U.S. News

World Bank Board Negotiating Wolfowitz Exit


The World Bank's board is negotiating an exit package for President Paul Wolfowitz that should end his tumultuous two-year tenure that burst into acrimony over his role in directing a high-paying promotion for his companion, board sources said.

"They have resumed the meeting and are finalizing a deal," one of the board sources told Reuters after an adjournment of an earlier board meeting at the request of the United States.

The board sources, from developed and developing countries, said details of a package, including financial compensation, were being discussed with Wolfowitz's lawyer.

Under a contract he signed in June 2005 when he became World Bank president, Wolfowitz would receive a year's salary, or around $375,000, if his service were terminated by the board or if he resigned.

The resignation of the former U.S. deputy defense secretary and architect of the Iraq war would end a protracted and messy battle over the pay and promotion deal he approved for World Bank Middle East expert Shaha Riza when he joined the bank.

Pressure to resign increased on Wednesday as European countries signaled they would resist a bid by the United States to keep Wolfowitz in the job in the face of a damaging report by a board panel issued on Monday that found he broke bank ethics rules negotiating the package.

The board was discussing whether to endorse the report on Wednesday when the the United States requested a recess to consider its position.

One source said when the meeting resumed at 2:30 p.m. (1830 GMT) discussions had begun over how Wolfowitz might resign.

Germany Trip

Wolfowitz was scheduled to attend a meeting of the Group of Eight finance ministers in Germany this weekend.

German Development Minister Heidemarie Wieczorek-Zeul said overnight Wolfowitz would not be welcome to take part in a two-day World Bank forum on development aid for Africa that starts on Monday in Berlin.

"He would do the bank and himself a great service if he resigned," Wieczorek-Zeul, one of Wolfowitz's strongest critics, told reporters in Berlin.

"It would be the best thing for all concerned."

European countries have long had misgivings about Wolfowitz since his nomination by President George W. Bush in 2005 at the height of tensions between the White House and European critics of the Iraq war.

The U.S. request for an adjournment sparked speculation within the bank that U.S. backing for Wolfowitz was softening, but White House reiterated its support.

"We stand by our support of Paul as the World Bank president," White House spokesman Tony Snow told reporters.

Signs that the United States would not win the support needed to keep Wolfowitz in his job came when U.S. officials failed on Tuesday to rally allies among other rich Group of Seven countries.

It had tried to a cut a deal that would have separated consideration of his ethics violations from a decision over whether he had the credibility to continue, but only Japan out of the G7 countries sided with the United States.

G7 sources said most board members wanted a quick resolution to the protracted dispute over whether Wolfowitz should stay on, resign or be fired over his companion's promotion.

Wolfowitz has remained defiant and has argued he should not take all the blame for the promotion and is seeking an acknowledgment by the board of its failures in its guidance to him on how to deal with conflict of interest issues over Riza.

In an emotional appeal to keep his job, he urged the board on Tuesday to be fair.