Sun, May 06, 2007 - Page 5 News List

Wolfowitz's term as ambassador draws criticism


World Bank president Paul Wolfowitz, embroiled in controversy over the pay he awarded to a female companion in Washington, is being accused by critics of having failed to speak out against corruption and rights abuses when he was the US ambassador to Indonesia two decades ago.

As bank head, Wolfowitz has argued that corruption is crippling the world's poorest nations -- "the very thing he closed his eyes to" when he served as ambassador at the height of Indonesian President Suharto's autocratic regime, democracy activist Binny Buchori said.

"He's a hypocrite," she said. "He should quit."

Wolfowitz this week blamed unclear bank rules for creating questions about his handling of hefty pay raises for his girlfriend, Shaha Riza, shortly after he took over the helm of the international development agency in 2005.

The World Bank's 24-member board has promised a decision soon in the controversy, which has led to calls for his resignation.

But Jeffrey Winters, a professor of political economy at Northwestern University in Chicago, said Wolfowitz's 1986 to 1989 tenure as US ambassador to Indonesia already showed he was ill fit to run the World Bank.

"From the very beginning, I felt this was the wrong person for the job," Winters said.

He pointed to the radical deregulation of Indonesia's banking sector in 1988, promoted by Wolfowitz's economic team and international lenders.

It "opened the floodgates for local crony conglomerates to set up private banks and take in deposits from a trusting public," he said.

With no rule of law, there was no oversight and no supervision, he said.

"The foxes were running wild in the financial chicken coop and no one, including Wolfowitz, pressured the Indonesians to design safeguards to protect the public's deposits," he said.

One result was the financial crisis from 1997 to 1998 "that plunged tens of millions into abject poverty."

Suharto, who ruled for 32 years, was toppled in 1998 by demonstrations for democracy.

The former dictator's family has been accused of embezzling an estimated US$35 billion in state funds during his regime, according to corruption watchdog Transparency International.

Hundreds of thousands of people were killed under the dictator's brutal reign.

Supporters say Wolfowitz pushed quietly for economic and political reforms. One example was a call for greater openness at his farewell speech at Jakarta's American Cultural Club in 1988.

"I wouldn't say it was brave, after all he was moving on," said James Castle, a former head of the American Chamber of Commerce, adding that the comments would also have needed Washington's approval.

Others say he helped fight the Suharto regime in subtle ways.

"It seemed like he was hugging a dictator, but he was actually supporting us," said Bambang Harymurti, editor of the hard-hitting magazine Tempo, adding that "persons non grata with the government" were often invited to embassy receptions.

Asmara Nababan, executive director of pro-democracy research institute Demos said that by staying silent, Wolfowitz "was saying: `Don't worry about your domestic problems, America is here to back you,'" Nababan said.

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