KEY POINTS:
Lost in the brouhaha over Paul Wolfowitz's tenure at the World Bank is what it means to Asia.
The word "means" is used here since Wolfowitz hasn't left yet amid a furore sparked by his pay raise for his girlfriend. As his departure date is June 30, the multilateral institution is stuck with an infamously unilateralist leader for six more weeks.
There's another reason to discuss Wolfowitz's 23 months as World Bank president in the present tense: his legacy is a work in progress.
It's called the Asian Monetary Fund and his peers at the International Monetary Fund may not be happy about it.
An Asia bailout fund was considered during the 1997-1998 crisis but died a quick death amid strong United States resistance to creating a counterpoint to the IMF; one over which the US Treasury Department would have zero influence.
The IMF, of course, drew much ire during the crisis for demanding fiscal austerity and higher interest rates in return for bailouts. Since then, Asian governments have worked to wall off their economies from speculators and to stop outsiders dictating policies. Hence, the build-up of currency reserves with China alone having more than US$1 trillion ($2.7 trillion).
This month, finance ministers from 13 Asian nations agreed to pool part of their US$2.7 trillion of foreign-exchange reserves to prevent a repeat of the crisis that depleted the region's holdings 10 years ago.
"If there's one lesson we learned from '97, it's that you better stand on your own two feet and you better be able to help yourself before others help you," Asian Development Bank director-general Rajat Nag said in Kyoto earlier this month.
"There should be a mechanism by which countries of the region come to each other's help."
Wolfowitz's tenure at one of the institutions involved in the Asian crisis is part of the sentiment driving the process.
The real irony, many say, is that a man who has been given credit - too much, really - for combating corruption in developing nations got tripped up by it. Asians still bristle at talk of the region's "crony capitalism" emanating from Washington in the 1990s.
That was especially true when US companies such as Enron and WorldCom turned out to be poster-children of bad corporate governance. And now, the Wolfowitz mess.
Supporters argue Wolfowitz was the target of a left-wing conspiracy, that his ouster was payback for being an architect of the war in Iraq while he worked at the US Defence Department and that he was sacrificed by bank staffers for tweaking the anti-corruption campaign begun by his predecessor, James Wolfensohn.
Yet Wolfowitz would have had zero credibility in the region preaching about corruption. It's not just about demanding a huge raise for his girlfriend; it's also about intellectual corruption.
Asian finance ministers watched with dismay as Wolfowitz shielded himself from the bank's development experts with a tight band of Republican loyalists. He has been running a multination, multiphilosophy, multifaceted institution meant to understand the plight of the world's poor and doing it like some corporate chieftain above accountability.
A quip one hears from Asians is how the "world" in World Bank hasn't applied to Asia in recent years.
That's odd considering two-thirds of the world's poor live in Asia. On the flipside, Asia is full of nascent powerhouses like China, India and Southeast Asia. Japan, too, is recovering.
The region's economies also are sitting on huge amounts of currency reserves. Together, these economies could set up an Asian Monetary Fund to combat poverty that would dwarf the World Bank.
The extent to which major economies are reliant on Asian savings to support their way of life was summed up recently in a Bank of America Capital Management report with the title: China's Role as America's Financial Sugar Daddy.
There's also a growing urgency for reducing Asia's reliance on the US dollar. It means fears of Asia dumping US Treasuries to bring the money home may be getting a little more real. It's not a distinguished legacy for a man many say did a great job at the World Bank.
-BLOOMBERG
