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World Bank Postpones Decision over Wolfowitz Fate

Senior U.S. Democrats Wednesday urged President Bush to help end the "historic crisis" over Paul Wolfowitz's leadership of the World Bank as the bank's board delayed a decision over his fate until next week.

In a late night statement, the 24-nation board said it had agreed to delay until Friday the deadline for Wolfowitz to respond to a bank panel report, which found that he broke rules in a pay and promotion deal in 2005 for his companion, Shaha Riza, a bank Middle East expert.

The board had planned to meet on Friday to decide on Wolfowitz's future, but it said it would now make a decision Tuesday, May 15, when Wolfowitz could explain himself in person if he wished to.

The board is divided over its support for Wolfowitz -- European countries are pushing for him to step down and the United States is shoring up support for the former U.S. deputy defense secretary among a clutch of allies like Canada and a few Asian and African countries.

In a letter to Bush Wednesday, Senate Majority Leader Harry Reid and Democratic Sens. Patty Murray, Richard Durbin and Charles Schumer warned that the crisis was damaging the institution and undermining U.S. interests, especially its traditional role in choosing the bank's president.

"We urge you to take decisive action quickly to bring thiscrisis to a close," they told Bush, echoing concerns expressed by other prominent Democrats, including presidential candidates Bill Richardson and John Edwards.

The Democratic senators said the bank's board may be compelled to vote on Wolfowitz's fate, an unprecedented step.

NO RULES FOR DISMISSAL

There are no rules for the dismissal of a World Bank chief because it has never happened in the bank's 62-year history. It could either be put to a vote or decided by consensus.

"We do not believe the bank's mission or U.S. interests would be advanced by such a vote," the senators wrote.

They questioned the manner in which the crisis had been handled and in part blamed Wolfowitz, who has always been controversial because of his leading role in the Iraq war.

“The current situation is complex and unfortunately may be fueled in part by views toward Mr Wolfowitz unrelated to his tenure at the bank," the senators said.

"At the same time, it is likely that, at least by adding to confusion about the facts, Mr Wolfowitz played a role in aggravating the crisis."

The furor has paralyzed the World Bank for more than a month since leaked documents emerged over Wolfowitz's handling of Riza's high-paying promotion. That unleashed widespread anger among bank staff and prompted an inquiry.

The bank's employee association said the institution's credibility depended on how the crisis was resolved.

FULL WHITE HOUSE SUPPORT

The White House, which had previously deferred questions over the matter to the U.S. Treasury, insisted Wednesday it was not "hanging Paul Wolfowitz out to dry" and that he had the Bush administration's strong support.

"We still support him fully," White House spokesman Tony Snow told reporters on board Air Force One as he flew with Bush to visit parts of Kansas devastated by tornadoes last week.

The Treasury is officially responsible for U.S. World Bank policy, but Wolfowitz is strongly identified with the White House as an architect of the American-led invasion of Iraq.

Both the White House and the Treasury pressed this week that Wolfowitz be given time to properly explain himself.

Before the board extended the deadline, Wolfowitz had until the close of business Wednesday to respond to a 600-page report by the bank panel after protesting that he was being treated unfairly and that bank rules permitted staff under investigation five days to react.

"The report being prepared by the ad hoc group will permit an effective and orderly resolution of the matter, following fair process and careful deliberation," the board statement said.

Germany, which heads the World Bank board, said Wednesday it had called for Wolfowitz to step down.

Karin Kortmann, a state secretary for German development ministry, said Minister Heidemarie Wiezorek-Zeul told Wolfowitz during meetings of the World Bank in April she was worried about the bank and urged him to quit.

Kortmann said Germany was not looking for a confrontation with the United States and that pushing through any solution against Washington's wishes would be difficult.