U.S. has tough task to heal rift over Wolfowitz

By Lesley Wroughton

WASHINGTON (Reuters) - A day after Paul Wolfowitz resigned as World Bank president under an ethics cloud, the United States faced the tough task of healing rifts with Europeans and satisfying calls that his successor be picked on merit, not just nationality.

Wolfowitz's resignation on Thursday followed pressure by European opponents who said his handling of a high-paying promotion for his companion damaged the institution's credibility. Bank staff complained the crisis had undermined their mission of fighting poverty in developing countries.

"It is a very delicate issue but we will make clear to the United States that we need someone credible and this time they need to consult more broadly," said one senior European bank board official. "That was not the case with Mr. Wolfowitz."

The United States, the bank's largest shareholder, has named the World Bank chief since the bank's inception more than 60 years ago.

Many critics have said that practice should be revamped in the wake of Wolfowitz's rocky two-year tenure at the bank.

European countries, who by tradition always choose the head of the bank's sister organization, the International Monetary Fund, have not challenged that long-standing practice.

The White House said President George W. Bush would move quickly to nominate an American successor.

"The president is going to try to select the individual he thinks is the best person for the job," said White House spokesman Tony Fratto.

U.S. Treasury Secretary Henry Paulson has said he would help Bush identify a nominee after consulting with other countries. But he made clear it would be an American.

"I see no reason why this should change and I see every reason why it's important that the World Bank should continue to be run by an American," Paulson said.

Dutch Development Minister Bert Koenders said the stature of the candidate was more important than nationality.

"The quality of a new candidate is the most important thing. Whatever nationality, American or from another continent, the bank needs a president of the highest quality," he said.

While the White House cautioned it was too early to speculate over a successor, names being tossed around in the U.S. media included former Federal Reserve Chairman Paul Volcker, former Deputy Secretary of State Robert Zoellick, Deputy Treasury Secretary Robert Kimmitt, and even Tony Blair, Britain's outgoing prime minister.

Wolfowitz's decision to step down at the end of June did not quell anger among staff.

The bank's staff association said it was important to the institution's credibility to ensure the process of choosing the next chief was more transparent. "The next president should be selected based on merit and qualifications, after full consultation of all shareholders," it said.