Nextgeneration_Project - Press & Op-Eds

Press & Op-Eds

THE SAN DIEGO UNION-TRIBUNE

Russia superpower status linked to oil, ex-CIA official says

Putin's objective: to control energy

March 4, 2007

By David Gaddis Smith

Union-Tribune Staff Writer

Russia is trying to use its oil wealth to become a superpower again, a former CIA deputy director says.

In a recent speech in San Diego, retired Adm. Bobby Inman said President Vladimir Putin seized control of the Yukos oil firm not just because its owner engaged in politics, but because Putin wanted the Russian state to control the energy industry.

“I believe that Mr. Putin has concluded that there is a new path for Russia to again be a superpower. . . . It is for the state to control one of the world's largest supplies of oil,” Inman said.

He said Russia is reassembling “state control of all the energy production distribution processes” and seeking to own “the downstream facilities in the countries that are dependent on Russian foreign gas.”

Inman, 75, spoke as part of the Next Generation Project, hosted by the University of California San Diego's School of International Relations and Pacific Studies. The project concluded last weekend.

“The reality in the world that we live in is that the competition for available fossil fuels is growing far faster than the suppliers are being found,” Inman said.

Also speaking was Anne-Marie Slaughter, a Princeton dean, who some say could become secretary of state in a Democratic administration.

A recent national security project that she co-directed put the price of oil “at over $150 a barrel when U.S. defense spending dedicated to keep oil flowing is factored into the price.”

Oil was trading around $62 a barrel Friday.

Slaughter, dean of Princeton's Woodrow Wilson School of Public and International Affairs, and Princeton professor G. John Ikenberry were co-directors of the Princeton Project on U.S. National Security in the 21st Century.

She pushed for a more multilateral approach to the world and said the U.N. Security Council should be expanded. She also advocated the creation of a global “Concert of Democracies,” whose members would “commit to not attack one other” and “(to) uphold the institutions of liberal democracy.”

The “concert” could approve the use of force to counter world threats when institutions such as the United Nations do not act. It would include “new democratic partners like India, South Africa, Brazil and Mexico,” according to the Princeton project's blueprint.

Inman also spoke about Mexico and Brazil. He said he had been pleased and surprised with Mexican President Felipe Calderón's “immediately attacking crime and abductions,” although Inman said this was “high risk” because the military that Calderón is using to fight drug traffickers could be corrupted.

Inman said he had been worried about Brazilian President Luiz Inacio da Silva because of his leftist background. But, Inman said, “to my great amazement, he proceeded to do a better job of implementing his predecessor's economic policies than they had.”

The Next Generation Project, part of the American Assembly at Columbia University, is an effort to bring together people from across the country to generate ideas about the direction of U.S. foreign policy.

The project is headed by Francis J. Gavin of the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, where Inman holds the Lyndon B. Johnson Centennial Chair.

Project Director Francis J. Gavin and The Next Generation Project were recently mentioned in the following Op-Ed from The Wall Street Journal.

The Real World Bank Scandal

THE WALL STREET JOURNAL

April 20, 2007

By Robert B. Holland III

By the time this is published, I don't know if Paul Wolfowitz will still be president of the World Bank. Regardless of his fate, many of the problems and agendas underlying his current predicament will remain unresolved and must be confronted if much-needed reforms have any hope of implementation.

Before addressing those matters directly, a few words about the Shaha Riza situation are in order. Ms. Riza is, of course, Mr. Wolfowitz's companion who left the World Bank to join the State Department when he became the Bank's president. First, the shabby treatment Ms. Riza endured at the World Bank began long before Mr. Wolfowitz's nomination was unanimously approved by the Bank's Board of Executive Directors in 2005. I should know, I represented the U.S. on the board from 2002 to 2006. Without board authorization or knowledge, several members of senior management -- including several now trying to dust their tracks -- pressured Ms. Riza to leave the World Bank while Mr. Wolfowitz's nomination was pending.

Second, Ms. Riza is a well-known advocate of women's rights in the Middle East, a reputation that made her unpopular among some of my board colleagues well before Mr. Wolfowitz's nomination. In my opinion, the pressure to which she was subjected was typical of a culture that many female employees frequently complain is oppressively sexist.Moreover, Mr. Wolfowitz acknowledged the conflict promptly upon his nomination. I believe that he consistently acted in good faith attempting to carry out the board's wishes that the conflict be resolved without unduly penalizing her for making a career move she did not seek. He would have avoided much grief if he had simply presented the details of the arrangement to the ethics committee, if in fact he didn't, but it wasn't unreasonable to assume he was acting as directed, especially since the committee expressed satisfaction with the outcome. A clearer public explanation also would have helped, but no fair reader of the released documents would call his actions a "scandal."

Those interested in the success of the World Bank should be under no illusion as to what is really motivating the staff revolt now playing out and what the consequences are likely to be. Many are opposed to Mr. Wolfowitz's anti-corruption emphasis, some on the good faith basis that he is placing disproportionate emphasis on the issue at the expense of other development priorities. Others, however, are opposed on the selfish basis that elevating anticorruption and governance considerations will result in lower lending levels and more difficult negotiations with borrowing governments. Still others may fear exposure of corruption among staff itself and possible adverse donor reaction if widespread corruption appears to plague Bank operations.

