Wolfowitz exit seen clearing way for progress

LONDON Fri May 18, 2007 5:11pm BST

1 of 5. World Bank President Paul Wolfowitz leaves his house in the Washington suburb of Chevy Chase, Maryland, May 17, 2007. Wolfowitz said on Thursday he was resigning as of June 30, ending a protracted and tumultuous battle over his stewardship, sparked by a promotion he arranged for his companion.

Credit: Reuters/Yuri Gripas

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LONDON (Reuters) - Paul Wolfowitz's exit as World Bank president clears the way for the global lending body to move ahead, many said after he announced his decision, but by not quitting earlier he had hurt his own and the bank's reputation.

The general reaction has been that a protracted battle over his stewardship, prompted by his involvement in a high-paying promotion for his companion, had undercut any chance he had to be an effective leader.

"The poorest people in the world ... deserve the very best we can deliver," Wolfowitz himself said in a statement. "Now it is necessary to find a way to move forward."

His resignation takes effect on June 30 and prompted some non-governmental organisations to call for a new way of appointing his successor.

"Wolfowitz's actions have impeded the ability of the World Bank to carry out its critical mission of alleviating global poverty," said U.S. Senator Christopher Dodd, a Democratic presidential hopeful, echoing the sentiments of many.

Wolfowitz took the top post in the bank -- responsible for billions of dollars in aid projects around the world -- in 2005.

A former U.S. deputy defence secretary already controversial as a leading architect of the 2003 U.S.-led invasion of Iraq, he won praise from some in Africa and Asia for his bank policies, which included a strong campaign against corruption in aid programmes and in the governments of recipients.

UNTENABLE POSITION

For many people Wolfowitz's role in the promotion of Shaha Riza, an expert at the bank, an involvement which a bank panel found broke several rules, had wiped out any credibility he might have had as an anti-corruption champion.

Many African governments in particular had grown used to being lectured by the World Bank about good governance and Wolfowitz's actions raised claims of hypocrisy among some.

"The way Wolfowitz negotiated a pay rise for his girlfriend is exactly the same as the way in which President Deby has embezzled oil revenues," said Ngarlegy Yorongar, a veteran opposition critic of Chad's President Idriss Deby.

Others were more diplomatic.

Germany's Finance Minister Peer Steinbrueck, in welcoming Wolfowitz's departure, said the organisation must look ahead.

"It will now be important not to focus on the past, but to rebuild the reputation of the World Bank," he said.

The European Commission said its relationship with the bank "increased in both intensity and in quality" under Wolfowitz.

The director of aid group Oxfam, Barbara Stocking, said his resignation showed "even the office of the president has to play by the rules".

INTERNAL DISSENT

It was also becoming clearer on Friday the level of unhappiness Wolfowitz's actions had caused among bank staff.

"I just returned yesterday from a mission in West Africa where I was beginning to feel most acutely the impact of the crisis ... in terms of the legitimacy we have in advocating good governance," said Daniel Owen of the social development department.

Another insider, a World Bank Senior Vice-President Francois Bourguignon, said lessons needed to be learnt.

"The weaknesses must be eliminated and we must make sure that such things won't happen again."

Some outside critics said the resignation was a chance to end the tradition of the bank's president being an American, and make the selection process more open and transparent.

But key player Japan, the second-largest shareholder and supplier of capital to the bank after the United States, said the process was a matter for the bank.

(With reporting by Washington, Tokyo, Berlin, London, Amsterdam, Ljubljana and African bureaux)

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