World Bank mulls controversial anti-graft campaign

SINGAPORE: The World Bank policy-setting body convened on Monday to debate an aggressive anti-corruption plan that critics contend imposes harsh conditions harmful to the interests of poor countries.           

 

The campaign is spearheaded by World Bank President Paul Wolfowitz, who insists that stamping out graft is critical to eliminating poverty and raising living standards.    

 

"The fact that governance and anti-corruption have risen high on the agenda of the World Bank reflects, I think, a worldwide recognition that better governance and reduced corruption are key to addressing the central mission of our organization -- the reduction of poverty," Wolfowtiz said on Sunday.      

 

The World Bank Institute estimates that more than a trillion dollars is paid in bribes worldwide every year, a figure that does not include embezzlement of public funds and theft of public assets.          

 

"The evidence is quite clear that better governance is associated with more rapid growth, lower inequality, lower child mortality, lower illiteracy," Wolfowitz said.           

 

"Poor governance, at its most extreme, can lead to financial collapse and even societal instability."            

 

Wolfowitz's initiative would link Bank financial assistance to commitments by beneficiary countries to good governance, such as transparency in public procurement, and anti-corruption measures. But he says his aim "is not to find a reason to cut back on lending" to poor countries, which is up nine percent this year to 9.5 billion dollars.        

 

Nonetheless, several World Bank members, notably Britain, France and Germany, are wary about what is seen as a blueprint for interfering in the internal affairs of poor countries by attaching conditions to aid.         

 

Several countries, most recently the Democratic Republic of Congo, have seen aid projects stall because of obstacles thrown up by the corruption-busting initiative.      

 

There is also controversy about World Bank policy prescriptions. In Bangladesh the World Bank has made lending conditional on privatization in key sectors, according to the British-based pressure group Oxfam.             

 

Britain has said it will withhold a 50-million-pound contribution to the Bank, about 10 per cent of the amount it planned to provide the institution next year, to protest the strings attached to aid given to poor nations.          

 

British International Development Secretary Hilary Benn said conditions should be attached in areas such as tackling corruption and promoting good governance but it was "not right" to impose them on economic policy choices.      

 

British charity Christian Aid's head of policy Charles Abugre praised London's decision but urged it to go further in withholding all its contributions to the World Bank.          

 

"This is a very welcome development and vindicates Christian Aid's long-held belief that economic conditions imposed on poor countries by the World Bank and the International Monetary Fund can be disastrous for poor countries. But this is only a first step. We now urge Britain to go the extra mile and withhold all its monies."             

 

Wolfowitz gained support for his position at a seminar here Sunday from leading anti-corruption campaigners including former US Federal Reserve chairman Paul Volcker, who chaired the explosive inquiry into the UN Oil for Food scandal.              

 

"I see no real question of national sovereignty involved," Volcker said, adding that the greatest threat to development "is to sit back and be passive in the face of this challenge".            

 

Nigeria's celebrated anti-corruption chief Nuhu Ribadu told the seminar that "the biggest challenge facing world development is corruption," which he said forces poor countries to depend on foreign aid.        

 

The corruption and governance question figures prominently on the agenda of the Development Committee, which sets policy for the Washington-based World Bank.    

 

The committee was meeting here ahead of plenary sessions Tuesday and Wednesday of the full membership of the Bank and the International Monetary Fund.