Wolfowitz departure just first step in healing for World Bank

Associated Press • May 18, 2007 at 10:39 AM

WASHINGTON - The Wolfowitz episode hobbled the World Bank's work of aiding the poor, and Paul Wolfowitz's resignation was just the first step in a healing process. The Bush administration hopes to quickly name a successor to take over that effort.

The new chief will need to regain trust, rebuild credibility and mend frayed relations inside the poverty-fighting institution as well as with its 185 member countries.

All of those things are critical for Wolfowitz's successor, who will have to persuade countries to contribute close to $30 billion over the next few years to fund a centerpiece bank program that provides interest-free loans to the poorest countries.

"We want to move swiftly in this process," White House spokesman Tony Fratto said Friday. "We want to make sure that we are selecting the best individual for the job. We want someone who has a real passion for lifting people out of poverty."

One day earlier, Wolfowitz announced that he would step down on June 30, his leadership undermined by a furor over a hefty compensation package he arranged in 2005 for Shaha Riza, a bank employee and his girlfriend.

His departure will end a two-year stint at the development bank that was marked by controversy from the start. Before his appointment, he had been a major architect of the Iraq war as the No. 2 official at the Pentagon.

The resignation also ends a political headache for President Bush, who had named him to the post.

The controversy put the bank's staff of 10,000 worldwide in revolt, tarnished the bank's reputation and strained relations with other countries, especially Europeans, who led the charge for Wolfowitz's ouster.

"Like any good diplomat, there will need to be one of these early tours to European capitals, explain what he or she is about and kind of mend fences with the donor countries," said Joel Oestreich, a political science professor at Drexel University who has done research on the bank.

"What is needed is a good manager and somebody who is going to be perceived as listening to the concerns of the people in the bank and really working with them rather than being seen as more insulated from bank staff," he added. Wolfowitz's critics complained about his management style.

In the U.S. and overseas, everyone seemed to be looking ahead:

• Alison Cave, head of the bank's staff association, which had advocated Wolfowitz's resignation, said, "What we are hoping for is somebody who really has leadership capacity. Somebody who is a person of vision, who has demonstrated diplomatic abilities to bring development partners and clients together and really somebody who trusts the staff."

•Britain's international development secretary, Hilary Benn, said he was "relieved that this damaging time for the bank is finally over. The bank's task now is to renew its efforts to lift people out of poverty."

•German Development Minister Heidemarie Wieczorek-Zeul, a vocal critic of Wolfowitz, said, "The bank must quickly recover its full ability to act."

By tradition, the World Bank has been run by an American, and the U.S., the bank's biggest financial contributor, wants to keep that practice intact. But it's not a rule, and Bush spokesman Fratto was asked about the possibility of outgoing British Prime Minister Tony Blair. Fratto said he wasn't aware of that subject coming up in Bush's conversations with Blair this week. Nor would he comment on American names mentioned in news stories. Among them: former Deputy Secretary of State Robert Zoellick, who was Bush's former trade chief; Robert Kimmitt, No. 2 at the Treasury Department; Treasury Secretary Henry Paulson; former Rep. Jim Leach, R-Iowa; Sen. Richard Lugar, R-Ind.; Stanley Fischer, who once worked at the International Monetary Fund and is now with the Bank of Israel, and former Federal Reserve Chairman Paul Volcker. Bush's selection must be approved by the World Bank's board. Paulson, who will work with the president on finding a successor to Wolfowitz, said, "I will consult my colleagues around the world as we search for a leader." That suggests a consultative approach to finding a new head of the bank. Bush's selection of Wolfowitz in 2005 stunned many overseas, especially Europeans who were upset that he would tap someone so closely associated with the Iraq war. The bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. The bank's centerpiece program offers interest-free loans to the poorest countries. Wolfowitz waged a vigorous battle to save his job and maintained he had acted in good faith. He was all but forced out, however, by the finding of a special bank panel that he violated conflict-of-interest rules in his handling of Riza's pay package. After days of negotiations, Wolfowitz one thing he wanted - an acknowledgment from the bank's board that he did not bear sole responsibility. As he left his home Friday morning, Wolfowitz, struck a conciliatory tone, telling The Associated Press that he was "particularly grateful for the hard work" of the bank's staff. "We have accomplished a lot in the last two years. ... I am happy to claim a little bit of credit, but it couldn't happen without them." --- On the Net: World Bank: http://www.worldbank.org AP-CS-05-18-07 1600EDT

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