WB chief defends graft plan

SINGAPORE – Playing down a funding row with Britain, World Bank President Paul Wolfowitz defended his controversial anti-corruption campaign on Friday, saying the bank could not tolerate misuse of its funds to poor countries.

Wolfowitz has made fighting corruption a priority in his first year as president of the world’s largest development agency and has argued that corruption is one of the biggest threats to reducing poverty. At issue is how the World Bank should respond to evidence of corruption, which has strained relations between Wolfowitz and some European states, including Britain, France and Italy, which fear the campaign could slow the bank’s lending to poor countries.While the countries support cracking down on corruption, they argue that instead of withholding lending to projects where there are signs of corruption, the bank should work with governments to correct the problem while keeping funds flowing to the poor.The strains widened this week when Britain’s development secretary, Hilary Benn, threatened to withhold a payment of 50 million pounds to the World Bank to press the body to change the conditions it attaches to its loans.The money was earmarked for World Bank reforms and is separate from Britain’s main funding to the bank for anti-poverty programmes.”I don’t think it’s a row and I don’t think it’s out of control,” Wolfowitz told a news conference in Singapore.”Hilary and I are in complete agreement.”Benn said the World Bank should place conditions on its loans when such measures helped fight corruption and improve transparency, but it should not dictate economic policies to developing countries.Research by development group Oxfam in April found that 18 out of 20 countries surveyed had privatisation-related conditions attached to their World Bank loans.Wolfowitz agreed that countries should be responsible for their own policies.”If they don’t feel that it’s their programme, if you try to force them, it’s bound not to succeed,” he said.He denied differences with Britain over a new World Bank strategy to fight corruption, to be presented to the bank’s board of governors at meetings in Singapore this week and next.”I think we both agree that the approach here is that governance is very important, that tackling corruption is very important, that the way to do it is not by withholding money,” Wolfowitz said.But he added: “We simply can’t afford to turn a blind eye when we do encounter corruption in our projects.”New World Bank indicators show that governance and corruption are not problems for developing countries alone.The bank’s “Governance Matters 2006″ indicators score developing countries like Slovenia, Chile, Botswana and Estonia higher when it comes to rule of law and controlling corruption than some wealthier nations like Greece and Italy.”After the scandals that have taken place, it is a stretch to say there is no corruption in the rich world,” Daniel Kaufmann, director of global governance at the World Bank Institute, told Reuters.Earlier, Wolfowitz urged Western donor nations to make good on promises they made last year to increase financial help to Africa, warning that unless the aid was forthcoming, efforts in some developing countries to build effective governments and tackle corruption could be undermined.”I think the improved performance is there and increased assistance has got to come,” Wolfowitz said.”Donors are in danger of falling short on that promise.”Nampa-ReutersAt issue is how the World Bank should respond to evidence of corruption, which has strained relations between Wolfowitz and some European states, including Britain, France and Italy, which fear the campaign could slow the bank’s lending to poor countries.While the countries support cracking down on corruption, they argue that instead of withholding lending to projects where there are signs of corruption, the bank should work with governments to correct the problem while keeping funds flowing to the poor.The strains widened this week when Britain’s development secretary, Hilary Benn, threatened to withhold a payment of 50 million pounds to the World Bank to press the body to change the conditions it attaches to its loans.The money was earmarked for World Bank reforms and is separate from Britain’s main funding to the bank for anti-poverty programmes.”I don’t think it’s a row and I don’t think it’s out of control,” Wolfowitz told a news conference in Singapore.”Hilary and I are in complete agreement.”Benn said the World Bank should place conditions on its loans when such measures helped fight corruption and improve transparency, but it should not dictate economic policies to developing countries.Research by development group Oxfam in April found that 18 out of 20 countries surveyed had privatisation-related conditions attached to their World Bank loans.Wolfowitz agreed that countries should be responsible for their own policies.”If they don’t feel that it’s their programme, if you try to force them, it’s bound not to succeed,” he said.He denied differences with Britain over a new World Bank strategy to fight corruption, to be presented to the bank’s board of governors at meetings in Singapore this week and next.”I think we both agree that the approach here is that governance is very important, that tackling corruption is very important, that the way to do it is not by withholding money,” Wolfowitz said.But he added: “We simply can’t afford to turn a blind eye when we do encounter corruption in our projects.”New World Bank indicators show that governance and corruption are not problems for developing countries alone.The bank’s “Governance Matters 2006″ indicators score developing countries like Slovenia, Chile, Botswana and Estonia higher when it comes to rule of law and controlling corruption than some wealthier nations like Greece and Italy.”After the scandals that have taken place, it is a stretch to say there is no corruption in the rich world,” Daniel Kaufmann, director of global governance at the World Bank Institute, told Reuters.Earlier, Wolfowitz urged Western donor nations to make good on promises they made last year to increase financial help to Africa, warning that unless the aid was forthcoming, efforts in some developing countries to build effective governments and tackle corruption could be undermined.”I think the improved performance is there and increased assistance has got to come,” Wolfowitz said.”Donors are in danger of falling short on that promise.”Nampa-Reuters