Institute for Justice and Democracy in Haiti

Wolfowitz and the World Bank: The Question Not Asked

May 21, 2007 7:00 PM

The scandal over the salaries paid to World Bank president Paul Wolfowitz’s friends and lover opened the door to good questions about both the bank and its president. Wolfowitz’s resignation answered some of them, but one of the best questions of all has yet to be asked: is there a larger problem with an institution claiming to be “working for a world free of poverty” paying those salaries to anyone?

The World Bank insiders who launched the scandal by revealing the annual salaries of Mr Wolfowitz’s domestic partner, Shaha Ali Riza ($193,590), and Bush Administration collaborators, Robin Cleveland and Kevin Kellems ($250,000 and $240,000 respectively), have not raised this question.

That may be because the controversial salaries were not out of the ordinary. Ms Riza defended her pay as “quite common for World Bank staff that have years of experience, background and education similar to” hers. And government officials and international development groups who have used the salary scandal to make broader critiques of Wolfowitz’s polices at the bank, especially his signature “anti-corruption” campaign, failed to raise any larger questions about salaries at the bank.

But the people who actually live with the consequences of World Bank policies – the world’s poor – would certainly ask about the other salaries, if given the chance. The bank measures national incomes with a figure called per capita GNI (Gross National Income), which is roughly the annual value of the production and income of a country divided by the number of people living there.

According to the bank’s website, the average per capita GNI for all the low-income countries (over a third of world population) is $875 (�439) per year. Mr Kellems made more than that every day before he resigned on May 7. Haiti has a per capita annual GNI of $450. So on average, 430 Haitians could live on the equivalent of Ms Riza’s annual salary.

The bank justifies its salaries by comparing them not to teh average income in Port-au-Prince, but to salaries in the private sector, where many of its talented employees could find work. It claims it needs to pay competitively to attract “the brightest, most talented people in the world”.

But competing with the private sector for workers may make the bank less able to fulfill its mission of fighting poverty. The bank has financial policies like private banks, but it also has political, moral and social policies. The bank tells poor governments how much they can spend on healthcare, which in countries like Haiti helps determine how many children needlessly die of treatable but untreated diseases. It decides what kinds of “corruption” are tolerable, and which kinds justify cutting off funds for schools and clean water in poor neighbourhoods.

An economist making $250,000 or $160,000 a year, no matter how talented, may be the least qualified of all to evaluate these non-financial policies. The economist may be able to precisely calculate the impact of health ministry budget cuts on Haiti’s debt service payments, but on that salary could never understand the impact of closing a neighbourhood health clinic on a Haitian parent struggling to feed, cloth and care for a family on $1.29 per person per day.

Questions about bank salaries would be harder to ask if the “brightest, most talented people in the world” had done more for the poorest, most disadvantaged people in the world. But many of the bank’s borrowers are poorer now than they were when the bank started to help them. In Haiti’s case, the economy has, on average, shrunk almost 2% per year (adjusted for inflation) for the past 25 years.

In the 1980s, the bank loaned millions to the dictatorship of Jean Claude “Baby Doc” Duvalier, knowing that the aid was being siphoned for fur coats and paramilitary thugs. Those loans are now due, with interest. The World Bank is siphoning money back from the spare coffers of Haiti’s elected government every month in loan payments – $957,240 scheduled for May, $2,365,870 in June.

So Haiti will forgo paying teachers and nurses to pay the loans so the bank can pay its staff the salaries of whole Haitian neighbourhoods (that lack teachers and nurses) to fight poverty. Poor Haitians would tell us that if the bank wanted to fight corruption, stopping those siphons would be a great place to start.

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