Wolfowitz Steps Down

The process leading up to Wolfowitz's resignation lasted too long and damaged the reputation of the World Bank, said German Finance Minister Peer Steinbrück Friday in an interview with broadcaster Deutschlandradio Kultur.

Now the World Bank has to repair its reputation as quickly as possible, said Steinbrück, adding that the institution is "extremely important for the countries of the Third World."

Following a conflict-of-interest scandal that became public six weeks ago, Paul Wolfowitz said late Thursday evening from Washington that his resignation was in the best interest of the World Bank.

The announcement came ahead of a meeting of the finance ministers from the Group of Eight countries on Friday in Potsdam, just outside of Berlin. Wolfowitz said he would not be attending the conference, where he was scheduled to give a speech on corruption.

Eckhard Deutscher, Germany's representative on the 24-member board of the World Bank, said on Thursday Wolfowitz's failings ran deeper than the immediate cause of his resignation. Poor management style and lack of vision for the bank's mission were among Wolfowitz's weaknesses, he told reporters in Washington.

"I regret that Paul Wolfowitz personally suffered damage, but I regret the damage he cause the bank much more," said Deutscher.

US, Europe divided

Shortly after taking on the World Bank presidency in 2005, Wolfowitz arranged for a promotion and a $60,000 (44,000 euro) pay raise for his girlfriend Shaha Riza, who was also working at the bank at that time. Riza later transferred to a position at the US State Department, but continued receiving paychecks from the World Bank.

The scandal had caused a transatlantic rift: Germany, France and the Netherlands have been particularly vocal in demanding Wolfowitz's resignation, while the US staunchly defended him.

The White House said President George W. Bush would name a successor as soon as possible. By tradition, the US appoints the head of the World Bank, while Europe selects a leader for its partner institution, the International Monetary Fund.

Focusing on developing countries


The debt crisis in developing countries will top the agenda at the two-day G8 finance ministers' meeting in Potsdam. Delegates from Cameroon, Ghana, Nigeria and South Africa have been invited to the talks.

Steinbrück said that Germany's lawmakers will prioritize developmental aid as much as possible when forming the national budget for 2008.

The finance conference, which serves as a precursor to the G8 meeting in early June, will also focus on achieving more transparency for companies with hedge funds, a German initiative that faces resistance in the US and Britain.