washingtonpost.com  > Business > Policy

Wolfowitz Closing In On Bank Post

Germany Softens Stance As Nominee Woos Others

By Paul Blustein
Washington Post Staff Writer
Tuesday, March 22, 2005; Page E01

Deputy Defense Secretary Paul D. Wolfowitz closed in on the presidency of the World Bank yesterday when Chancellor Gerhard Schroeder said Germany would not try to block Wolfowitz's candidacy.

Schroeder said on German television that President Bush phoned him to discuss the nomination, "and I told him Germany would not stand in his way," according to news service reports. "I even think that people will be positively surprised" by Wolfowitz's leadership at the bank.

_____World Opinion_____
Jefferson Morley Wolfowitz's Third World Critics: Commentators in the countries where the World Bank does most of it work question nominees priorities.
Wolfowitz Strives To Quell Criticism (The Washington Post, Mar 21, 2005)
Europeans Resist Wolfowitz for World Bank (The Washington Post, Mar 18, 2005)
Tsunami Tour Said to Spur Wolfowitz Move (The Washington Post, Mar 17, 2005)
Wolfowitz Picked for World Bank (The Washington Post, Mar 17, 2005)
_____World Markets_____
Global Economies
International Stocks
_____Special Report_____
Globalization and Its Critics
In-depth Reports by Region
World News and Updates

The statement virtually extinguished the already-fading chances of a rebellion by other World Bank member nations against Wolfowitz, whose nomination by Bush last week became the focus of controversy because of his role in promoting the invasion of Iraq.

With France, the other major European opponent of the Iraq war, Germany posed a potential threat to Wolfowitz's candidacy, which must be approved by the board of the 184-nation institution. The United States traditionally chooses the World Bank president as part of an informal agreement in which the European Union gets to name the head of the International Monetary Fund. But the boards of the two institutions operate by consensus -- indeed, a German candidate for IMF chief was forced to withdraw five years ago for lack of support from Washington and other capitals.

Schroeder's comments made it clear that a European-led challenge to Wolfowitz is not in the offing. Although there is still a chance that developing countries could put forward an alternative candidate around whom Wolfowitz's critics could rally, sources at the bank said that board members from developing nations have shown no desire to take such a step.

"It's a closed matter, because there is no willingness on the European side to oppose the nomination," said a European source at the bank who spoke on condition of anonymity, as did the other sources, because of the highly charged nature of the controversy.

European board members are likely to interview Wolfowitz together on Wednesday, the source added, and Wolfowitz will probably meet with higher-ranking European officials next week, with formal approval by the board scheduled for March 31.

A spokesman for the European Commission was quoted in news service reports yesterday as saying that Wolfowitz would travel to Brussels to meet with commission officials. Rob Nichols, a spokesman for the Treasury Department, which oversees U.S. participation in the World Bank, would not comment on specific plans but said that Wolfowitz "has reached out to a broad array of European organizations and ministries. He has had some very positive conversations, and he looks forward to meeting them at the earliest opportunity."

Wolfowitz's apparent success in preempting opposition to his candidacy reflected a number of factors, including his own spirited effort to dispel concerns about how he would run the bank.

His nomination aroused fears that the Bush administration would use the bank -- which lends about $20 billion annually to developing countries for anti-poverty projects -- to further U.S. foreign policy aims, especially in the Middle East. But Wolfowitz, a former academic and ambassador to Indonesia, began meeting with board members and granted interviews in which he repeatedly stressed his dedication to the bank's antipoverty mission and said he understood that his role would become that of an "international civil servant" responsible to the entire board.

More important, according to board sources and many outside observers, was the simple recognition by governments wary of Wolfowitz that challenging him directly could carry a steep price.

European governments felt they were in no position to do so because the United States readily acceded to Europe's choice last year of Rodrigo de Rato, Spain's finance minister, as head of the IMF; future European candidates for other jobs would almost certainly be at risk if the Europeans challenged Wolfowitz.

In addition, a battle over his nomination would reopen the bitter wounds inflicted on the transatlantic relationship by the Iraq war, which have only recently begun to heal.

Some officials in Europe have privately voiced disgust that nations such as South Africa and Brazil have refrained from putting forward an alternate candidate, since developing nations have complained loudly about rich countries' control of international financial institutions. But poor countries would be taking an enormous risk in challenging a U.S. candidate for the World Bank presidency, since their opposition might put at risk their prospects for getting loans.

© 2005 The Washington Post Company