Tuesday, December 12, 2006

Wolfowitz Clashes With World Bank Staff and Mideast Chief Exits

By Christopher Swann

Dec. 12 (Bloomberg) -- World Bank President Paul Wolfowitz faces mounting criticism from directors of the international lending organization who say he relies on a coterie of political advisers with little expertise in development while driving away seasoned managers.

Half of the bank's 29 highest-level executives have departed since Wolfowitz, the former U.S. deputy Defense secretary and an architect of President George W. Bush's invasion of Iraq, took office in June 2005. Among them is Christiaan Poortman, vice president for the Middle East and a 30-year World Bank veteran, who left in September after resisting pressure to speed up the pace of lending and adding staff in Iraq.

``It was very sad to see someone of Mr. Poortman's caliber leaving,'' Eckhard Deutscher, one of 24 executive directors who oversee the management of the Washington-based lender, said in an interview. ``The bank needs to be very careful not to lose too much of its human capital.''

The exodus is damaging the world's leading poverty-fighting institution, which provided $23.6 billion last year for projects such as schools and clinics, say directors and outside observers.

Three directors, who spoke on condition of anonymity, said they are concerned governments might be less willing to contribute because of unhappiness with Wolfowitz.


The only other World Bank chief to sweep aside as many senior managers was Wolfowitz's predecessor, James Wolfensohn, said Devesh Kapur, a former economist at the lender and author of ``The World Bank: Its First Half Century.'' The difference, he said, is that Wolfowitz's appointees are short on expertise and long on political connections.

New faces include counselor to the president Robin Cleveland, who as associate director of the White House Office of Management and Budget helped secure congressional funding for the wars in Iraq and Afghanistan.

Kevin Kellems, a former spokesman for Vice President Dick Cheney, was named director of external strategy. Suzanne Rich Folsom, a lawyer who joined in 2003 and is the bank's chief corruption-fighter, is married to George Folsom, who was principal deputy director of the Iraq Reconstruction Management Office and served as president of the International Republican Institute.

Wolfowitz, 62, ``has placed considerably more trust in a small group of outsiders from the Republican Party than in the seasoned experts in the bank,'' said Alison Cave, head of the World Bank staff association, which represents more than 13,000 employees.


``The changes under Wolfowitz are unprecedented in the calculated manner in which inexperienced or ideological replacements are being placed in senior positions,'' said Kapur, a professor at the University of Pennsylvania in Philadelphia.

Among those who left the bank after disagreements with Wolfowitz are Roberto Danino, general counsel and a former prime minister of Peru; Ian Goldin, vice president for external affairs; and Gobind Nankani, vice president for Africa. Of the 14 executives who left, three had reached mandatory retirement age, according to the staff association.

Poortman, the Mideast chief, resigned rather than accept an assignment in Kazakhstan, according to a colleague who spoke on condition of anonymity. Poortman declined to comment.

Donor Requests

Wolfowitz, in a written statement from his press office, said plans for a ``modest, incremental upgrading'' of Iraq operations came in response to donor nations and were approved by the Mideast department.

Kellems, in an interview, said that ``change in senior posts throughout the bank has been more gradual than most people expected, and the senior management team is very international and composed of experienced professionals from a wide range of backgrounds and viewpoints.''

The push to beef up the World Bank's presence in Baghdad has been a subject of clashes with officials over safety. ``The German government has been very skeptical of the bank operating in Iraq because of the danger,'' said Deutscher, the director from Germany. Wolfowitz said in his statement that staff safety is ``at the top of our list of priorities.''

Bush's nomination of Wolfowitz last year raised concern among employees that he would use his position to promote U.S. Iraq policies. His plan to step up activities in Baghdad ``exposes him to charges of attempting to provide political cover for the White House,'' said Nancy Birdsall, a former director of the bank's policy research department and president of the Washington-based Center for Global Development.

Poverty Reduction

``Mr. Wolfowitz managed to silence a lot of his critics in the first months of his tenure by listening and by promising to focus on poverty reduction in Africa,'' Birdsall said. ``But many of the early doubts have resurfaced.'' Hartwig Schafer, the bank's director of African operations, said Wolfowitz's attention to Africa has won plaudits from borrowers and bank officials assigned to the continent.

``President Wolfowitz's consistent message that Africa is a priority for the World Bank has been welcomed,'' Schafer said in an e-mail.

Ian Vasquez, a director at the Cato Institute, a think-tank that supports limited government, said it's no surprise that the arrival of a new president has caused some discontent.

``So long as Wolfowitz is taking his job seriously, he will make some of the staff uncomfortable,'' Vasquez said in an interview in Washington. ``Even so, the appointment of Republican aides may not have been the smartest political move within the World Bank.''

To contact the reporter on this story: Christopher Swann in Washington at cswann1@bloomberg.net

Last Updated: December 12, 2006 00:00 EST

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