Who’s Afraid of the Big, Bad Wolfowitz


To some, Paul Wolfowitz’s nomination to be president of the World Bank is yet another sign of neoconservative political hegemony; to others, it smacks of a setback for the neocons, as it means one of their top (though least doctrinaire) defense intellectuals will, for the first time in his career, be using balance sheets, not bullets, as instruments for realizing formidable political vision.

How well he’ll do is anyone’s guess. There were, however, a few comments of optimistic or deferential cast in Tuesday’s papers regarding the deputy secretary of defense that bear commenting on, in the service of divining what we’re likely to see from the architect of “free and democratic Iraq”—which a report released yesterday by the anti-corruption group Transparency International reveals is reeling with corruption and graft, thanks in part to the poor planning and practices of the U.S.-led invasion and occupation that was Wolfowitz’s baby.

He helped manage a large organization. The World Bank’s a large organization; the Pentagon’s a large organization. He’s been involved in the management of that organization. George W. Bush, March 16

Ah, but how well has he helped manage it? Late last year the Government Accountability Office (Congress’s investigative arm) released a report on how effectively and efficiently the Pentagon’s “transformation” of the armed services—an effort running to the hundreds of billions of dollars—has been going. The report pointedly noted an “absence of clear leadership and accountability” at the Pentagon’s top tier—not exactly a ringing endorsement.

Citing the deputy secretary and Secretary Donald Rumsfeld specifically, the report concluded the Wolfowitz and other top Department of Defense officials haven’t done a stellar job of “maintain[ing] the oversight, focus and momentum needed to resolve the weaknesses in DOD’s business operations.” The result, concluded the GAO, has been a “lack of transparency and appropriate accountability across all of DOD’s major business areas [that] results in billions of dollars in annual wasted resources in a time of increasing fiscal constraint.”

That was just with regard to “transformation.” About this time last year, Comptroller General David M. Walker (the GAO’s chief) gave Congress a verbal update on a critical 2002 GAO report about across-the-board Pentagon financial management problems. Since 2002, Walker said, things hadn’t got much better. The principal reasons included a “lack of sustained top-level leadership and management accountability for correcting problems”.

While Walker did give Rumsfeld and Wolfowitz points for at least talking about addressing these problems, he added that they’ve been heavy on talk and light on walk, and he called for a much higher level of “direct, active support and involvement of Secretary and Deputy Secretary . . . in achieving shared, agency-wide outcomes and successes.” Walker noted that these were not trivial matters, and that the current Pentagon leadership’s lack of attention to them has helped enable a continuing “existence of pervasive weaknesses in DOD’s financial management” that has “hindered operational efficiency, adversely affected mission performance and left the department vulnerable to fraud, waste and abuse.”

Walker went on to cite some examples of what poor financial and operational management atop the Pentagon has wrought—examples that would not seem to portend well for a Wolfowitz-run World Bank. Among the dubious financial and accounting achievements that have occurred on Wolfowitz’s watch:

  • Weak Iraq-related distribution and accountability processes that have screwed both the American solider and American taxpayer. “These weaknesses,” he revealed, “resulted in (1) supply shortages, (2) backlogs of material delivered in theater but not delivered to the requesting activity, (3) a discrepancy of $1.2 billion between the amount of material shipped and that acknowledged by the activity as received, (4) cannibalization of vehicles, and (5) duplicate supply requisitions.”
  • Helping defense contractors abuse the federal tax system with impunity. “Under the Debt Collection Act of 1996, DOD is responsible—working with the Treasury Department—for offsetting payments made to contractors to collect funds owed, such as unpaid federal taxes,” Walker said. “However, we found that DOD had collected only $687,000 of unpaid taxes over the last six years. We estimated that at least $100 million could be collected annually from DOD contractors through effective implementation of levy and debt collection programs.”
  • Proliferation of Weapons of Mass Destruction constructive material from DOD’s own inventory. “Using a fictitious company and fictitious individual identities,” Walker reported, “we were able to purchase a large number of new and usable equipment items over the Internet from DOD,” including “a bacteriological incubator, a centrifuge, and other items that could be used to produce biological warfare agents.”
  • Putting civilians in danger by neglecting environmental responsibilities. “DOD continues to lack a complete inventory of contaminated and real property sites, which affects not only DOD’s ability to assess the potential environmental impact and to plan, estimate costs, and fund cleanup activities, but also its ability to minimize the risk of civilian exposure to unexploded ordnance,” Walker reported. “The risk of such exposure is expected to grow with the increase in development and recreational activities on land once used by the military for munitions-related activities.”
  • Letting insurers bilk the Pentagon. “Tens of millions of dollars are not being collected each year by military treatment facilities from third-party insurers because key information required to effectively bill and collect from third-party insurers is often not properly collected, recorded or used by military treatment facilities.”

