonymity because the meeting was private.
Wolfowitz replied that it is important for the bank to have a stronger presence in Iraq to be effective but that he has not yet decided, the sources said. He also said he would carefully assess the danger to employees before sending anyone into Iraq, and that if staff members return to Baghdad they would do so voluntarily, with no penalty for refusing.
The bank is deeply concerned, however, about its ability to administer its aid effectively in Iraq, according to the document that was presented last week to the executive board. The document, obtained by The Washington Post, outlines plans for the bank's "second interim strategy" for Iraq, which involves a $500 million, no-interest loan of the bank's own money that was approved in July, plus donor funds. The program's main objectives include restoring basic services such as education, electricity, transportation and water supplies; fostering development of the private sector; establishing a social safety net; and strengthening government institutions.
"The high level of insecurity makes it difficult for even Iraqi staff and consultants to move about the country and carry out on-site supervision," the document says. Project management teams "face major difficulties, including attacks on ministries and death threats to staff," it says.
Although the bank is trying to alleviate those problems, "risks that funds may not be used effectively or in a manner conforming to Bank procedures are likely to remain high even in comparison to other conflict-affected situations," the document says. It notes that "recent reports and audits have revealed weaknesses in the control systems of Iraqi ministries."
Because of the uncertain outlook, the bank will "scale up its program or scale down, as the changing situation demands," the document says. "If security and political stability improve, the Bank will ramp up its assistance and deepen policy dialogues. If the security situation further deteriorates, the Bank will scale down its financial assistance as necessary, while maintaining dialogue to the extent possible."