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White House Backs World Bank Head Paul Wolfowitz

May 15, 2007 at 6:10 PM EDT

JUDY WOODRUFF: World Bank President Paul Wolfowitz headed to work this morning in anticipation of what could prove to be a fateful meeting with the bank’s 24-member board of directors. The board has the power to dismiss or reprimand him or report a lack of confidence in his leadership.

The meeting comes a day after a special bank panel reported that Wolfowitz broke bank rules in helping to arrange a substantial pay raise and promotion for his companion, Shaha Riza.

In its report, the panel underscored that there is “a crisis in the leadership of the bank,” and it urged the bank’s board to decide whether Wolfowitz can, quote, “provide the leadership needed” to run the bank. The committee said Wolfowitz “placed himself in a conflict of interest situation” and “should have withdrawn from any decision-making.”

In 2005, as Wolfowitz joined the World Bank, he became involved in negotiations to have Riza re-assigned from the bank to the State Department, with a salary totaling almost $200,000 year. Wolfowitz has said he relied on advice in the matter from the bank’s ethics committee. He has claimed that the ethics committee insisted that Riza leave the bank upon his arrival.

PAUL WOLFOWITZ, World Bank President: I didn’t volunteer to get involved in this. I didn’t get involved for any personal reasons, but rather to resolve something that I think posed institutional risk. I didn’t hide anything that I did. And I’m, as I said, prepared to accept any remedies that the board wants to propose.

JUDY WOODRUFF: The board acknowledged in its report that the ethics committee advice, quote, “was not a model of clarity,” but said Wolfowitz’s interpretation “turns logic on its head.” Since details of the matter emerged last month, Wolfowitz has apologized.

PAUL WOLFOWITZ: I made a mistake for which I am sorry. But let me also ask you for some understanding. Not only was this a painful personal dilemma, but I had to deal with it when I was new to this institution, and I was trying to navigate in uncharted waters.

JUDY WOODRUFF: But that has done little to quell calls for his resignation from the World Bank’s staff association and the Bank’s European members.

The 185-nation institution focuses on lending money to developing countries. In return, those countries are supposed to improve their economies and limit corruption.

The U.S., as the bank’s largest lender, gets to choose its president with board approval. Since his nomination two years ago, Wolfowitz has been criticized for his prior role as a key architect of the Iraq war.

GEORGE W. BUSH, President of the United States: He ought to stay. He ought to be given a fair hearing.

JUDY WOODRUFF: President Bush and members of his administration have repeatedly backed Wolfowitz, saying they don’t think the facts merit his dismissal. Today, White House spokesman Tony Snow said they still supported Wolfowitz, but added…

TONY SNOW, White House Press Secretary: Members of the board, Mr. Wolfowitz, need to sit down and figure out what is, in fact, going to be best for this bank to be able to serve as a venue for — especially in the developing world. Regardless, we have faith in Paul Wolfowitz. We do think it is appropriate for everybody to sit down after the fact, calm down, take a look, and figure out, “OK, how do you move forward?”

Effectiveness in leading the bank

Nancy Birdsall
President, Center for Global Development
Paul Wolfowitz should step down because he believes in the mission of the bank. And if he stays, he cannot be effective anymore in leading the bank in its mission.

JUDY WOODRUFF: The bank's board is expected to announce its recommendation on Wolfowitz tomorrow.

We get two views now on whether Paul Wolfowitz should stay at the World Bank or go. Andrew Young is a former U.S. ambassador to the United Nations and former mayor of Atlanta. He now serves as co-chairman of Good Works International, a consulting firm that focuses on emerging markets in the Caribbean and Africa.

And Nancy Birdsall is president of the Center for Global Development, a Washington think-tank that works to reduce global poverty and inequality. She served as executive vice president of the Inter-American Development Bank and worked at the World Bank for 14 years.

Thank you both for being with us.

Nancy Birdsall, to you first. You believe Paul Wolfowitz should step down. Why?

NANCY BIRDSALL, President, Center for Global Development: Paul Wolfowitz should step down because he believes in the mission of the bank. And if he stays, he cannot be effective anymore in leading the bank in its mission.

He cannot be effective because he's lost the confidence of the constituencies that the bank serves: its members, its stakeholders, its staff, its board.

