Wolfowitz Resigns; Officially Leaves Post in June

World Bank President Paul Wolfowitz waves as he returns to his home in Maryland. i i

World Bank President Paul Wolfowitz returns to his home in Maryland after the bank announced his resignation. Win McNamee/Getty Images hide caption

itoggle caption Win McNamee/Getty Images
World Bank President Paul Wolfowitz waves as he returns to his home in Maryland.

World Bank President Paul Wolfowitz returns to his home in Maryland after the bank announced his resignation.

Win McNamee/Getty Images

World Bank President Paul Wolfowitz has resigned. Pressure for Wolfowitz to step down has grown since the release of a report on his handling of a 2005 pay raise for his girlfriend, who is also a bank employee.

Under the terms of the resignation, Wolfowitz will leave office at the end of June. But he is expected to remove himself immediately from the bank's day-to-day business.

The announcement followed two days of intense negotiations between Wolfowitz and the bank's executive board. The negotiations mostly involved the language that the announcement would be phrased in — and how Wolfowitz's resignation would be explained.

Wolfowitz would seem to have prevailed in at least part of that discussion: The bank released two statements about the resignation — one from the board and one from Wolfowitz.

While the board's version of events weighs in at 415 words, Wolfowitz took 1,999 words to touch on a number of subjects, from the bank's duty to serve Africa's poor to a list of the agency's accomplishments during his tenure.

Wolfowitz's final paragraph began, "Change should not be feared, it is something to welcome."

Speaking at a Rose Garden press conference with British Prime Minister Tony Blair on Thursday, President Bush seemed to suggest that Wolfowitz was ready to leave.

"I regret that it's come to this," the president said. "I admire Paul Wolfowitz. I admire his heart. And I particularly admired his focus on helping the poor."

Statements: World Bank Board, Paul Wolfowitz

Washington, May 17, 2007

STATEMENT OF EXECUTIVE DIRECTORS

Over the last three days we have considered carefully the report of the ad hoc group, the associated documents, and the submissions and presentations of Mr. Wolfowitz. Our deliberations were greatly assisted by our discussion with Mr Wolfowitz. 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. We also accept that others involved acted ethically and in good faith. At the same time, it is clear from this material 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. One conclusion we draw from this is the need to review the governance framework of the World Bank Group, including the role as well as procedural and other aspects of the Ethics Committee. The Executive Directors accept Mr. Wolfowitz's decision to resign as President of the World Bank Group, effective end of the fiscal year (June 30, 2007). The Board will start the nomination process for a new President immediately.

We are grateful to Mr. Wolfowitz for his service at the Bank. Much has been achieved in the last two years, including the Multilateral Debt Relief Initiative, the Clean Energy Investment Framework, the Africa Action Plan, and the Avian Flu Initiative. 2006 was a record year for IDA lending, especially in Africa. The Bank has launched emergency action programmes in Liberia, the Democratic Republic of the Congo and the Central African Republic, and played a key role in the Lebanon and Afghanistan donors conference. In March, after an unprecedented global consultation process, we adopted a new strategy for the Bank's work on Governance and Anti-Corruption. And we have new strategies for Rapid Response in Fragile States, for the Health Sector and for the Financial Sector. We thank Mr Wolfowitz for his leadership and for championing the Bank's work across so many areas.

It is regrettable that these achievements have been overshadowed by recent events. Mr Wolfowitz has stressed his deep support for and attachment to the World Bank and his responsibility, as its President, to act at all stages in the best interests of the institution. This sense of duty and responsibility has led him to his announcement today. We thank him for this and underscore our appreciation for his commitment to development and his continuing support for the World Bank and its mission.

STATEMENT OF PAUL WOLFOWITZ

I am pleased that after reviewing all the evidence the Executive Directors of the World Bank Group have accepted my assurance that I acted ethically and in good faith in what I believed were the best interests of the institution, including protecting the rights of a valued staff member.

The poorest people of the world, especially in Sub-Saharan Africa deserve the very best that we can deliver. 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. Therefore, I am announcing today that I will resign as President of the World Bank Group effective at the end of the fiscal year (June 30, 2007).

The World Bank Group is a critical institution with a noble mission, that of enabling the world's poor – and particularly the more than a billion men, women and children who struggle to survive on less than a dollar a day – to escape the shackles of poverty. I have had the privilege of visiting World Bank Group staff and programs in some 25 developing countries in the last two years. I've had a chance to see with my own eyes and hear with my own ears how eager people are to work hard if they have a chance for a good job, how excited children are to have a chance for the first time to go to school, and how willing parents are to sacrifice so that their children can have a better future.

It has been truly inspirational to be able to help them achieve their goals and it is a privilege for all of us in the World Bank Group to have a chance, every day that we come to work, to make a difference in the lives of those who are less fortunate. I am grateful to have enjoyed that privilege for nearly two years and I am proud of what we have accomplished together as a team.

