'My Job Is to Tell You He's Not Available'

'My Job Is to Tell You He's Not Available'
The World Bank tries to silence a critic.
BY CLAUDIA ROSETT
Thursday, November 8, 2001 12:01 a.m. EST

Foreign aid is supposed to help the poor and build a better, safer world. But too often there's a sordid side to it all. So it is with a story now unfolding in the Washington headquarters of the World Bank. It is a drama of some relevance as the World Bank's president, James Wolfensohn, heads next week to a ministerial strategy session in Canada, and the bank girds for a big effort to reshape Pakistan, rebuild Afghanistan and very likely hit up the U.S. next year for fresh billions in funding.

The tale begins with a World Bank senior staffer, economist William Easterly, who during his 16 years with the bank has traveled widely and seen a lot of World Bank projects, both on the drawing board and in the field. He has pondered his observations in the context of modern development theory--which tries to take into account not just static models but how real people respond to the many interacting incentives of the real world. After years of research and consultation with a long list of topflight economists such as Stanford's Paul Romer, Harvard's Robert Barro and Nobel laureate and former World Bank chief economist Joseph Stiglitz, Mr. Easterly published a book last summer called "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics."

Mr. Easterly's book is deeply sympathetic to the poor, but highly critical of aid policies over the past half century, including those of his own employer, the World Bank. It is also articulate, packed with colorful eyewitness examples and anecdotes, ranging from tales of Colombia to Russia to Pakistan. Among that small fraction of the population who gravitate toward 342-page hardcovers on economic policy, his book has been extremely well received.

Mr. Easterly also reached out to a wider audience. Under the headline "The Failure of Development," he wrote an op-ed for the July 4 Financial Times summarizing the argument of his book: "Contrary to conventional wisdom, aid to the developing world has been a big disappointment." He argued that despite the $1 trillion spent on aid projects since the 1960s, such institutions as the International Monetary Fund and the World Bank "have all failed to attain the desired results."

But here's one result the World Bank is about to achieve. According to a public-relations officer for the bank, "Bill is going on sabbatical"--within the week. Whether Mr. Easterly will be allowed to return from his sudden "sabbatical" is still "up in the air," the flack adds.

Why it's happening is no secret. World Bank officials acknowledge that Mr. Easterly's article triggered an internal "investigation" of the author, based on a complaint by the bank's chief economist, Nicholas Stern. Officially, Mr. Stern's concern was not that Mr. Easterly had questioned the bank's policies in his book, but that he had published his article in a newspaper--thereby reaching a general audience--without informing his boss. This investigation has now dragged on for months, and is still "ongoing," according to bank officials. The outcome rests in the hands of Katherine Sierra, the bank's vice president for human resources, who has the power to fire Mr. Easterly. A bank press officer interviewed this week would not rule out that possibility.

In becoming sudden sticklers for the rules, the World Bank's managers may be broadly within their rights. But several of Mr. Easterly's former colleagues and fellow economists see this as a witch hunt--meant to remove the most vocal critic within the ranks and by example silence the rest. A former World Bank staff economist, Michael Finger, now a resident fellow at the American Enterprise Institute, says that during the 20 years he worked at the bank--he left in April--he published scores of articles in external publications, such as the Journal of Commerce, and "only twice did I ever ask anybody for permission." He was never disciplined. He was not as sharply critical as Mr. Easterly, and he did not reach quite as broad a public. Mr. Finger says he believes the bank's logic is: "We're going to draw and quarter Bill Easterly so that the others will stay in line."

A World Bank press officer acknowledges that staffers often don't bother to get clearance before publishing in or speaking to a newspaper. And bank officials I talked to this week were unable to come up with a single other example of an internal disciplinary investigation targeting a full-time staff member for a "clearance" infraction. The bank press officer says this is "a gray area" and "not a situation for which we have extensive written rules."

Mr. Easterly himself has no way to present his own version of these events without, by World Bank lights, committing fresh infractions of the rules, whatever they might be. My attempt this week to reach him via the officially condoned channel of the bank's PR department was met with this response: "It would be impossible to speak with him." When I asked if I might call Mr. Easterly directly, just to see if he'd be willing to request official permission to speak with The Wall Street Journal, the official answer was: "My job is to tell you he's not available."

And if Mr. Easterly himself asks for World Bank approval to respond to the press?

"I'd say no."

Further questioning at the World Bank turned up the press office pronouncement that Mr. Easterly has been "providing a false and misleading picture of what the Bank does." This was at least in part a reference to comments by Mr. Easterly quoted in the Washington Post Sept. 30. The subject was not his personal situation. What Mr. Easterly spoke about was his "huge grounds for concern" that the World Bank will continue to pursue flawed policies in the new rush of lending likely to go to client countries that are "allies in the war against terrorism"--countries such as Pakistan.

What's disturbing here is the World Bank's deep interest in its own vague internal technicalities and apparent indifference to vital matters of policy. Mr. Easterly is no crank. His arguments are well grounded; he has been raising large and legitimate issues. His concerns are shared by a wide range of experts, including Allan Meltzer and Adam Lerrick, whose heavily researched Meltzer Commission report to Congress last year found that the bank's own internal evaluations of its projects showed "a 55-60% failure rate to achieve sustainable results." Some economists familiar with the World Bank say the failure rates of its projects may be far higher; there is currently no fully independent audit of bank activities, and little sustained official follow-up.

As Mr. Easterly chronicles in his book, this sort of stuff can lead to real trouble in the countries we are supposed to be helping. Aid donors can be "remarkably oblivious to ethnic polarization. They don't sufficiently monitor how aid resources might disproportionately benefit a particular ethnic group, worsening ethnic tension." He offers the example of Sri Lanka just before the outbreak of civil war in 1983. His warning seems apt, as well, for such places as modern Pakistan--where the World Bank has loaned some $5 billion over the past decade to no great avail, with $600 million currently on the way.

World Bank staffers have been packing their bags for a big powwow in Islamabad at the end of this month, where they'll discuss how to pour more aid into the region. But Mr. Easterly won't be joining them. Concerned as he is with actual results of the bank's projects, he'll be packing his bags to start his surprise sabbatical at a private Washington-based think tank, the Institute for International Economics. There, one might presume, he'll be safely removed, along with his critical ideas and courageous voice, from too intimate a view of what the World Bank says it is doing to help us all.

Ms. Rosett is a member of The Wall Street Journal's editorial board. Her column appears Thursdays on OpinionJournal.com and in The Wall Street Journal Europe as "Letter From America."