May 9, 2007 / 12:07 AM / 11 years ago

Democrats urge Bush to resolve World Bank crisis

WASHINGTON (Reuters) - Senior U.S. Democrats urged President George W. Bush to step in to resolve the “historic crisis” over Paul Wolfowitz’s leadership at the World Bank as the bank’s divided membership prepared to decide his fate.

World Bank President Paul Wolfowitz looks down during a news conference at the European Union headquarters in Brussels May 2, 2007. REUTERS/Francois Lenoir

In a letter to Bush, Harry Reid, the Senate Majority leader, Patty Murray, Richard Durbin and Charles Schumer expressed “grave concern” over the crisis, sparked by a pay and promotion deal by Wolfowitz for his companion in 2005.

“We urge you to take decisive action quickly to bring this crisis to a close,” the senators told Bush.

They questioned the manner in which the crisis was handled, saying it had seriously jeopardized the United States’ dominant role as the World bank’s largest shareholder.

“We urge you to find a timely resolution that ensures the bank’s current leadership crisis will not interfere with the bank’s effectiveness ... and preserves the important and historical role of the United States in selecting the president of the bank,” the senators wrote.

The letter came as the World Bank’s 24-nation board, led by Germany, is set to meet on Friday to decide on Wolfowitz’s future at the bank. There are no rules for the dismissal of a World Bank chief because it has never happened in the bank’s 62-year history.

The institution has been paralyzed by the controversy for more than a month after leaked documents showed Wolfowitz approved a high-paying promotion for his companion, Shaha Riza, a bank Middle East expert, unleashing widespread anger among bank staff and prompting an investigation.

The board is divided over its support for the former U.S. deputy defense secretary, whose two years at the bank has been dogged by his prominent role in the planning of the Iraq war.

The senators said the board may be compelled to take an unusual step by deciding on Wolfowitz’s fate in a vote.

“We do not believe the bank’s mission or U.S. interests would be advanced by such a vote,” the senators said.

Their concerns came as Germany said it had called for Wolfowitz to resign and the White House and U.S. Treasury urged that he be given time to explain himself properly.

FULL WHITE HOUSE SUPPORT

The White House, which on Tuesday deferred questions over Wolfowitz matter to the U.S. Treasury, insisted on Wednesday it was not “hanging Paul Wolfowitz out to dry” and that he had the Bush administration’s full support.

“We still support him fully,” White House spokesman Tony Snow told reporters on board Air Force One as he flew with President George W. Bush to visit parts of Kansas devastated by tornadoes last week.

The Treasury is officially responsible for U.S. World Bank policy, but Wolfowitz is strongly identified with the White House as a former Pentagon official and because of his leading role in the Iraq war.

Wolfowitz has until the close of business today to respond to a 600-page internal report by a bank panel that has found his conduct over the promotion violated rules and represented a conflict of interest.

Meanwhile, Karin Kortmann, a state secretary for German development ministry, said on Wednesday that Minister Heidemarie Wiezorek-Zeul told Wolfowitz during meetings of the World Bank in April she was worried about the bank’s credibility and urged him to step down.

“She made it clear to (Wolfowitz) that his voluntary resignation was the best solution for the bank and its goals,” Kortmann told lawmakers in German parliament on Wednesday.

Kortmann said Germany, which chairs the World Bank board as well as this year’s meeting of the Group of Eight industrial nations in June, was not looking for a confrontation with the United States and that pushing through any solution against U.S. wishes would be difficult.

“The United States should rather be given room to react to the current leadership crisis in the bank,” Kortmann added.

Other European countries including Norway, Switzerland, the Netherlands, and France have voiced concern over the impact of the scandal on the World Bank’s anti-poverty mission.

The United States and European nations are the World Bank’s largest financial backers. Member countries in Asia, Latin America and Africa have not yet publicly stated their positions, although officials have privately indicated they are waiting for Wolfowitz’s response.

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