Sunday, May 13, 2007

World Bank board majority want Wolfowitz to resign

World Bank board majority want Wolfowitz to resign
By Lesley Wroughton

WASHINGTON (Reuters) - A majority of countries on the World Bank board believe Paul Wolfowitz should resign as President of the World Bank, bank board sources from rich and developing nations said on Friday.

"It is now very clear that a majority of members think Mr. Wolfowitz must resign," said one board source from a developing country, which received instructions from its capital this week not to support Wolfowitz's continued leadership.

"We believe that the World Bank cannot continue under the leadership of Mr. Wolfowitz," the source told Reuters.

The bank's 24-nation board this week delayed a final decision until next week over Wolfowitz's future, which hangs in the balance over a pay and promotion deal he approved for his companion, Shaha Riza, a World Bank Middle East expert.

The high-paying promotion sparked calls by the bank's employee association for Wolfowitz to resign and has paralyzed the institution, the globe's largest poverty-fighting agency.

Wolfowitz has said he took the advice of the board's ethics committee on Riza and that the row is part of a smear campaign designed to undermine his leadership.

Asked how many member countries thought Wolfowitz should resign, the source told Reuters: "More than 50 percent."

But another board official from a developed country cautioned that Wolfowitz's departure was not yet a foregone conclusion and he should be given time to respond properly to findings by a panel that his actions in the Riza's promotion broke bank rules.

He is expected to present his response to the panel by the end of the day today.

It was unclear whether the meeting of the board will decide Wolfowitz's future by consensus or whether it may be forced into a vote, which would be an unusual move.

There is concern among some board officials that a vote could further divide the bank by pitting allies of the United States against Europe and its supporters.


The official said among the issues being weighed by member countries was whether Wolfowitz's continued leadership of the World Bank would damage its ability to raise funds for anti-poverty projects, hurt the morale of the staff and further damage the bank's reputation.

The row over Wolfowitz has stirred lingering unhappiness, mainly among European countries, about his nomination to the job in 2005 because of his role as architect of the Iraq war.

Despite the private disquiet among Europeans at the time, Wolfowitz's appointment to the bank was confirmed without dissent on March 31, 2005. He has remained a controversial figure, locking horns with the bank's membership on such issues as his good governance and anti-corruption campaign.

Board sources said Canada and Japan would support the United States in its backing for Wolfowitz together with countries in Africa, where Wolfowitz has focused much of his attention.

The sources said Europe's push for Wolfowitz to resign was supported by Brazil, South Korea, India, Russia, Argentina, Saudi Arabia and Kuwait.

Exactly where China, Malaysia, Pakistan and Mexico stood remained unclear.

The White House has repeated almost daily that U.S. President George W. Bush has confidence in Wolfowitz, but this week referred the matter to the U.S. Treasury Department, which is responsible for U.S. World Bank policy.

U.S. Treasury Secretary Henry Paulson has stressed that it is important to preserve the World Bank's standing in the world and that Wolfowitz deserved a fair process.

U.S. Secretary of State Condoleezza Rice has been quietly discussing the issue with her European counterparts as recently as Thursday, according to a European source.

Rice's access to European capitals provides an opportunity for the Bush administration to gauge how serious the opposition is to Wolfowitz's continued leadership.