Wolfowitz & World Bank: It's all about Iraq

It shouldn't come as a huge surprise, but the current scandal that might sink Paul Wolfowitz at the World Bank is actually a sideshow to the real issue. His sweetheart, big-bucks deal for his girlfriend is just the "Al Capone/Tax Evasion" gambit.

And people have questioned why all this is coming out now - after all, these personel decisions were made a couple of years ago, right?

The real story is, as always, Iraq.

(More...)

The New York Times is reporting this morning (based on a Vanity Fair report from last week), that this isn't the first time that Riza has been involved in controversy (despite an earlier puff piece that pictured her as a good career bureaucrat who specialized in women's issues).

The Defense Department directed a private contractor in 2003 to hire Shaha Ali Riza, a World Bank employee and the companion of Paul D. Wolfowitz, then the deputy secretary of defense, to spend a month studying issues related to setting up a new government in Iraq, the contractor said Monday.
The contractor, Science Applications International Corporation, or SAIC, said that it had been directed to hire Ms. Riza by the office of the under secretary for policy. The head of that office at the time was Douglas J. Feith, who reported to Mr. Wolfowitz.
...Ms. Riza’s trip raised concerns among some bank officials, who said they did not know under whose auspices she had traveled to Iraq at a time when it was against bank policy for its officials to go there.
Bank officials said, however, that after the ouster of Mr. Hussein, the Bush administration tried to get the bank to help assist in the redevelopment of Iraq and that it was trying to involve the United Nations in the occupation to provide a rationale for the bank’s assistance.

That first attempt to involve the WB in Iraqi reconstruction came to an end in the bombing that killed the UN envoy, along with a WB employee.

But then Wolfowitz arrived at the WB as President - with no development experience, no banking experience, but plenty of (theoretical, at least) Iraq experience.

Let's let Bea Edwards at Whistleblower.org take up the story:

Only three months after Wolfowitz’ arrival, the Bank’s Board tried to restrain his management of World Bank operations in Iraq explicitly, issuing an unprecedented directive to his office to “[K]eep the Board regularly updated on developments in the country (Iraq) and implementation of the ISN” (Interim Strategy Note, September 2005, see GAP Web site). One year later, 30-year veteran Christiaan Poortman, vice-president for the Middle East, resigned from the World Bank rather than comply with Wolfowitz’s directives to prepare to increase lending and add staff in Iraq.

“In fact, the Bank is prohibited from operating in a conflict like this... In the simplest financial terms, there is no functioning banking system, the government does not control its territory and it cannot guarantee loan repayment. Any emergency or social funding in Iraq should come from donors’ grants, not loans.”

To engage in Iraq, the World Bank must justify reconstruction spending on economic grounds. If the conflict is ongoing, and the government is unstable, this cannot be done. Even assuming that the conflict ends soon, which no one is predicting, Bank Procedure 2.30 (“Development Cooperation and Conflict”) stipulates that, to operate in a country emerging from a conflict, the Bank must prepare a “watching brief,” develop a transitional support strategy, begin transitional reconstruction, then begin post-conflict reconstruction, and finally return to normal lending.

World Bank management under Wolfowitz has not taken these steps.

Although the Board did approve a limited loan program for Iraq of U.S. $500 million in September 2005, funds were not approved for disbursal, as of December 31, 2006. Disbursement was contingent on “critical progress in several areas important to IBRD (International Bank for Reconstruction and Development) creditworthiness, including security and external debt-relief,” according to an internal memo from December 2006 (See GAP’s Web site). The required progress has not occurred. Currently, regular staff travel to Iraq is prohibited, meaning that lending operations cannot be properly monitored.

So that means the World Bank isn't moving into Iraq, right?
Wrong.

WASHINGTON, Feb 22 (IPS) - World Bank President Paul Wolfowitz may appoint a new resident director for Iraq soon, a move that sources inside the Bank say could contradict the institution's policies on engagement in conflict-stricken areas and put his role in the 2003 U.S. invasion back into the limelight.
The move by Wolfowitz, the former number two official at the Pentagon and a main architect of the U.S.-led war, likely means the Bank would release new loans to the occupied Arab nation, despite the deteriorating security situation and recent disclosures of massive corruption in reconstruction efforts.

That's the story. The Busheviks are trying to extend hundreds of millions of additional dollars to their good buddies, courtesy of the World Bank. And the honest folks at the bank are appalled, and fighting back the only way they can.

Expect to see more reports like this in the next few days, from Bloomberg:

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.

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.

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.

(Note Worlfie's cute parsing - moving from no Iraq office and personell at all to a full in-country operation is a "modest, incremental upgrading"; and the typical Abu Gonzales parsing in which he puts responsibility for the decision on the "donor nations" making the request, and approval by the Mideast department.)

And you can bet you'll be seeing
a lot more like this, from the Nelson Report (via Agonist):

Recall the early days of 2001, when “job lists” were the name of the game here in Washington, you would find Wolfowitz on everyone’s short list for the CIA, not for DOD. Something happened which knocked Wolfowitz off the intelligence side of the equation. What you might have forgotten (if you ever knew) is why:

A certain Ms. Riza was even then Wolfowitz’s true love. The problem for the CIA wasn’t just that she was a foreign national, although that was and is today an issue for anyone interested in CIA employment. The problem was that Wolfowitz was married to someone else, and that someone was really angry about it, and she found a way to bring her complaint directly to the President.

So when we, with our characteristic innocence, put Wolfowitz on our short-list for CIA, we were instantly told, by a very, very, very senior Republican foreign policy operative, “I don’t think so”. It was then gently explained why, purely on background, of course.