    Before I have my own vision, I need to do a lot of listening. Wolfowitz to the Financial Times, March 17

    Some at the Pentagon who read this line think it possible Wolfowitz is actually learning from his mistakes. And that is possible—but not likely. “If this guy ignored some of the best advice from the most informed and experienced experts and scholars in and out of the military, what makes anyone think he’s going to do anything differently at the World Bank?” asked one senior military officer whose experiences with Wolfowitz have not made him a fan of the departing deputy secretary.

    Having dismissed with impunity everything from the troop requirement estimates for Iraq of then Army Chief of Staff General Eric Shinseki, to realistic cost estimates for the Iraq venture, to the prescient observations of various war colleges’ scholars; having blamed reporters in the line of fire for post-war problems in Iraq; having asserted as of summer 2004 that the situation in Iraq is “not an insurgency” when troops on the ground had been properly calling it such for a year . . . well, you get the idea.

    “It wouldn’t surprise me,” said the officer, “if he sets up his own little Office of Special Plans over there at the Bank.”

    He said he had learned some lessons from missteps made in Indonesia, when the bank was financing huge projects in a country that at the time was run by a dictator, Suharto . . . The bank, he said, “did some wonderful work in Indonesia, but ‘it didn’t do enough to empower those advocating’ ” better development strategies against the government . . . “[an associate] expected Mr. Wolfowitz would continue the anticorruption efforts of the departing president, James D. Wolfensohn, and demand fresh accountability from governments that receive aid. “Corruption was high on Wolfensohn’s agenda, and Wolfowitz has been very, very impressed by that,” the associate said. “One of his first passions was development, and when he was ambassador to Indonesia in the Reagan years, he was out there with the chicken farmers, and he’s kind of made for this job in some ways.” The New York Times, March 17

    Though doubtless some would like to think of Wolfowitz as a populist diplomat out sprinkling feed in solidarity with the poultry yeomen of Sumatra—as well as being a once and future champion of anti-corruption and fiscal accountability—his activities in the mid-to-late ’90s in support of klepto-cratic Indonesia at least temper that image a touch. Indeed, though Wolfowitz was chomping at the bit to effect the speedy regime change of Saddam Hussein—a dictator with a penchant for corruption and human rights violations on a mass scale—when it came to Indonesia, Wolfowitz was quite happy to encourage a go-slow-and-gentle approach to dealing with Suharto.

    In 1994, the constellation of American corporate interests that had long been doing business with Indonesia formed the U.S.-Indonesia Society. According to a 1996 Journal of Commerce article, while the group did no actual lobbying, its funding came from “major U.S. oil, mining, financial services and pharmaceutical companies with strong economic or political connections to Indonesia.” The Society’s constituent companies, the paper reported, “share a deep interest in maintaining smooth ties with the Suharto government in Jakarta.”

