- The Washington Times - Tuesday, May 15, 2007

From combined dispatches

The White House said yesterday that “all options are on the table” about World Bank leadership, even as it defended embattled President Paul Wolfowitz as he fights conflict-of-interest charges.

Mr. Wolfowitz met with the bank’s 24-member board of directors last night to respond to a report from a special ethics panel that said he broke World Bank rules in arranging a job and generous pay package for his girlfriend, a World Bank employee. Mr. Wolfowitz maintains that he acted in good faith and was following direction from the bank’s ethics committee.

“We look forward to a fair hearing,” his attorney, Robert S. Bennett, said before Mr. Wolfowitz’s appearance.

“We have faith in Paul Wolfowitz,” White House spokesman Tony Snow said yesterday. He insisted that the charges against Mr. Wolfowitz are not “a firing offense.”

Only after the charges are resolved would it be appropriate to consider the bank’s future leadership, he said.

“Separately, at some point in the future, there are going to be conversations about the proper stewardship of the World Bank,” Mr. Snow said. “In that sense … all options are on the table.”

The Bush administration yesterday failed to rally support for Mr. Wolfowitz among the Group of Seven industrialized nations. The administration found support only from Japan in a conference call for a plan to separate consideration of Mr. Wolfowitz’s ethics violations from whether he could continue credibly as head of the bank.

The seven countries are the U.S., Japan, Germany, Britain, France, Italy and Canada.

It was not clear whether Mr. Snow’s comments signaled a weakening of support at the White House for Mr. Wolfowitz, or more of an attempt to calm European allies who are clamoring for him to step aside.

A special bank panel concluded in its report released Monday night that Mr. Wolfowitz broke bank rules in his handling of the pay package for Shaha Riza. It said the board must consider whether he “will be able to provide the leadership” to ensure that the bank achieves its mission of fighting poverty around the world.

In a response, Mr. Wolfowitz said, “It is highly unfair and unwarranted to now find that I engaged in a conflict of interest because I relied on the advice of the ethics committee as best I understood it.”

The controversy has been building in recent weeks, and several names have surfaced as replacements should Mr. Wolfowitz step down, The Washington Times reported last week.

Replacements mentioned include former U.S. Trade Representative and Deputy Secretary of State Robert B. Zoellick, Deputy Treasury Secretary Robert M. Kimmitt, former Assistant Secretary of State and Deputy U.S. Trade Representative Robert D. Hormats, former Council of Economic Advisers Chairman Martin Feldstein, Bank of Israel Governor Stanley Fischer and U.N. Development Program Administrator Kemal Dervis.

The U.S. traditionally names the World Bank’s head, while Europe chooses the chief of the International Monetary Fund, its sister organization.

European officials have indicated that they would let the U.S. choose the next bank president if Mr. Wolfowitz resigns soon, the New York Times reported last week.

The White House thinks the controversy is rooted in Mr. Wolfowitz’s role as a key architect of the Iraq war. This has made the president more determined to stand behind Mr. Wolfowitz unless the facts make it absolutely clear that his behavior was egregious, a senior administration official said. The official spoke on the condition of anonymity.

The ethics panel also proposed a review of the bank’s governance framework.

“What we hope is that the integrity and the credibility of the bank can be preserved, that is to say re-established,” said German Development Minister Heidemarie Wieczorek-Zeul, whose country holds the rotating presidency of the European Union.

“There has to be a strong World Bank with a strong president,” she said.

Staff writer Steve Hirsch contributed to this story.

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