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Stormy Wolfowitz era ends

He resigns as the World Bank president, and the staff is exuberant.

Published May 18, 2007


WASHINGTON - As he prepared to assume the World Bank presidency two years ago, Paul Wolfowitz reached out to the bank's skeptical senior managers.

In informal meetings, he took copious notes and asked respectful questions. He knew they had doubts about him, Wolfowitz said, especially because of his role in designing the Iraq war. He told them that he was committed to the bank's goal of reducing world poverty, that he would learn from them and rely on their guidance.

According to several attendees, they were won over by his humility. "I went back and reported to my staff that I didn't see any horns, " a senior official told the Washington Post.

On Thursday, Wolfowitz resigned from the World Bank, effective June 30, ending a long fight to keep his job amid outrage over the generous compensation he arranged for his girlfriend. The resignation, negotiated in recent days with the bank's executive board, closed a leadership crisis that has essentially paralyzed the institution for almost two months.

Wolfowitz had become a virtual pariah, reviled by much of the staff as an arrogant intellectual who cared more about his ideas and image than about the institution or its customers.

Staff members described a celebratory mood inside the World Bank's headquarters near the White House, with people embracing, singing songs and hoisting flutes of champagne.

The scandal that ultimately brought down Wolfowitz was merely the latest in a long list of his infractions in the eyes of many staff members, who accused Wolfowitz of insulating himself behind tyrannical aides, disregarding the counsel of veteran bank officers and running the bank as an adjunct of the Bush administration.

Wolfowitz and his attorney, Robert Bennett, extracted a measure of the exoneration they had demanded before he would resign. In a statement released Thursday night, the board conceded that "a number of mistakes were made by a number of individuals in handling the matter under consideration, " and that the bank would need to improve its ethical procedures.

The news that Wolfowitz was leaving, however, did not fully heal the international rifts that have emerged with the leadership crisis. His exit set off a new struggle to determine who will run the bank between now and his official departure date at the end of June.

According to bank and Bush administration sources briefed on the negotiations, the White House demanded that Wolfowitz be allowed to stay for three months, fearing that otherwise an acting president would be put in place from within the bank. That could threaten the traditional American prerogative to select the head of the institution.

In rushing to secure the resignation Thursday night, the board deferred the question of what happens in the interim, a subject it plans to take up today.

Most of the board, and particularly the Europeans, wanted Wolfowitz to leave immediately,

Some do not think he deserved this.

The Wall Street Journal editorial page has said European governments opposed Wolfowitz's efforts to cleanse a corrupt and hidebound institution. Many in the Bush administration consider his ouster unfair payback-by-proxy for the Iraq war.

But others, including some friends and admirers, saw the seeds of Wolfowitz's demise in the arc of his 34-year Washington career - a steady rise through the State Department and the Pentagon, interrupted only to become dean of Johns Hopkins University's School of Advanced International Studies during the Clinton years.

Throughout, Wolfowitz built a reputation as a foreign policy iconoclast, a mild-mannered intellectual with a steely ideological core, and an inept manager.

Wolfowitz, they concluded, should never have been in charge of a multinational institution owned by more than 180 governments and with 10, 000 employees.

"At the World Bank, you're not as well protected" as in government, said Fred Ikle, a veteran national security official who brought Wolfowitz to the State Department in 1973. "You don't have somebody above you who will endorse what you want to do."

The immediate cause of Wolfowitz's resignation was a pay deal he ordered for Shaha Riza, a bank employee with whom he was romantically involved. But the public vitriol that poured from the bank once his fall began in late March with revelations about the deal underscored wider problems.

Wolfowitz surrounded himself with former White House and Republican officials and gave them wide authority. He altered long-standing policies and imposed new ones without consulting the staff or member governments.

A turning point came last month when Wolfowitz's hand-picked managing director, New Zealander Graeme Wheeler, told him he should resign for the good of the institution.

In a signed letter to the Financial Times, more than three dozen former top bank officials described his signature anti-corruption initiative as "implemented with no consultation, and little transparency or apparent consistency." Employees wore blue ribbons supporting "good governance, " a signal that they wanted Wolfowitz to go.

The board, in a report released late Monday, said the "central theme" of Wolfowitz's tenure was that he had "cast himself in opposition to the established rules of the institution."

Time line

A brief tenure

June 2005: Paul Wolfowitz becomes World Bank president.

September 2005: Shaha Riza transfers from the World Bank to the State Department, assigned to the Bureau of Near Eastern Affairs, at a salary of $180, 000 .

Jan. 21, 2006: An e-mail from a whistleblower complains about the terms of Riza's pay package.

September: On the World Bank payroll, Riza moves to the Foundation for the Future, an international organization that receives money from State Department.

April 2007: Wolfowitz begins meetings with World Bank Ad Hoc Group to answer accusations of impropriety.

May 17: Wolfowitz announces he will resign at the end of June.

Associated Press

[Last modified May 18, 2007, 01:34:46]

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