    To this end, the Society cast itself as the distributor of “authoritative and nonpartisan” information on Indonesia, doing everything from offering U.S. congressional staff carefully guided tours of the country to distributing “informational materials” to everyone from schoolchildren to businessmen. In a seminal 1996 Progressive article, Eyal Press quoted the distinguished Northwestern University Indonesia expert Jeffrey Winters as calling the Society’s materials “outrageous.” One “guide” in particular, Press noted, was devoted to “bolster[ing] the myth that Suharto has orchestrated an economic miracle in Indonesia, modernizing the country while lifting the masses out of poverty.” Another booklet published under the Society’s aegis characterized charges of corruption and authoritarianism as “exaggerated,” omitting any mention of dubious labor practices or human rights abuses.

    Given the Society’s prime movers, this was hardly surprising. Among the group’s underwriters was Texas energy magnate Roy Huffington, who in the early ’80’s decided to help pal Suharto with unruly elements in East Timor and Aceh by sending Suharto large consignments of cattle prods and other torture gear. Another active corporate member was Freeport McMoran, the multinational mining giant that wrought such environmental devastation in Irian Jaya—on, say, the scale of Saddam Hussein’s destruction of the Marsh Arabs native habitat—that the Overseas Private Investment Corporation (OPIC) pulled the company’s political risk insurance. (In 1998 The Wall Street Journal described Freeport’s Indonesian operations as “a study in how multinational companies adapted to the crony capitalism” of the Suharto epoch.)

    The Society’s Board of Trustees included Sumitro Djojohadkkusumo, a Suharto crony whose son Prabowo Subianto was not only married to one of Suharto’s daughters, but also commanded the notorious human-rights violating Kopassus special forces unit. And sitting at the same table as Sumitro at Board of Trustees meetings was the board’s co-chair—Paul Wolfowitz.

    Wolfowitz was also on hand for a December 10, 1996, National Press Club forum, in which Suharto’s man in Washington, Arifin Siregar, endeavored to make the case that human rights violations in Indonesia—and in particular East Timor—were a thing of the past. (The Indonesian army’s murderous 1999 operations in East Timor proved they were not.) When they were asked by an audience member how the United States could positively and proactively influence Indonesia’s political and economic betterment, Wolfowitz struck a decidedly non-interventionist tone: “I think the important point is that it’s Indonesians who decide what goes on in Indonesia,” he said. “But I think as long as we have good relations, they have been very open to hearing the American point of view. And I think your question was how can the United States influence. I don’t think it’s fair to ask the Indonesian ambassador how we can influence. But I would just say I think we have a very important influence, and I think we’ve exercised it quite effectively.”

    On the profit-over-everything-else front, Wolfowitz was certainly right; as Abigail Abrash of Harvard Law School’s Human Rights Program noted in a 2000 report, “in general, U.S. support—bilaterally through the Export-Import Bank and multilaterally through the World Bank, Asian Development Bank, and International Monetary Fund—for socially and environmentally harmful economic activities and social programs . . . has contributed to severe human rights abuses.” But for Wolfowitz, “democracy” will always trump human rights, as the case of Indonesia’s General Wiranto makes clear.

    In 2003, the U.N.’s Serious Crimes Unit, in conjunction with the government of recently-independent East Timor, issued indictments against nearly 300 current and former Indonesian military officers for war crimes committed in East Timor in 1999. Among them is Wiranto, former chief of staff of the Indonesian army—and a man Wolfowitz lauded in 2000 as a good steward of “democratic reform” in Indonesia for his stabilizing role in the waning days of Suharto’s regime. In a 2000 television interview, Wolfowitz did wanly concede that Wiranto (who’s indictment runs to 92 pages) “may have done something bad in East Timor or failed to stop something bad going in East Timor,” and that he “should be given a fair trial on these charges in East Timor.” But not only has the democratic government of Indonesia so beloved by Wolfowitz failed to hold Wiranto accountable, it has also bullied the young government of East Timor into not submitting the warrant for Wiranto’s arrest to INTERPOL—thus allowing Wiranto freedom to do everything from traveling to seeking Indonesia’s presidency, which he did unsuccessfully last year.

    No word yet on whether or not a Wolfowitz-run World Bank will alter its debt collection policies to include extraordinary renditions or audits at the Abu Ghraib branch.

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