JUDY WOODRUFF: And what about the original charge, his handling of the salary and the pay increase for his companion, Ms. Riza?

NANCY BIRDSALL: You know, I don't really think it's only or mostly about the pay and promotion package. It is now about the ability of a leader to have leadership which requires confidence from those who are led. And, you know, it would be bad for the bank. It would be bad for U.S. leadership in the world, and I think it would be, most of all, bad for the world's poor, which is what Paul Wolfowitz cares about, were he to stay.

JUDY WOODRUFF: What exactly are you saying he's done wrong in all this then?

NANCY BIRDSALL: You know, the question is whether the Shaha Riza affair is only a symptom. It is an issue in itself, a conflict-of-interest issue. I haven't read the hundreds of pages of documents.

I think the issue that is being raised now and has been raised over the last three weeks is also about this issue of leadership and whether the Shaha Riza business is a symptom of a larger set of problems that people see now with Wolfowitz's style of leadership.

JUDY WOODRUFF: Andrew Young, Ambassador Young, hearing what Ms. Birdsall is saying, you already have had the view that he should stay, but how do you respond to what she's saying?

Undermining Wolfowitz's leadership

Andrew Young
Former U.S. Ambassador to the U.N.
For them [the World Bank Board] to take their prejudices -- which I agree with -- against him on the war in Iraq and resurrect it to try to put it into the World Bank political scene is, in many ways, obscene.

ANDREW YOUNG, Co-Chairman, Good Works International: Well, first of all, I think she said herself that this is not about the girlfriend, and that's what people have been responding to.

This is a professional woman who was at the World Bank six or eight years before Wolfowitz got there. She was a ranking member. She's a British woman, who's a Muslim, who's fluent in Arabic, and in almost any corporation in the world she could make a half-a-million dollars. She's at the bank because of her competence.

Paul Wolfowitz coming created a conflict, which he went to the ethics committee to try to solve. The ethics committee would not let him recuse himself, so they put him in this trick. And now they want to use this trick to undermine his leadership.

I think what they're doing is undermining the credibility, and particularly the Dutch. They have a reputation for tolerance, for generosity, for forgiveness, and an expansive view of the world that I've always admired. They were very helpful to us in Atlanta. They were very helpful in the Holocaust, and now, for them to be caught in this bureaucratic crap, is embarrassing to me.

JUDY WOODRUFF: Clarify what you....

ANDREW YOUNG: I think who's on trial here is not Paul Wolfowitz, but that board. In a world where tolerance is required, where women in the Islamic world are the hope of the entire planet, for them to take their prejudices -- which I agree with -- against him on the war in Iraq and resurrect it to try to put it into the World Bank political scene is, in many ways, obscene.

It's sort of like Imus referring to these young women on the basketball team and ignoring all of the professional competence and all of the skills and talents that are at stake here. Paul Wolfowitz and Riza Shaha have tremendous things to offer the world. And I think, right now, staid bureaucrats who've been there 25 years bungling in the bank are trying to make him a scapegoat.

JUDY WOODRUFF: And your reference to the Dutch is a reference to some of the leadership on the board of directors.

ANDREW YOUNG: This is a European...

JUDY WOODRUFF: Nancy Birdsall, let me come back -- if you would, Ambassador Young -- to Nancy Birdsall. You hear what the ambassador is saying, that what he did...

ANDREW YOUNG: Can I say one more thing?

JUDY WOODRUFF: ... was on the advice of the ethics -- excuse me, Ambassador Young, we'll come back to you in just a moment -- but that this was at the advice of the ethics committee.

NANCY BIRDSALL: Look, I think the issue is really about what's needed to have a strong World Bank. The world does need the World Bank.

The problem is that, fair or unfair, both to Shaha Riza and to Paul Wolfowitz, there is a time when leadership is needed. And when he is not able anymore to exert the kind of -- the bank is an international organization. Leadership of the bank has to be grounded in passion, in conviction, in use of the bully pulpit effectively. It cannot be based on fiat. It's about leading a very large, experienced group of people...

Losing confidence

Nancy Birdsall
President, Center for Global Development
If he stays now, without confidence by those he is trying to lead, how will he be able to bring any new vision, how will he be able to bring to the bank the reform that it does need?

JUDY WOODRUFF: So is that what you're saying he was doing, was leading by fiat, by command?

