- The Washington Times - Thursday, May 17, 2007

2:10 p.m.

WASHINGTON (AP) — President Bush today seemed resigned to the possibility that World Bank President Paul Wolfowitz would lose his job over conflict-of-interest charges involving his girlfriend.

“I regret that it has come to this,” Mr. Bush said as the bank’s 24-member board resumed deliberations on Mr. Wolfowitz’s fate.

“I believe all parties in this matter have acted in good faith,” the president said.

Mr. Wolfowitz and the Bush administration were seeking a face-saving deal with the board that would allow him to resign under his own terms and escape some blame for the furor involving his girlfriend’s compensation.

Pressure on Mr. Wolfowitz to step down has grown since Monday’s release of a bank panel report on his handling of the 2005 pay package of bank employee Shaha Riza.

Mr. Wolfowitz contends he acted in good faith and followed direction from the bank’s ethics committee.

Mr. Bush, who picked Mr. Wolfowitz for the job, said, “I admire Paul Wolfowitz. I admire his heart, and I particularly admire his focus on helping the poor.”

The president added: “All I can tell you is I know that Paul Wolfowitz has an interest in what’s best for the bank.”

European members — led by France, Germany and the Netherlands — are pushing for Mr. Wolfowitz to resign. The White House, for the first time, suggested this week that it would be open to a change of leadership.

“It’s a game that is still going on. What I understand from people close to the board is that they really want to make a decision on this case because it cannot continue like it is. It’s really bad for the bank,” said Kees-Jaap Ouwekerk, spokesman for Dutch Overseas Development Minister Bert Koenders.

Behind-the-scenes negotiations took place yesterday for an exit package for Mr. Wolfowitz, but they failed to produce a resolution. Mr. Wolfowitz and his attorney, Robert Bennett, have said repeatedly that Mr. Wolfowitz won’t resign with a cloud of what they call unfair charges hanging over him.

The 185-nation World Bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. The bank’s centerpiece program offers interest-free loans to the poorest countries.

By tradition, an American has run the bank, with the board’s approval. A European heads the bank’s sister agency, the International Monetary Fund.

The United States, the bank’s biggest financial contributor, wants to keep that decades-old tradition intact.

Miss Riza worked for the bank before Mr. Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest but stayed on the bank’s payroll.

Her salary rose from close to $133,000 to $180,000. With subsequent raises, it eventually increased to $193,590.

The bank panel concluded that the salary increase Miss Riza received “at Mr. Wolfowitz’s direction was in excess of the range” allowed under bank rules.

The panel said Mr. Wolfowitz “placed himself in a conflict of interest situation” when he became involved in the terms and details of Miss Riza’s assignment and pay package and “he should have withdrawn from any decision-making in the matter.”

Meanwhile, the German Ministry of Finance said today that Mr. Wolfowitz was still expected to attend a meeting of finance officials from the Group of Eight nations in Potsdam tomorrow and Saturday, which is supposed to set the agenda for next month’s summit of G-8 leaders.

“We did not receive a cancellation,” spokesman Torsten Albig said.

There were concerns that the flap over Mr. Wolfowitz would overshadow talks on the global economy, which is the main focus on the group. Besides the United States, the countries that make up the G-8 are Britain, Canada, France, Germany, Italy, Japan and Russia.

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