Monday, 23 April 2007

Occidental tourist

The Occidental Grill
Pennsylvania Avenue
Washington DC

Dear Confidentialers,

Viewed from the reassuringly stolid interior of the Occidental Grill ­ 'Where statesmen dine', it says on the door ­ Washington could be mistaken for a benign provincial city where bow-tied professors and power-suited politicians meet for lunch to engage in a leisurely philosophical joust. In reality, the US capital is in ferment as the confrontation between the Republican Presidency and the Democratic Congress threatens to paralyse the remaining months of the George W. Bush administration.

Whatever the issue ­ funding the Iraq war, the Justice Department and now the World Bank ­ partisans from each side are ready to bombard the other with accusations and innuendo. The next presidential elections are 18 months away and neither party has chosen a candidate yet but that doesn't stop every public issue being pushed through the political meat grinder.

As I was chatting with my companions at the Occidental, a lone student had embarked on a shooting rampage at a local university. Within hours of news breaking about the tragedy, Democratic politicians had started lambasting President Bush's opposition to gun control.

My mission in DC was to cover the less bloody but equally fraught battle for control of the World Bank. Here the villain of the piece is beleaguered World Bank President Paul Wolfowitz, who has admitted to 'making mistakes' by twice promoting his girlfriend, a communications officer with the Bank, and raising her salary.

Wolfowitz, who as Deputy Defence Secretary helped plan the USA's ill-fated war in Iraq, doesn't regard his mistakes as a hanging offence. Understanding that his appointment as President of the Bank while his girlfriend was an employee represented a conflict of interest, Wolfowitz dealt with the matter on his own terms and without consulting the relevant Bank officials.

He is the latest of President Bush's neo-conservative acolytes to suffer a reversal of fortune as Washington's political winds change direction. Wolfowitz's attempt to resolve this conflict by seconding his girlfriend, Shaha Riza, to the State Department, where she was awarded a salary higher than Secretary Condoleezza Rice's, provoked a rebellion among the World Bank staffers.

Neither are the staffers particularly enamoured of the self-confessed Bush administration retreads that Wolfowitz recruited as his enforcers in the Bank. The two, former Spokesman for Vice-President Dick Cheney, Kevin Kellems, and former senior Treasury Department official Robin Cleveland, have a reputation for brusque interventions and for ignoring the views of Bank officials.

Resentments have built up about mega-salaries and special conditions for the advisors. One Bank source tells me that Ms Cleveland insists on driving her Humvee to work and that the staff car park had to be modified to accommodate the gigantic vehicle.

Another Bank source compared the staff's attitude to Wolfowitz, Cleveland and Kellems to the rejection of a transplanted organ by the host. 'It is a 100% rejection,' he said. That was clear from a series of internal meetings in the run-up to the Bank's annual meeting on 14-15 April.

However, the Bank's Executive Board has been much more divided on the Wolfowitz issue. Unsurprisingly, the US Director strongly supported Wolfowitz; more surprisingly they were joined by the African Directors at the bank, who hailed the President's anti-corruption campaign and mobilisation of Bank resources for debt relief and post conflict states such as Liberia. But Wolfowitz has lost the backing of Asian and Latin American Bank shareholders, despite some public expressions of support.

Britain and Germany, the main assassins, have struggled to mount a unified European position on Wolfowitz's dismissal. However the crisis plays out, the Bank will be greatly weakened, particularly as it gears up to raise some US$30 billion in concessional funds to finance its soft-loan affiliate, the International Development Association (IDA), of which about half is to be earmarked for Africa.

The Wolfowitz question comes as doubts grow about the G8's big push for Africa. Last year, overall aid levels to Africa decreased by 5% while the World Bank's own disbursements to Africa were down by about $1bn. A testing time about which I'll have more to say in this week's issue.

I can't end without referring to the Nigerian elections from where I'll be reporting over the next week. Last week's edition of Africa Confidential gave a state-by-state guide to the key gubernatorial contests and analysed how the post-election transition may play out. I'll be talking to some of the key politicians and activists in the Niger Delta this week as well as the generation of national politicians in waiting in Abuja.

We also have a detailed pre-election analysis from Freetown, Sierra Leone, that suggests the electoral contest there may have opened up a little and that some tougher challenges lie ahead from Solomon 'Solo B' Berewa, the Sierra Leone People's Party candidate. Building on those themes, there is an analysis of the successes and failures of post-conflict reconstruction in Africa, a subject of growing interest to the multilateral development institutions. We have reports from Congo-Kinshasa and Guinea, and a banking analyst explains what lies behind the boom in Africa's financial services industry.

Yours in confidence

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