Wolfowitz Seeks ‘Face-Saving’ Resignation Deal

World Bank President Paul Wolfowitz.
Pablo Martinez Monsivais
World Bank President Paul Wolfowitz.

World Bank President Paul Wolfowitz refused on Wednesday to bow to heavy European pressure to resign as he sought to clear his name in negotiations with the bank's board over a possible exit strategy.

"Mr. Wolfowitz will not resign under this cloud -- he is awaiting the decision of the full board which has heard from him last night and seen all the evidence. ," Robert Bennett, Wolfowitz's lawyer told NBC's Andrea Mitchell. Bennett added that, "If the full board does not clear his name and exonerate him - he (Wolfowitz) will not resign."

Several European countries have said Wolfowitz should step down to salvage the bank's credibility, which they say has been damaged by his handling of a high-paying promotion for his companion, bank Middle East expert Shaha Riza.

The controversial former deputy U.S. defense secretary and architect of the Iraq war has insisted he acted in good faith on the advice of a board ethics committee in overseeing the promotion of Riza and has said he wants it to acknowledge its own failures.

A board panel found his efforts on her behalf broke bank rules and represented a conflict of interest.

Board sources said talks were launched on Wednesday over how to push the dispute to a close. Some members have suggested a resolution that would recognize the panel's findings and Wolfowitz's efforts to resolve the conflict of interest issues over Riza, but also acknowledge mistakes by the board.

However, the board adjourned until Thursday without a decision.

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.

Pressure To Resign

Pressure to resign intensified on Wednesday as European countries signaled they would resist a bid by the United States to keep Wolfowitz in the job.

Wolfowitz had been scheduled to attend a meeting of the Group of Eight finance ministers in Germany this weekend. But German Development Minister Heidemarie Wieczorek-Zeul said Wolfowitz was not 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 had misgivings about Wolfowitz since his nomination by President George W. Bush in 2005, at the height of bitter tensions between the White House and Europeans over the U.S. invasion of Iraq.

The White House publicly maintained its support for Wolfowitz on Wednesday. "We stand by our support of Paul as the World Bank president," White House spokesman Tony Snow said.

Tensions increased after the U.S. administration tried to a cut a deal that would have separated consideration of Wolfowitz's 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, which has paralyzed the bank for more than a month.