White House Support for Wolfowitz Wavers

By Peter S. Goodman
Washington Post Staff Writer
Wednesday, May 16, 2007

The Bush administration softened its support for World Bank President Paul D. Wolfowitz yesterday, signaling a willingness to replace him if the bank's executive board resolves an ethics controversy without firing him.

"All options are on the table," said White House spokesman Tony Snow, addressing reporters at a morning briefing. "Members of the board, Mr. Wolfowitz, need to sit down and figure out what is in fact going to be best for this bank. . . ."

The shift of tone at the White House, which nominated Wolfowitz for the post two years ago, is a blow to his struggle to save his job. It came a day after a bank investigating committee found that Wolfowitz broke ethics rules and damaged the integrity of the institution by engineering a large raise for his girlfriend, Shaha Riza, while keeping the bank's top legal adviser out of the loop.

Senior Bush administration officials emphasized that the White House has not abandoned Wolfowitz and does not believe he should be fired. But the White House has concluded, through conversations with counterparts in foreign capitals and from the committee report, that Wolfowitz can no longer effectively head the institution, the officials said, speaking on the condition they not be named because they lacked authorization to discuss the matter publicly.

"We've considered that this is an issue for people at the bank and our colleagues at other governments," a senior White House official said. "We'll engage in a discussion about the future leadership of the bank."

Whether the bank's executive board would be willing to negotiate an end to the leadership crisis was uncertain last night. A senior bank official, briefed by a European member of the board and willing to recount the conversation only on the condition of anonymity, said that members as well as others believe it would compromise the board's integrity to cut a deal.

Wolfowitz addressed the board yesterday to plead for his job. "I acted in what I believed were the best interests of the institution," he said, according to a copy of his remarks. "I implore each of you to be fair in making your decision, because your decision will not only affect my life, it will affect how this institution is viewed in the United States and the world."

The board planned to convene this morning to deliberate.

Wolfowitz has insisted he would not resign under a cloud. His attorney, Robert S. Bennett, reiterated that position yesterday and insisted that Wolfowitz retained "full and complete support from the White House."

Treasury Secretary Henry M. Paulson Jr. has been calling finance ministers in foreign capitals to say that the ethics violations catalogued in the bank report do not amount to a firing offense, said Michele Davis, a Treasury spokeswoman. Administration officials acknowledged, however, that Paulson had garnered little support for Wolfowitz abroad, even among close U.S. allies. That has led the administration to favor a negotiated settlement, they said.

"It could involve a shifting of senior managers at the bank, or it could involve a change of leadership at the bank," an administration official said. "The message to the board is: 'Don't fire him based on the personnel infraction.' Then, if you want to have a bigger, broader conversation, we'll engage in it."

The official declined to specify what board action the White House envisions, but he suggested one possibility: The board could reprimand Wolfowitz while acknowledging a lack of clarity in the bank's rules about conflict of interest and in the advice Wolfowitz got from a bank ethics committee. The World Bank report, even as it found ethics violations by Wolfowitz, acknowledged "that the informal advice as provided by the ethics committee was not a model of clarity."

At his appearance before the board yesterday, Wolfowitz promised substantial management changes if he remains. He also opened the door to a broader conversation about his future at the bank if he is cleared of blame in the issue of Riza's raise.

"If you want to have a discussion about my leadership, my management style and the policies I support, let's do it," he said. "That's fair. That's legitimate. But let's get past this conflict-of-interest matter. . . ."

Wolfowitz has argued that he did the best he could to follow the guidelines of the bank's ethics committee in arranging that Riza be transferred outside the bank so he could avoid supervising her. He said her raise, to about $180,000 from about $130,000, was awarded as compensation for the disruption to her career.

The investigating report concluded that Wolfowitz improperly directed the bank's vice president of human resources to confer the raise while shutting the bank's general counsel out of negotiations and keeping the arrangement a secret.

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