World Bank divided on Wolfowitz's future - East Valley Tribune: Business

World Bank divided on Wolfowitz's future

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Posted: Sunday, April 15, 2007 7:31 am | Updated: 6:13 pm, Fri Oct 7, 2011.

WASHINGTON - The controversy involving World Bank President Paul Wolfowitz and his involvement in a huge pay increase awarded to a close female friend moves to center stage Sunday as the bank's policy-steering committee meets.

Wolfowitz, who has been working behind the scenes at weekend meetings of finance ministers and central bankers to drum up support to stay in his post, presents reports to the bank's Development Committee and participates in its closing news conference.

The United States, Britain and France, whose governments have a major role in bank operations, said it was important to await the outcome of the World Bank's board of directors' investigation into Wolfowitz's actions.

But Britain said Saturday the controversy had damaged the World Bank. Development minister Hilary Benn failed to give wholehearted backing to Wolfowitz, who has been under fire since it emerged that he secured a $193,590 job for his companion, Shaha Reza, at the State Department soon after he joined the World Bank in 2005.

"Having (made public) the facts the World Bank board has yet to complete its work," Benn said in a statement. "While this whole business has damaged the bank and should not have happened, we should respect the board's process. I'm sure these views will be shared by other governors who will also be giving their response."

He said the Wolfowitz controversy was distracting attention from the bank's agenda.

"This weekend ought to be about the bank's contribution to fighting poverty and I'm looking forward to discussing how we can increase aid, tackle climate change and get clean water to 1 billion human beings," said Benn.

Treasury Secretary Henry Paulson called Wolfowitz "a very dedicated public servant" and said he also believed the review process by the board should be allowed to proceed.

However, Paulson said waiting for this process to be completed should not be read "as any lessening of support for Paul" by the United States. The White House said President Bush has confidence in Wolfowitz, a former deputy defense secretary and one of the architects of Bush's Iraq war strategy.

A planned demonstration by bank employees calling for Wolfowitz to resign failed to materialize, but several dozen members of advocacy groups marched outside the bank headquarters calling for his ouster.

Some African officials attending the meetings expressed support, saying Wolfowitz has made the continent a greater priority at the bank.

"We have seen visionary leadership, steadfast progress under Mr. Wolfowitz," said Liberia's finance minister, Antoinette Sayeh. "We can only say that we look forward to that continuing."

German Development Minister Heidemarie Wieczorek-Zeul said Wolfowitz needs to do some soul-searching about whether he can continue to lead the bank.

"At this point it is my conclusion that he has to decide for himself whether in regard to this mistake, he can credibly fulfill his duties," she said.

Last week, Wolfowitz apologized for his involvement in securing Reza's job at the State Department. But the apology has failed to quell the concerns of many on the bank's board.

Its European members have long had doubts about Wolfowitz's suitability to be bank president and have clashed with him over his emphasis on rooting out corruption in developing countries and holding up loans for countries with poor governance records.

The World Bank meetings were the closing chapter in the spring finance meetings, which also involved the International Monetary Fund. On Saturday at the IMF policy-steering committee meeting, officials expressed satisfaction with the robust expansion of the global economy but said more must be done to correct trade imbalances.

Finance ministers and central bankers said in a policy statement that growth is expected to remain strong this year and in 2008, underpinned by solid economic foundations.

In their communique the ministers said continued vigilance of the world economy was required in case there was a sharper than expected downturn in the U.S. economy, the world's largest, and a revival of inflationary pressures if oil prices rebound.

In a separate statement, four governments, including the United States and China, renewed promises to enact policies aimed at rebalancing global trade.

They said an orderly reduction in the U.S. trade deficit and trade surpluses in Asia would benefit the world by defusing protectionist trade action.

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