Mon, Sep 10, 2001 page17

• Report angers World Bank

  • NY TIMES NEWS SERVICE
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  The World Bank is conducting a disciplinary investigation of one of its highest-ranking economists, who sharply criticized the bank's record on fighting poverty in a recent book and newspaper opinion article.

  The economist, William Easterly, came under investigation by the bank's office of business ethics and integrity after he wrote an article in The Financial Times that summarized views expressed in his book, several bank officials said. They said the inquiry, which has not yet concluded, was started because Easterly did not receive the required permission to write an article in a general-interest publication.

  In the article and the book, Easterly harshly assessed the bank's half-century history of fighting poverty, arguing that it has pursued a long list of failed elixirs and systematically ignored the poor results of its programs.

  He said the bank should encourage countries to adopt traditional free-market policies and stop lending to corrupt and incompetent governments. The investigation of Easterly, which a bank spokeswoman described as a routine enforcement of the World Bank's media and communications policies, is being conducted at a time when its president, James Wolfensohn, has come under attack from numerous critics.

  Right-wing economists say he has led the bank far astray of its traditional mission to enhance economic growth around the world, while those on the left say the bank under his leadership remains a top-down institution that does too little to respond to the needs of the poor. Critics have also put pressure on Wolfensohn to forgive more Third World debt.

  Several bank officials said that Easterly's case is one of several recent examples of how Wolfensohn has sought to assert more control over a raging debate within the bank as he battles outside critics. The timing of the dispute is particularly sensitive because thousands of protesters are expected to gather in Washington later this month at the annual meetings of the bank and the International Monetary Fund to oppose the way the lending institutions do business.

  Some protesters argue that the bank and the IMF have failed to alleviate -- and may have worsened -- poverty in developing countries. Environmental, human rights and social activist groups have also sought to force the bank, which is controlled by member governments, to disclose more documents and allow the public to express views about policies before they become final.

  Separately, President Bush and his top advisers have pressed the bank to rethink its antipoverty strategy. Bush proposed replacing as much as half of the bank's loans to developing countries with outright grants, a change that the World Bank leadership has resisted.

  Two influential opinion journals, Foreign Affairs and Foreign Policy, have lengthy articles in their most recent issues that question the direction Wolfensohn has taken the bank.

  Although many of its critics have conflicting views about what is wrong with the bank and what should be done to fix it, the flurry of internal dissent and outside attacks have sapped morale and created a sense of crisis, several people who work there say.

  One close supporter of Wolfensohn said the bank was "under attack by the forces of reaction," who are trying to undo the changes Wolfensohn has brought since he took office six years ago.
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