World Bank Split, Democrats Pressure Bush

The 24-nation Board of Directors of the World Bank has given Paul Wolfowitz more time to respond to a special panel report, which found him guilty of a conflict of interest in arranging for a pay raise and promotion for his girlfriend, Shaha Riza, in 2005. Since the crisis broke earlier last month, pressures have been mounting on the White House and president George W. Bush, who nominated Wolfowitz, his former Deputy Secretary of Defense, to the bank top post in January 2005.

Calls for resignation have been increasing by the minute. Yesterday, senior U.S. Democrats added their voice to the general discontent and urged Bush to help end the “historic crisis.”. In a letter to the U.S. President, Senate Majority Leader Harry Reid and Democratic Senators Patty Murray, Richard Durbin and Charles Schumer warned that the crisis was damaging the institution and undermining U.S. interests.

“We urge you to take decisive action quickly to bring this crisis to a close,” the letter reads. “The current situation is complex and unfortunately may be fueled in part by views toward Mr. Wolfowitz unrelated to his tenure at the bank.” And other prominent Democrats, including presidential candidates Bill Richardson and John Edwards, have expressed concerns over Wolfowitz’ leadership and how the White House is handling the crisis.

Since the foundation of the World Bank, the President of the United States has been given the prerogative to choose and nominate the head of the organization – the US holds around 16.4% of total votes, and major decisions require an 85% super-majority. Instead, European governments have the prerogative to elect the top executive of another Washington-based Bretton Woods institution, the International Monetary Fund.

Earlier this week, European governments offered the White House a compromise over the so-called Wolfowitz affair. After a meeting in Brussels, EU finance ministers have decided not to challenge the prerogative of the President of the United States to nominate the head of the World Bank if the Bush administration puts an end to the stand-off and pushes Wolfowitz to resign as president of the organization.

While the Bush administration still publicly supports Wolfowitz, the approach is now more cautious. “This is a World Bank matter,” White House spokesman Tony Snow told reporters on Monday.

Wolfowitz has until Friday to respond to the accusations and it’s not yet clear how the board will react to his rebuttal.

The Board of Directors of the World Bank seems split, with Europeans voicing their discontent and the United States lobbying for support – Canada, Japan and a few other Asian and African countries are allying with the U.S.. Secretary of State Condoleezza Rice has also been lobbying fellow foreign ministers in a bid to help Wolfowitz keep his job, her spokesperson confirmed this morning earlier today.

The crisis has paralyzed the World Bank for more than a month since leaked documents emerged over Wolfowitz’ handling of his girlfriend’s promotion. The furor among bank staff has forced one of Wolfowitz’ top aide, Kevin Kellems, to quit and complaints are now targeting a second aide, Robin Cleveland, who followed Wolfowitz after his appointment to the top post at the World Bank in 2005. Both Cleveland, still in place, and Kellems have been the focus of critics over their high salaries — more than $250,000 a year.

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