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White House eyes new World Bank chief

The White House said Friday it will move quickly to find a successor — preferably an American — for departing World Bank President Paul Wolfowitz as the administration sought to rebuild relationships strained by the controversy.
Wolfowitz Awaits World Bank Decision On Rules Violation
World Bank President Paul Wolfowitz, shown here leaving his house  Thursday, issued a statement that he was pleased the board "accepted my assurance that I acted ethically and in good faith in what I believed were the best interests of the institution, including protecting the rights of a valued staff member."Chip Somodevilla / Getty Images
/ Source: The Associated Press

The White House said Friday it will move quickly to find a successor — preferably an American — for departing World Bank President Paul Wolfowitz as the administration sought to rebuild relationships strained by the controversy.

Wolfowitz a day earlier announced that he would step down at the end of June, his leadership undermined by a furor over compensation he arranged in 2005 for Shaha Riza, a bank employee and girlfriend.

“Traditionally, the American nominee has become the World Bank president. We want to move swiftly in this process,” said White House spokesman Tony Fratto. “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.”

The European Commission called Friday for a quick appointment, saying the poverty fighting institution needs “stable and strong political leadership.”

Wolfowitz’s departure ends a two-year run at the development bank that was marked by controversy from the start, given his previous role as a major architect of the Iraq war when he served as the No. 2 official at the Pentagon.

It also ends a potential political headache for President Bush, who had named Wolfowitz to the post.

The Wolfowitz flap had been seen as a growing liability that threatened to tarnish the poverty-fighting institution’s reputation and hobble its ability to persuade countries around the world to contribute billions of dollars to provide financial assistance to poor nations.

The bank “needs to rebuild it credibility immediately, regain its focus and devote its full attention to its clients,” said the bank’s staff association, which, along with former bank officials, aid groups and some Democratic politicians, had wanted Wolfowitz to resign.

As he left his home Friday morning, Wolfowitz, struck a conciliatory tone, telling The Associated Press that he is “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.”

Asked if the president had received any recommendations yet, Fratto responded: “Not that I’m aware of. I see lots of speculation in newspaper articles, and I’m not going to comment on names.”

Fratto also said he wasn’t aware of Britain’s Prime Minister Tony Blair — who recently met with Bush at the White House — being mentioned as a candidate to head the World Bank in conversations between the two leaders.

Bush’s selection must be approved by the World Bank’s board.

Among those mentioned as a possible replacement for Wolfowitz were former Deputy Secretary of State Robert Zoellick, who was Bush’s former trade chief; Robert Kimmitt, the 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 U.S. Federal Reserve chairman Paul Volcker.

The 185-nation 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.

By tradition, the bank has been run by an American. The Bush administration keenly wanted to keep that decades-old practice intact as it dealt with the Wolfowitz situation. The United States is the bank’s largest shareholder and its biggest financial contributor.

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 suggested a more consultive approach to finding a new head of the bank.

Bush’s selection of Wolfowitz in 2005 for the bank post had stunned Europeans and some other countries. Europeans were upset that Bush would tap someone so closely associated with the Iraq war. After the pay controversy erupted a month ago, Europeans led the charge for Wolfowitz to resign.

Ute Koczy, a development policy spokeswoman for Germany’s opposition Greens, argued that it was time to ditch that “wretched tradition” of an American heading the World Bank, and a European running the IMF. But a spokesman for Chancellor Angela Merkel dismissed the idea.

“There is absolutely no question for the (German) government over the United States of America continuing to fill the top job at the World Bank,” spokesman Thomas Steg told reporters in Berlin.

Germany “has no doubt” that the U.S. administration will “make a convincing personnel proposal — one that does justice to the demands of the World Bank in this situation,” Steg said.

Japan’s Finance Minister Koji Omi told reporters at a finance meeting of major economic powers in Potsdam, Germany, that it was wise to keep an American as president of the World Bank.

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 got what he wanted — an acknowledgment from the bank’s board that he did not bear sole responsibility for the conflict-of-interest furor surrounding his handling of the pay package.

The bank board said it was clear that a number of people had erred in reviewing Riza’s pay package. The board’s statement made no mention of any financial arrangements related to Wolfowitz’s departure, nor did it speak to Riza’s future.