Paul Wolfowitz lost his battle to hang on to his job as president of the World Bank on Thursday, announcing his resignation after a bitter international controversy. However, he managed to extract a statement from the bank’s executive board exonerating him for wrongdoing in engineering a generous pay rise for his partner, Shaha Riza, who is on the staff of the bank.
He is to step down at the end of next month, after two years at the bank.
“He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution and we accept that,” the board said in its announcement of his resignation on Thursday night.
There was no mention of a financial arrangement involving Wolfowitz, or of Riza’s future at the bank.
Officials said the bank would announce an interim head on Friday, and immediately begin the nomination process for a new president.
The White House, which by tradition controls the selection of the bank president, said it would announce a new candidate soon.
Early contenders for the post were thought to include Robert Zoellick, who has served as deputy secretary of state as well as trade chief in the Bush administration, and Jim Leach, the former Republican congressman from Iowa.
Wolfowitz’s resignation ended a saga which convulsed the bank for weeks, opening a chasm between America and European members, after it emerged that he had engineered a $60 000 pay rise for Riza in violation of bank rules.
The bitterness of the dispute was exacerbated by a fierce campaign by Wolfowitz to shift some of the blame for that pay rise to other officials at the bank. In the end, he appears to have prevailed.
In its statement on Thursday night, the bank’s board said: “A number of mistakes were made by a number of individuals in handling the matter under consideration”, and that “the bank’s systems did not prove robust to the strain under which they were placed”.
In return, Wolfowitz said he had concluded it would be in the best interests of the bank if he stood down.
“I am pleased that, after reviewing all the evidence, the executive directors of the World Bank group have 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,” he said.
The end to the crisis at the bank will come as a relief to US and European governments, as well as to the institution’s employees, who had bridled at the installation of Wolfowitz, a man best known as the architect of the Bush administration’s invasion of Iraq.
However, the nomination process for his replacement could ignite a new row over the current arrangements, where the US government chooses the head of the World Bank and European governments choose the head of the bank’s sister institution, the International Monetary Fund.
“The US and other rich countries must now show that they are serious about good governance by allowing the next head of the bank to be appointed based on merit through an open, accountable process,” said Bernice Romero, the advocacy director of Oxfam International.
The denouement to the Wolfowitz controversy was set in motion on Tuesday when the White House appeared to waver in its support for the bank president. By Thursday morning, Wolfowitz’s departure seemed only a matter of time.
At a press conference at the White House, President George Bush offered up a valedictory comment when asked if Wolfowitz could continue to lead the institution. “I regret that it’s come to this,” Bush said. – Guardian Unlimited Â