Regardless of the fates of Mr. Wolfowitz and the anticorruption initiative, the Bank faces an existential financial problem because of the combined effect of its declining relevance and attractiveness as a funding source for many middle-income countries like China, India, Mexico and Russia, and an annual administrative budget exceeding $1 billion. It's a positive development that many countries no longer are dependent on Bank lending, but the income consequences to the Bank need to be addressed because the administrative budget is a serious burden on the world's poor and donor taxpayers.

The most important cost drivers are staff salaries and headcount, and it is here where some of the most pernicious effects of the staff association's union characteristics are felt. Over the years, the Bank's legal department has constructed a complex set of rules and procedures governing employment practices, particularly terminations, designed to avoid a court of law somewhere imposing something more onerous in the name of "due process."

The unfortunate result is a system of such Dickensian complexity that virtually all bank managers have concluded that no one can be fired. This, and the tendency of many Board members to intervene in individual cases to protect or promote their nationals, has resulted in far too many employees, many of whom are widely viewed as incompetent, and costly salaries and severance packages (compared to which Ms. Riza's package is a pittance). Other unfortunate results are an unreasonably low mandatory retirement age of 60 and the retention of an army of consultants nearly as large as the Bank's regular workforce. Many consultants are former Bank staff. The permanent nature of Bank employment also complicates needed reform of its whistleblower policies, which are frequently abused as another tool of entrenchment.

All of these and other factors have added up to a bloated budget in which an unusually honest and candid senior budget official , who met with Mr. Wolfowitz in my home pending board approval of his nomination to avoid detection by more senior Bank staff, identified specific examples of wasteful spending adding up to about $300 million annually. Mr. Wolfowitz's first steps to rein in the Bank's unsustainable cost structure are another important reason many staff and their board allies want him gone. Unless he and his successors and the board address the cost structure, the Bank will be in danger of collapse.

The bloated permanent staff is also an obstacle to a necessary re-assessment of which activities the Bank should really be engaged in, the kind of constructive critical thinking regarding the post-World War II multilateral institutions of which the "Next Generation" project, led by Frank Gavin at the LBJ School of Public Affairs, is a good example. In my opinion, the Bank does first-rate work in research and in acting as a clearinghouse and opinion leader in promoting and disseminating best practices in development. Its annual "Doing Business" report is an excellent resource promoting foreign direct investment and encouraging developing country reform. But many of its other activities, including much of its lending, are of more questionable development impact. The Bank needs to narrow its focus on areas of comparative advantage, a threatening idea to turf conscious entrenched bureaucrats.

Mr. Wolfowitz is also under attack because he brought with him some trusted advisers from outside the Bank and has encouraged the departure of several senior managers. This has disrupted the status quo and caused job insecurity for many career staff whose long-held assumptions regarding what is necessary to make their way up the career ladder have been challenged. I haven't agreed with, nor am I aware of, all of his personnel decisions or with their timing, but any Bank president who relies exclusively on career staff is unwise and any who doesn't challenge the status quo is not doing his job.

Many staffers have also reacted to Mr. Wolfowitz's insistence on accountability in Bank operations in the manner of Dracula being exposed to a cross. Without staff accountability for results, however, there is little hope that the poor will be helped by the Bank.

The nature and composition of the board itself is also at play. Needless to say, a 24-person board is hopelessly unwieldy as an effective policy-making, much less operating, body. The board's structural ineffectiveness is compounded by the frequency of its turnover, with tenure averaging less than two years, hardly enough time to learn all the acronyms, much less who you can trust; the imperatives of gaining loan approvals for borrowing country directors (never once in four years did I witness one such director oppose any loan); and the comparatively high compensation enjoyed by many board members. Other parochial foreign-policy interests, including those of the U.S. (especially in the form of a mind-numbing and influence-diminishing number of legislatively mandated voting requirements), are also a serious impediment to Board effectiveness.

Many board members would love to see the board's power relative to the president enhanced. All others should be horrified at the thought.

Finally, there is no question that many resent the tradition by which the nominee of the President of the U.S. becomes the president of the Bank. The resentment has been exacerbated by the staff's political preferences (roughly the same as that of most college faculty). Good philosophical arguments can be made for a more open presidential selection process. However, the same arguments can be made with respect to many other multilateral institutions such as the IMF; the African, Asian, European and Latin American multilateral development banks; and, last but not least, the U.N. The unproductive free-for-all that would be unleashed if all such understandings were abandoned would not be a pretty picture, nor, in my opinion, an improvement.

As for the Bank itself, the idea of the board reaching consensus on desirable, objective, non-parochial job qualifications for its president is an amusing thought and the exercise might be entertaining and edifying (if the Bank's opaque disclosure policy was amended to allow it). In my opinion, ideal qualifications would include experience running both a large, hostile government bureaucracy and a large multinational corporation, success in a turn around situation, and business experience in developing countries. Unfortunately, that list would be short and the few who might be on it are not likely to want the job after observing Mr. Wolfowitz's ordeal.

Mr. Holland represented the U.S. on the World Bank's Board of Executive Directors from 2002 to 2006.

OHMYNEWS.com

It's Time for a Change in America's Global Thinking

by Paul J. Lamb (Next Generation Project Fellow, West Coast Assembly)

OHMYNEWS.com

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