Christian aid agencies call for democratizing World Bank

Christian aid agencies have called for greater democratization of the functioning of the World Bank (WB) in wake of the controversy surrounding its president Paul Wolfowitz's decision to give his partner a pay increase and promotion.

According to UK–based international relief and development agency Christian Aid, the crisis over World Bank president Paul Wolfowitz is the result of the institution's lack of internal democracy.

An antiquated agreement allows the United States government to nominate the World Bank president, while European governments nominate the managing director of the Bank's sister agency, the International Monetary Fund (IMF).

The US stranglehold results from its massive 16 percent voting share. The combined vote of the majority of the African continent – comprising 47 countries – is just 6 percent. And the voting system guarantees the US an effective veto on any major decision.

Christian Aid has warned consistently that in its view Wolfowitz is a bad choice of president, and that his election would be bad for poor countries. Christian Aid has also long argued that the president should be elected democratically.

In a letter to British Prime Minister Tony Blair in March 2005, just before Wolfowitz was confirmed in post, Christian Aid said his election had laid bare the hypocrisy of a process "...which is neither transparent nor merit–based, as employed by an institution which portends to advocate good governance."

"Two years on and Wolfowitz's regime has descended into farce. The self–styled anti–corruption crusader has behaved in a manner he was quick to condemn of recipient governments," said Charles Abugre, Christian Aid's head of policy.

"Democratic choice is at the heart of good governance, yet the Bank pursues a policy of telling developing countries – who have almost no say in the election of the president – what to do," he said.

Christian Aid also expressed concerns that the Bank still uses the language of good governance for dubious economic reforms. "The governance issue is, in our view, a Trojan horse for inappropriate liberalisation reforms," added Charles Abugre. "For example, in a recent loan to Bangladesh, trade liberalization was packaged as contributing to 'good governance and anti–corruption.'"

Christian Aid said it believes the UK and other European governments, including France and Germany, should lead by example and give up control over the leadership of the IMF.

"Paul Wolfowitz has made corruption an essential part of his personal policy platform not only in the bank but also among all major donors," Catholic aid agency CAFOD (Catholic Agency for Overseas Development) head of policy George Gelber said. "If he will not resign, then the bank board must ask him to leave."

"CAFOD has clear memories of Wolfowitz last year addressing a distinguished collection of Cardinals and Archbishops on the issue of corruption – and garnering their general approval for his stance, which now looks distinctly threadbare," Gelber said.

He added that the case raised wider issues about the appointment of the World Bank president and the managing director of its sister agency, the International Monetary Fund (IMF).

"It is the view of CAFOD that these appointments need to be brought into the 21st Century. The president of the World Bank should be an appointment based on merit and not a grace and favor appointment of the US President," he said.

"We also believe that the position of managing director of the IMF – currently a European appointment – should follow a transparent, accountable and meritocratic recruitment process," he added.

President Bush appointed Wolfowitz, a main architect of the Iraq war when he served as deputy defense secretary. His appointment was greeted with protests by international aid and other groups, and some worried he might use the bank to help America's allies and punish its enemies.

When asked about those fears, Wolfowitz, after his appointment, had said, "We're not playing favorites with anybody."

Though US has openly expressed its confidence in Wolfowitz, its European members have long had doubts about Wolfowitz's suitability to be bank president and have clashed with him over his emphasis on rooting out corruption in developing countries and holding up loans for countries with poor governance records.