A great US innovation is to tie foreign aid to the honesty of the recipient, and Paul Wolfowitz is causing squeals of rage by applying that principle to World Bank lending. He should keep up the good work.
Britain and other European countries pressed Mr Wolfowitz in April to put greater emphasis on fighting corruption by building institutions in the developing world rather than simply suspending loans.
Critics, who include a clutch of European governments and many senior members of the bank’s staff, claim that the anti-corruption campaign threatens to undermine the bank’s primary purpose of eliminating global poverty by being too ideological, arbitrary and high-handed. “In the same way that the neocons tried to impose democracy on Iraq,” said a source at the bank. “They are trying to impose their own economic and political model on Africa — without recognising the reality of the situation on the ground.”
Of course the “reality of the situation on the ground” is that all aid is tax dollars, pounds, etc taken from productive people in Western economies. If those donors continue to see their taxes fed to corrupt tyrants, they’ll vote to cut aid.
But Blair’s likely successor thinks otherwise (ellipsis give corruption rankings for the nations referenced):
Britain last night threw down a direct challenge to Paul Wolfowitz’s leadership of the World Bank as the Government announced that it was withholding a £50 million payment in protest at the conditions attached to aid for poorer countries.
The decision by Hilary Benn, the International Development Secretary, reflects growing concern over Mr Wolfowitz’s aggressive anti-corruption campaign, which has led to the suspension of mutlimillion- dollar loans and contracts to countries such as Chad (158th, world’s most corrupt), India (88th), Argentina (97th), Congo (130th), Kenya (144th), Ethiopia (137th) and Bangladesh (158th, bottom equal with Chad).
The unexpectedly robust public attack by Mr Benn, who is close to Gordon Brown, will sound alarm bells within the US Administration about relations with Britain when Tony Blair departs No. 10.
The £50 million withheld wouldn’t keep an African Mercedes dealership going for a year, so I don’t see it terrifying Wolfowitz into submission.
And the White House already knows Brown is a hard line Euro-socialist who thinks the taxpayers’ money is his own, so no doubt it’ll control its alarm.