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Wolfowitz affair approaches day of reckoning

11 May 2007

Week five of the scandal at the World Bank over president Paul Wolfowitz’s promotion of partner Shaha Riza started with the resignation of one of Wolfowitz’s inner circle, advisor Kevin Kellems. “Given the current environment surrounding the leadership of the World Bank Group, it is very difficult to be effective in helping to advance the mission of the institution,” Kellems said. It was not a good omen, as things have gone from bad to worse for the embattled president.

Opening up the possibility of a US-European showdown on the Bank board, a spokeswoman for German development minister Heidemarie Wieczorek-Zeul said there remained deep concerns that the scandal surrounding Mr Wolfowitz was damaging the World Bank. The minister had made it clear that Mr Wolfowitz’s “voluntary resignation was the best solution for the Bank and its goals”, the spokeswoman said.

Whether the Europeans will be satisfied with the removal of Wolfowitz without an end to US control over the leadership selection process at the Bank is now the key issue at play. Karin Kortman, a state secretary in Germany’s development ministry demurred: “The US interest in naming the World Bank president is not being called into question by the German government.” Dutch finance minister Wouter Bos echoed this sentiment saying “up to now the appointment procedure seems to have worked. We have a problem with the president, not the procedure.” However, during parliamentary questioning, UK secretary of state for international development Hilary Benn has said that “picking the heads of the World Bank and the IMF based on nationality should end”. Signatures continue to mount on petitions from civil society and research thinktanks backing Benn’s call for an end to the gentleman’s agreement.

voluntary resignation is the best solution for the Bank and its goals

The ad hoc committee investigating the allegations submitted its findings to Wolfowitz 6 May. Leaks have suggested that the 300-page report has found Wolfowitz to be guilty of conflict of interest in arranging Riza’s salary raise and promotion and to have broken rules in arranging her transfer to the US state department. Initially, Wolfowitz was given until 9 May to respond to the report’s findings in writing. However, following the complaints of Wolfowitz’ attorney Robert Bennett, the grace period was extended to the close of business 11 May.

Wolfowitz will be given the opportunity to present his response to a meeting of Bank officials 15 May. It is widely speculated that these delays are simply an attempt to buy time in order to allow the Americans to come up with an exit strategy from the debacle. If the US continues to back Wolfowitz, the issue could go to an embarrassing vote at the 16 May meeting of the full Bank board, where it would be likely to declare that Wolfowitz no longer has its confidence to function as the Bank’s leader.

For timely updates, see worldbankpresident.org