World Bank Delivers a Rare Rebuke

WASHINGTON -- Paul Wolfowitz's struggle to remain as president of the World Bank was dealt a crippling setback when its most powerful oversight committee delivered an unusually public rebuke of his leadership, expressing "great concern" about the institution's future and the need to preserve its credibility and staff morale.

Wolfowitz, responding at a news conference Sunday, vowed to stay on at the bank, however, saying that he too cared about the bank's ethical standards.

"Look, I believe in the mission of this organization, and I believe I can carry it out," he said with a pained smile and a measure of frustration.

The extraordinary exchange between Wolfowitz and the oversight committee, which consists of 47 of the world's finance ministers and leaders of other international organizations, deepened the uncertainty over Wolfowitz. His future had earlier been thrown into doubt by the disclosure that he played a direct role in granting a pay raise and promotion to a female companion when she was transferred in 2005.

Bank and finance officials said they could not recall any time in the history of the bank when there was such an open and rancorous rift between its president and the people who are supposed to run the institution in cooperation with him.

The events of the day, in which top officials took time out from discussing issues like poverty and development strategies, set up a clear impasse between Wolfowitz and the leadership of the bank, as represented by what seemed to be most of the world's finance ministers and most of the members of a separate 24-member executive board that governs its day-to-day affairs.

The rebuke of Wolfowitz came in the form of bureaucratic language in a series of sentences in the board's communique Sunday that asserted "the current situation is of great concern to all of us," an unusually blunt statement for a circumspect institution. "We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as the motivation of its staff," the committee said. "We expect the bank to adhere to a high standard of internal governance."

Though the language was indirect, the message it sent was unmistakable, according to officials who have been meeting in Washington the last few days. "Words like 'concerned,' 'credibility' and 'reputation' are pretty unprecedented for a communique from a place like the World Bank,'' said an official involved in the drafting of the statement. At issue in these statements was a crisis arising from Wolfowitz's involvement in decisions to transfer his companion, Shaha Ali Riza, to a new job and give her a raise.

Officially, Wolfowitz and the bank are now to wait for a full report by the bank's board on his leadership and charges of favoritism in dealing with Riza, who was employed at the bank until 2005. But bank officials said that in delaying a finding, the board seemed to be buying time for Wolfowitz to consider resigning. European officials close to the bank said that if anything, Wolfowitz's apparent dismissal of the criticism on Sunday would increase the determination of the wealthy European donor nations of the bank -- especially Britain, France and Germany -- that he needed to step aside for the good of the bank.