U.S. should not nominate World Bank heads-Stiglitz

LONDON, May 7 (Reuters) - The United States should give up its practice of choosing World Bank leaders in order to restore confidence after the controversy surrounding current president Paul Wolfowitz, the bank's former chief economist said. Joseph Stiglitz, who was sharply critical during his tenure at the bank of its sister institution, the IMF, wrote in Monday's Financial Times that Wolfowitz should quit.

Wolfowitz's replacement -- as well as future IMF leaders -- should be chosen by a broader range of countries, said Stiglitz, who worked at the bank from 1997 to 2000.

"It is time for the U.S. to give up its hold on picking the president of the bank and for Europe to give up its grip on choosing the president of the International Monetary Fund," said Stiglitz, who won the Nobel Prize for economics in 2001.

Controversy surrounding Wolfowitz's role in a lucrative promotion for his companion, World Bank Middle East expert Shaha Riza, has paralysed the institution for more than a month.

Referring to Wolfowitz's campaign to promote good governance in developing countries, Stiglitz said: "Good governance starts from how the head is chosen. Restoring confidence in the bank will require finally addressing the way in which its president is selected."

Stiglitz gave no details of how he thought World Bank presidents should be chosen but said there were 'first-rate' potential candidates from developing countries, such as Brazil's former central bank chief Arminio Fraga and Turkey's Kemal Dervis, head of the United Nations Development Programme.

While at the World Bank, Stiglitz criticised the IMF as arrogant and said countries ignoring IMF advice often did better than those that followed its economic recipes.

Since the World Bank's inception after World War Two, the United States has always nominated the president without objection while the head of the IMF has always been a European.

Reuters reported from Washington on Sunday that the bank's board of shareholder nations will meet as soon as Tuesday to decide whether Wolfowitz will be forced out or given the chance to negotiate his departure, according to board sources who declined to be identified.

((Reporting by Ruth Pitchford; Reuters Messaging: ruth.pitchford.reuters.com@reuters.net; London Treasury Desk +44 20 7542 6424; editing by David Christian-Edwards)) Keywords: WORLDBANK WOLFOWITZ/STIGLITZ

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