For Wolfowitz, Slings and Arrows

Paul D. Wolfowitz has faced criticism since taking over at the World Bank.
Paul D. Wolfowitz has faced criticism since taking over at the World Bank. (By Alexandrre Meneghini -- Associated Press)
By Krissah Williams
Washington Post Staff Writer
Thursday, April 12, 2007

Growing hostility within the World Bank toward its president, Paul D. Wolfowitz, is raising questions about his ability to lead the big lending institution and raise money for a fund that assists the developing world.

Wolfowitz's tenure, contentious from the start because of his earlier role as an architect of U.S. policy in Iraq, has been marred in recent months by a series of controversies. World Bank staffers disclosed that a woman with whom Wolfowitz is romantically involved received big pay raises from the bank. Sensitive board minutes regarding China have been leaked to the press, and blistering criticism has been leveled at Wolfowitz on an internal electronic bulletin board.

The heightened tension comes as delegates from around the world convene in Washington this weekend for annual meetings of the World Bank, the International Monetary Fund and finance ministers for the major industrial powers.

Wolfowitz sought to defray questions about the pay raises in a briefing with reporters yesterday and to focus attention on his priorities, which he has defined as dealing seriously with environmental problems, rooting out governmental corruption and fighting poverty, particularly in Africa.

Wolfowitz noted that a committee has been appointed to review the situation involving Shaha Riza, to whom he has been romantically linked. "I'm comfortable with that, and that's all I have to say on that," Wolfowitz said. "I don't think its fair to the rest of the agenda to take up this valuable time with that."

Riza was transferred to the State Department shortly after Wolfowitz took over the World Bank in 2005, in accordance with conflict-of-interest rules. She is still paid by the bank and she has received raises that increased her pay to $193,590 from $132,660 after she was moved to the State Department in 2005, according to the bank's employee association. A Wolfowitz spokesman, who has previously said that Wolfowitz played no role in the raises, would not comment yesterday. Riza has made no public comment.

There was no sign that Wolfowitz, who was appointed to the job at the recommendation of President Bush, was in imminent danger of being forced out. None of the World Bank's executive directors, who make up a 24-member board that governs the bank's operations along with Wolfowitz, have publicly withdrawn support.

Board members have asked Wolfowitz to more clearly articulate the direction he intends to lead the bank for the rest of his five-year term, which ends in 2010.

"There are considerable questions about his leadership at the bank, and he faces some morale problems and questions coming from" important member countries, said Edwin M. Truman, a senior fellow at the Peter G. Peterson Institute for International Economics in Washington. "But I don't think that he's in jeopardy."

The 185-nation World Bank, which has a staff of 10,000 and lends about $20 billion a year to developing countries for projects such as classroom construction and the creation of financial systems, is carrying out a campaign to replenish the International Development Association fund, which lends money interest-free to the poorest countries.

Raising the billions of dollars necessary to keep the fund running at its present level falls largely to Wolfowitz. Given the turmoil at the bank, some staff members have questioned whether rich countries would donate as generously to the fund as they have in the past. That is not likely to become clear until the end of this year, after countries announce their commitments.

"I think it will be a tragic mistake if the promise of increased aid is not delivered," Wolfowitz said. "The U.S. should be a leader here. When it comes to IDA replenishment, frankly a lot of the donors are looking to see what the U.S. is going to do, particularly some of these small but relatively generous countries like the Nordic countries."

Even if Wolfowitz can manage to fill the fund's coffers, he has considerable mending to do inside the World Bank, said present and former staff members, who spoke on condition of anonymity for fear of reprisals or of offending Wolfowitz.

Some staff members say Wolfowitz has lost their support, and an online discussion board on the bank's internal Web site has become a heated forum where critics have attacked Wolfowitz, especially over the issue of raises for his romantic partner.

Posting anonymously, bank staffers have accused Wolfowitz of hypocrisy, noting that he has launched a campaign to root out corruption in the developing world even as he manages the bank in a way they view as corrupt.

According to the World Bank Staff Association, Riza's pay increases violated bank rules that restrict the size of raises. Wolfowitz said in an e-mail to bank earlier this week that he will cooperate with an investigation by the bank's executive board.

On other issues, senior bank officers felt compelled to defend a Wolfowitz decision to expand operations in Iraq after a staff driver was wounded in February at a checkpoint in Baghdad.

Recent leaks of sensitive World Bank executive board deliberations to Fox News have fed the criticism. This week, bank officials said they hired a Washington law firm to hunt down the source of the unauthorized disclosures, which included an internal e-mail noting that the bank had received a warning from China that it might halt future borrowings if Wolfowitz refused to curb anti-corruption investigations.

"Critics, both inside and outside the World Bank, are openly questioning whether Wolfowitz's liabilities will undermine his leadership of the institution," said Manish Bapna, executive director of the Bank Information Center, a nonprofit organization in Washington that monitors the bank's activities. "His relationship with staff, the board and with civil society remain highly strained, and some wonder what could even be done at this point to heal these festering wounds."

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