by Anil Netto

PENANG, Malaysia - Paul Wolfowitz's fall from grace is symptomatic of the double standards and hypocrisy of the World Bank and strains the marriage between neo-liberal policies and militarism that he embodied, say activists and analysts.

Wolfowitz, an architect of the war on Iraq, finally bowed to pressure after a favouritism scandal involving his girlfriend, ex-bank employee Shaha Riza. He is due to step down as Bank president on Jun. 30, three days after another key player in the aggression on Iraq, British Prime Minister Tony Blair, heads for the exit.

"It's a humiliating, and, for many, not unwelcome, fall for Wolfowitz who thought he'd found a respectable bolt-hole at the World Bank after his criminal enterprise in Iraq," said Glasgow-based political scientist John Hilley, who has written on militarism and neo-liberalism. ''Yet, it's a dark irony that he has gone down for engaging in cheap, nepotistic malpractice while his high crimes, the design and execution of mass terror in Iraq, go unpunished.''

"Of course, it's a hypocritical posture of little surprise for a body that has overseen, via its key finance arm, the IFC, the systematic enslavement of Third World countries," Hilley told IPS in an interview over e-mail.

Critics see Wolfowitz's removal as a reluctant damage limitation exercise by an institution on the ropes as it fends off the gathering struggle against neo-liberal orthodoxy. This struggle is being led by Venezuelan President Hugo Chavez, who is spearheading efforts to forge a new set of financial alternatives to the Bank and International Monetary Fund across Latin America.

Ironically, it was only last year, during the annual meetings of the IMF and World Bank held in Singapore, that Wolfowitz had unveiled a drive towards good governance, which he said was a broader concept than anti-corruption. Critics viewed it as a public relations scheme to restore the World Bank's credibility after years of complicity with corrupt regimes and disastrous neo-liberal policies.

The Bank's decisions to block funding for essential projects in India, Chad and Kenya on the basis of suspected corruption, however, drew sharp criticism. In particular, its move in 2005 to suspend 800 million dollars in loans for maternal and children's health in India because of potential graft provoked an outcry.

"On the surface, his campaign against corruption linked to World Bank loans sounded good. But he went about it in a high-handed way,'' independent Malaysian political analyst and writer Fan Yew Teng told IPS. ''You cannot have this holier-than-thou attitude and stop essential projects such as medical, water supply and food production -- because it will kill people."

Moreover, the stance smacked of double standards. ''America's friends were not to be regarded as corrupt and all the onus of dealing with corruption lay with the recipient country, not with either the donor or the home country of the briber,'' observed Stephen Mandel, senior economist at the London-based New Economics Foundation. The NEF is an independent think-tank that challenges mainstream thinking on economic, environment and social issues.

Loans, however, continued to be awarded to countries with poor human rights records, especially Pakistan, and Bank staff are known to have complained at the speed with which he was pushing them to get into lending to Iraq, Mandel told IPS over e-mail.

The Bank showed no concern for human rights in its lending, only concern about corruption, and that too defined in a biased way, so there is no sign that the Bank was moving away from building up more odious debt, said Mandel. ''It is no surprise that favouring a girlfriend (or a private corporation - as with the sweetheart deals between the U.S. defence department and Halliburton and other U.S. contractors) is not seen as corruption whereas the skimming off of funds by a primary school head is -- even if such a school head may not be being paid a living wage because of IMF requirements for a tight fiscal stance and trade liberalisation'', which can prevent a government from raising revenue from trade tariffs.

Political analyst Fan saw a link between Wolfowitz's pro-war views and how he regards the poor: In Iraq, the great majority of the victims of war are the poor, while those who are better off could afford to flee to Jordan and other Arab countries. ''For such a person to be president of the World Bank is a cruel joke. But it is not surprising because in both instances (war and Bank policies), the poor are deemed to be dispensable.''

And its questionable if poor nations really benefit from World Bank loans. Net transfers (disbursements minus repayments minus interest payments) to developing countries from the Bank and the International Bank for Reconstruction (IBRD), have been negative every year since 1991, pointed out the Social Watch Report 2006.

Activists in the region remember the Bank for its huge loans to Indonesia, where projects paved the way for large transnational corporations to take control and exploit natural resources. It inspired a land administration programme (LAP), which pushed for the titling of peasants' land, which activists say facilitated the takeover of farmers' land at cheap prices.

"Furthermore, they approved a loan to change the law on water to a new law protecting foreign investors in controlling the water resources. This paved the way for water privatisation through a project called Watsal (Water Resources Structural Adjustment Loan),'' says Achmad Ya'kub, a human rights activist with La Via Campesina, an international peasants' movement with its operations secretariat in Jakarta.

Because of the land privatisation and land conversions, Ya'kub told IPS that peasants have been cornered and their farmlands have become smaller and smaller -- and many have even lost their land altogether.

World Bank-inspired policies that pushed for land titling and market forces to drive agrarian reform have sparked conflict between peasants and investors, which in the Indonesian case would be either the government or the private sector. Ya'kub says the social cost of the marginalisation of farmers and peasants, the main victims, is huge, ranging from loss of livelihoods, arrests and even deaths.

Under then U.S. president Ronald Reagan, Wolfowitz was ambassador to Indonesia in the 1980s. His strong support for the dictator Suharto despite the extreme corruption and human rights violations under his administration is well known. Indonesian activists were thus dismayed when Wolfowitz was appointed World Bank president.

"When Wolfowitz was ambassador to Indonesia, he hardly spoke up for the poor,'' observed Fan. In the end, the poor farmers and peasants of Indonesia had to bear the brunt of odious debt even though they hardly benefited from it.

Now that Wolfowitz is stepping down, activists like Ya'kub say it is time for people around the world to realise that the World Bank's role is over. ''We must learn from Hugo Chavez that there is no development and democracy with the World Bank,'' he stressed. ''I hope it's not just Wolfowitz stepping down from the World Bank, but the World Bank must now 'step down' from our country and the world.''
Copyright © 2007 IPS-Inter Press Service.