Wolfowitz quits as World Bank chief

The resignation, effective June 30, brought a dramatic conclusion to two days of negotiations between Wolfowitz and the Bank board after weeks of turmoil.

“He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that,” said the board’s directors in a statement issued on Thursday night. “We also accept that others involved acted ethically and in good faith.”

In the carefully negotiated statement, the Bank board praised Wolfowitz for his two years of service, particularly for his work in arranging debt relief and pressing for more assistance to poor countries. They also cited Wolfowitz’s work in combating corruption, his signature issue.

For his part, Wolfowitz said he was grateful for the directors’ decision and, referring to the World Bank mission of helping the world’s poor, added: “Now, it is necessary to find a way to move forward. To do that, I have concluded that it is in the best interests of those whom this institution serves for that mission to be carried forward under new leadership.”

Wolfowitz’s negotiated departure averted what threatened to become a bitter rupture between the US and its economic partners at an institution established after World War II. The World Bank channels US$ 22 billion in loans and grants a year to poor countries.

But by all accounts, the terms of Wolfowitz’s exoneration left a bitter taste with most of the 24 board members. Most had wanted to adopt the findings of the special board committee that determined he had acted unethically.

The closest the board came to criticising Wolfowitz was saying in that “a number of mistakes were made by a number of individuals in handling the matter under consideration and that the bank’s systems did not prove robust to the strain under which they were placed.”

And he leaves behind a place that must heal its divisions and overhaul a flawed, cumbersome structure that had allowed the controversy over Wolfowitz to spiral out of control.

People close to the negotiations said Wolfowitz had agreed not to make major personnel or policy decisions between now and June 30. Some Bank officials said he might go on leave and cede day-to-day functions to an acting leader, but that might not be decided until Friday.