Iraq legacy dogged Wolfowitz at World Bank

By Lesley Wroughton

WASHINGTON (Reuters) - Paul Wolfowitz, whose resignation was announced on Thursday, took over the World Bank in mid-2005 carrying a legacy as an architect of the Iraq war that never ceased to trouble his critics inside and outside the poverty-fighting institution.

Controversial though he was as successor to James Wolfensohn, especially among European countries that had opposed the Iraq war, the Bush administration engineered his move from the Pentagon to the World Bank presidency without dissent.

Once there, he quickly reached out to poor African nations, where he encountered little criticism over Iraq, and pushed a deal to cancel the debts of highly indebted poor countries.

Soon after, he moved with characteristic zeal to launch a controversial anti-corruption campaign at the bank where he again clashed with European governments, who worried the effort could punish the poor by slowing the flow of aid.

Wolfowitz, however, prevailed and offered no apologies for the bruising campaign, which drew criticism both within and outside the bank.

But just weeks after securing a deal on anti-corruption, the former Pentagon deputy ran into a storm last month over charges of preferential treatment in his handling of a promotion and pay rise for his companion and bank employee Shaha Riza.

Determined to stay in the job and backed by the White House, he was dealt what turned out to be a fatal blow by a bank panel's finding that he had broken World Bank ethics rule and had "cast himself in opposition to the established rules of the institution."

Some of the stiffest opposition to Wolfowitz came from inside the bank, where staff association head Alison Cave said his actions had damaged the bank's reputation and urged its 24-nation board to take action against him.