The past month has witnessed the unfolding of a leadership crisis in the World Bank, sparked by a scandal involving its President Paul Wolfowitz. It has led to his resignation being announced on 16th May, 2007.

The scandal, as reported in the international media, concerns a special deal that was offered by President Wolfowitz to his girl friend, one Ms. Shaha Riza, a senior staff member of the World Bank. When Wofowitz was picked to be President of the World Bank, she had to leave the Bank according to its rules. Mr. Wolfowitz offered her three things as compensation for “upsetting her career”: (i) immediate promotion with close to 50% salary increase, (ii) an assignment with the US State Department, while the World Bank will pay her salary, as long as Mr. Wolfowitz remained in the Bank, and (iii) re-entry into the World Bank after his exit, with another promotion.

Media reports are creating the impression that the World Bank cares so much about corruption and ‘good governance’ that it has forced its President to resign. This is nothing but propaganda to deceive the people. Analysis of the facts indicate that the corruption scandal was only a pretext for getting rid of Wolfowitz.

One important fact is that the Board of Executive Directors, representing the member states of the World Bank, gave Wolfowitz a clean chit while announcing his resignation. They did not punish him in any way, even though a committee appointed by the Board had found him guilty of breaking staff rules. Yet the Board declared that Wolfowitz “acted in good faith”, and is resigning only for the sake of preserving the reputation and “clean image” of the World Bank.

The fact that the World Bank’s Board did not pronounce Wolfowitz guilty even though he broke the staff rules, shows that these rules do not apply strictly and uniformly to all those who work for the World Bank. It shows that favouritism and corruption are common practice for privileged senior officials. In other words, the World Bank does not practice what it preaches to the governments of the world in the name of good governance and anti-corruption.

One fact that clearly points to prior planning and organisation to get rid of Wolfowitz is that the details about the Riza deal were leaked to the media just on the eve of the Spring Meetings held in April, 2007. The Spring Meetings are an event where representatives of governments from around the world visit the World Bank headquarters in Washington, D.C, to meet with the President and other senior managers of this institution. When Mr. Wolfowitz appeared at the usual press briefing held during these Spring Meetings, he was bombarded with questions about the sweatheart deal he made out to his girl friend. The leak had clearly been timed in order to maximise his embarrassment and the visibility of the scandal in the media.

While a great deal of noise was created for a whole month about the deal between Wolfowitx and his girl friend, the final decision of the Board was determined by something entirely different. The decision of the Board was arrived at through back room negotiations between government representatives of the United States and the big powers of Europe. The deal was that the US would ask Wolfowitz to resign, while no charge of guilt will be pinned on him. This confirms that the scandal was only a pretense to get rid of Wolfowitz.

The World Bank is an institution whose real mission is to expand the space for the capitalist monopolies and imperialist powers to penetrate the markets and ruling circles in the countries of Asia, Africa and Latin America. It serves the interests of the G-8 powers in particular, headed by the United States. The US not only has the largest vote share in the Board of the World Bank, but the US administration also gets to nominate the President, by convention. The European powers get to nominate the Chief of the IMF, the sister organization of the World Bank. Mass opposition has been growing among the peoples all over the world, and some governments in Latin America, against these agencies of neo-colonial domination. Some reactionary circles within the imperialist powers have also been questioning the relevance of the World Bank in recent times.

To save the World Bank, in these circumstances, makes it necessary for the US and its European allies to sort out their internal contradictions. They have to reach a new deal, in which the first step is to replace the neo-conservative Wolfowitz, one of the architects of the war on Iraq, with someone more suitable to the G-8 powers as a whole. Corruption has been used as a convenient pretext to deal with a political problem and bring about a mid-term leadership change. How the situation develops over the coming months will reveal further the nature of the internal contradictions of imperialism and how they are playing out at this time.