- The Washington Times - Wednesday, May 16, 2007

The World Bank’s board is negotiating an exit package for President Paul Wolfowitz that should end his tumultuous two-year tenure that burst into acrimony over his role in directing a high-paying promotion for his girlfriend, board sources said yesterday.

“They have resumed the meeting and are finalizing a deal,” one of the board sources said after an adjournment of an earlier board meeting at the request of the United States.

The bank said it would resume its negotiations in the morning.

The board sources, from developed and developing countries, said details of a package, including financial compensation, were being discussed with Mr. Wolfowitz’s lawyer.

His departure would include an acknowledgment from the bank that he doesn’t bear sole responsibility for the controversy surrounding a generous pay package for his girlfriend, an anonymous bank official said yesterday.

The official said Mr. Wolfowitz wanted the bank to accept some responsibility for conflicts of interest cited against him by a special bank panel. It was not clear whether the bank’s 24-member board would agree to Mr. Wolfowitz’s terms.

But Mr. Wolfowitz’s lawyer said yesterday that he will not resign under the current “cloud” and would rather push the matter to a vote of the bank’s board to clear his name.

“Mr. Wolfowitz will not resign under this cloud, and he will rather put this matter to a full vote,” Robert Bennett said.

Under a contract he signed in June 2005 when he became World Bank president, Mr. Wolfowitz would receive a year’s salary, or about $375,000, if his service were terminated by the board or if he resigned.

The resignation of the former U.S. deputy defense secretary and architect of the Iraq war would end a protracted and messy battle over the pay and promotion deal he approved for World Bank Middle East expert Shaha Riza when he joined the bank.

The 185-nation World Bank provides more than $20 billion a year for projects that include building dams and roads, bolstering education and fighting disease.

The bank, created in 1945 to rebuild Europe after World War II, has evolved into a major development organization. A centerpiece program provides interest-free loans to the poorest countries.

Pressure to resign increased yesterday as European countries signaled they would resist a bid by the United States to keep Mr. Wolfowitz in the job in the face of a damaging report by a board panel issued Monday that found he broke bank ethics rules negotiating the package.

The board was discussing whether to endorse the report yesterday when the United States requested a recess to consider its position.

One source said when the meeting resumed at 2:30 p.m. discussions had begun over how Mr. Wolfowitz might resign.

Mr. Wolfowitz was scheduled to attend a meeting of the Group of Eight finance ministers in Germany this weekend.

German Development Minister Heidemarie Wieczorek-Zeul said yesterday that Mr. Wolfowitz would not be welcome to take part in a two-day World Bank forum on development aid for Africa that starts Monday in Berlin.

“He would do the bank and himself a great service if he resigned,” Ms. Wieczorek-Zeul, one of Mr. Wolfowitz’s strongest critics, told reporters in Berlin.

South African Finance Minister Trevor Manuel told Bloomberg News there “should be a parting of the ways.” Mr. Wolfowitz made aid for Africa a priority since his term began almost two years ago.

“I think we must live with the decision by the executive board,” said Mr. Manuel, who oversees Africa’s largest economy. “It’s unfortunate, but c’est la vie.”

European countries have long had misgivings about Mr. Wolfowitz since his nomination by President Bush in 2005 at the height of tensions between the White House and European critics of the Iraq war.

The U.S. request for an adjournment sparked speculation within the bank that U.S. backing for Mr. Wolfowitz was softening, but the White House reiterated its support.

“We stand by our support of Paul as the World Bank president,” White House spokesman Tony Snow told reporters.

Treasury Secretary Henry M. Paulson Jr. and Secretary of State Condoleezza Rice have said the conflict-of-interest charges against Mr. Wolfowitz were not grounds for him to be fired.

Signs that the United States would not win the support needed to keep Mr. Wolfowitz in his job came when U.S. officials failed Tuesday to rally allies among other rich Group of Seven countries.

It had tried to a cut a deal that would have separated consideration of his ethics violations from a decision over whether he had the credibility to continue, but only Japan out of the G-7 countries sided with the United States.

G-7 sources said most board members wanted a quick resolution to the protracted dispute over whether Mr. Wolfowitz should stay, resign or be fired over his companion’s promotion.

Mr. Wolfowitz says he should not take all the blame for the promotion and is seeking an acknowledgment by the board of its failures in its guidance to him on how to deal with conflict of interest issues over Miss Riza.

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