NANCY BIRDSALL: No, I'm not saying that. But if he stays now, without confidence by those he is trying to lead, how will he be able to bring any new vision, how will he be able to bring to the bank the reform that it does need?

Even on the governance issues that Ambassador Young is raising, it's a membership organization. He has to lead by building a consensus.

JUDY WOODRUFF: Ambassador Young, this point that, if he has lost -- no matter what the details were of what originally happened, if he's now...

ANDREW YOUNG: The problem is...

JUDY WOODRUFF: ... lost the confidence of the board and others.

ANDREW YOUNG: No, the problem is the board has lost the confidence of the world. Paul Wolfowitz responded very well, and is very -- I met him in Anacostia, dealing with poor blacks in Washington. I met him again in Nigeria.

He's been more in Africa than anywhere else, and the African delegates and the third world generally have appreciated his leadership. The role of women in the world is far more important than these bureaucrats that are making this decision. They probably all ought to retire like me and get out of the way.

But this is not a -- not like Bolton. Bolton was always there to destroy the United Nations.

JUDY WOODRUFF: You're referring to the former acting ambassador to the United Nations.

ANDREW YOUNG: Yes. For me, this is more like the scandal in the United Nations, where when Europe began to feel the influence of new coalitions in the third world threatening their dominance, they sought to get rid of the people who were pulling together these new coalitions.

I think the threat is that Paul Wolfowitz is pulling together a third world coalition that, while it doesn't have the money, it controls the markets of the future. And the old colonial routines of running Africa from Europe will no longer apply under Wolfowitz.

JUDY WOODRUFF: Nancy Birdsall, to you. The ambassador is describing a philosophy that he says Paul Wolfowitz has about what the World Bank should be. And he's basically saying that will be gone if he's gone. And he's saying it's the board that's the problem.

NANCY BIRDSALL: Right. Well, look, I think that Paul Wolfowitz definitely understood the mission of the bank, which is to bring advice to governments in the developing world that will help them reduce poverty. And I applaud him for that sense of mission that he brought to the bank.

This is not about that sense of mission. It is not at all about Iraq. Many people gave Paul Wolfowitz a chance when he came to the bank. It's true that there -- you know, we had President McNamara coming to the bank many years ago bearing a burden, and he showed effectively leadership.

Wolfowitz's role in the Iraq war

Andrew Young
Former U.S. Ambassador to the U.N.
Wolfowitz was shaking up the World Bank in a way that it needed shaking; for its own good, it needed shaking.

JUDY WOODRUFF: Well, let me pick up on that point. You're saying it's not about Iraq. The criticism across the board has been that this is a proxy fight for Paul Wolfowitz's role earlier as an architect...

NANCY BIRDSALL: I don't think it is. I don't think it is.

ANDREW YOUNG: I think it absolutely is.

NANCY BIRDSALL: I think it's very useful for Americans to understand that 83 percent of the bank is actually owned by these other governments that Ambassador Young is talking about.

And he's right that it's important to have a consensus and a sense of collective energy amongst all those shareholders. And the question is whether, if Mr. Wolfowitz stays, he could do the things, including the governance reforms, that the ambassador refers to.

ANDREW YOUNG: Let me break in.

JUDY WOODRUFF: Ambassador Young, you get the last word. We have just under a minute.

ANDREW YOUNG: Yeah, this is more bureaucracy. The Chinese are putting money into Africa by the billions of dollars. Private American banks are now beginning to wake up to realize the African market.

We might not need the World Bank, if it continues like it is. It takes so long for them to approve and evaluate projects. And the people who are approving and evaluating projects have never done projects themselves.

And when you bring a sense of competence and an urgency to the World Bank, those bureaucrats are going to kick, as they did when I did it in Atlanta. But I had a constituency of people who stuck behind me, and we were able to make the government and the private sector work together. And we shook it up.

Wolfowitz was shaking up the World Bank in a way that it needed shaking; for its own good, it needed shaking. If he's gone, and they bring somebody else in, first of all, the term is just too...

JUDY WOODRUFF: We are going to have to leave it there. I think we get a clear sense of two very different views of Mr. Wolfowitz's leadership.

ANDREW YOUNG: We probably share a view of the world.

JUDY WOODRUFF: Point well-taken. Ambassador Andrew Young, Nancy Birdsall of the Center for Global Development, thank you both.