We provided record levels of support last year to the poorest countries of the world, $9.5 billion, through the International Development Agency (IDA) and we are headed to a new record this year. Half of that support is going to Sub-Saharan African countries, also setting new records;

• We are further increasing support to the poorest countries through the Multilateral Debt Relief Initiative completed last year which canceled $38 billion of debt owed by the HIPC countries to IDA, along with specific commitments by the IDA donors to provide additional support to make up for the lost reflows to IDA on a dollar-for-dollar basis;

• And last year we transferred a record amount of Bank Group income, $950 million, to IDA, including the first ever transfer from the IFC to IDA;

We have not only increased the quantity of resources available to the poorest countries through IDA, we are also making those resources more effective, and we are providing greater assurance to donors that they are being used properly:

• By helping developing countries strengthen systems of governance and supporting their efforts to fight corruption and to recover stolen assets;

• By placing greater emphasis on measuring the results our support is producing, although much more work needs to be done in this area; and

• By strengthening cooperation among donors, and particularly among the Multilateral Development Banks in such areas as fighting corruption and averting unsustainable debt burdens;

We have also strengthened our work significantly in a number of important specific sectors, particularly:

• Infrastructure – which was a major concern of the Finance Ministers from Africa when I first met with them two years ago;

• Combating malaria, a preventable disease that is killing 3,000 people a day, most of them children and most of them in Sub-Saharan Africa. In the last 18 months we have approved over $360 million in assistance for anti-malaria programs compared to $50 million in the first five years of this decade.

• Here, too, we are emphasizing quality as well as quantity, pressing the development of a "malaria scorecard" to track results and effectively coordinate the work of the many donors so that gaps can be identified and filled.

Some of the work which has been most inspiring to me has been the Bank Group's response to countries emerging from conflict, countries with new leadership which urgently need assistance to consolidate peace and jumpstart recovery:

• We have responded with unprecedented speed to help fragile states with new leadership, such as Liberia, the Central African Republic and the Democratic Republic of the Congo;

• We have adopted a new Rapid Response and Fragile States policy to enable us to move faster in situations with new opportunity and to encourage more of our staff to work in fragile states.

• We have helped lead successful donor conferences for many post-conflict countries, including Afghanistan, Lebanon and Liberia.

Our work is important, however, to more than just the poorest countries. Indeed, the majority of the world's poor live in the more successful developing countries, our partners in middle income countries, which borrow from the IBRD.

• These countries still seek help to deal with their large challenges to fight poverty and preserve their environment, but the World Bank Group needs to be increasingly innovative and flexible if we are to be useful to these countries which are already highly sophisticated and have access to many other sources of funds. To do that we developed a new "Middle Income Country Strategy" last year and we are working hard on implementing it.

Some of our most important work has been strengthening the development of the private sector, which is the most important source of the growth and jobs that people need to escape poverty:

• The International Finance Corporation, which works with the private sector, has been setting impressive records, including $8 billion in new commitments this year.

• What should inspire us even more than the numbers is the greatly increased emphasis the IFC is placing on the development impact of their work and on expansion into "frontier markets." Indeed, Africa is the fastest growing region for IFC work – a five-fold increase in five years – and the IFC has greatly expanded its field staff in Africa.

• Perhaps most of all, I am proud of the innovative work the IFC is doing, through the "Doing Business" report, to help developing countries identify the obstacles to private sector growth and I have been delighted at how eager many governments have been to remove those obstacles once we help identify them.

This is not an exhaustive description of the work of the World Bank Group – or even just the part that I have been involved in – but I need to mention one more thing: the importance of the World Bank partnership with the developed countries to promote sustainable global development:

• The Bank helps rich countries carry out their obligation and their interest to help the world's poor.

• We support the interest of the developed countries to mobilize global resources for common purposes, such as containing the spread of Avian flu – where the Bank has played a leadership role – or to preserving the planet's environmental heritage, as we are doing in Brazil and the DRC, by supporting Amazon Basin and Congo River Basin initiatives.

• Most important of all has been the Bank's development of the Clean Energy Investment Framework which we were first asked to do by the Gleneagles Summit of the G-8 in July 2005. As the world mobilizes resources to diversify energy sources, reduce carbon emissions, avoid deforestation and help countries deal with the effects of climate change, most of those resources have to come from the developed countries. The most productive place to invest them will often be in developing countries. The World Bank Group has been and continues to be in a unique position to facilitate those investment flows and the Global Environment Facility and the Clean Energy Investment Framework form the foundation on which the Bank Group can build.

All of that work – and much more – is only possible because of the dedicated efforts of very hard working staff. I am particularly impressed by our staff in country offices, including remarkable local staff members, many of whom face daily risks to their health and security in order to help the poor whom we strive to serve. They too have been treated unfairly by much of the press coverage of the past weeks and they deserve better. I hope that can happen now.

I have made many strong appointments both from inside and outside the Bank of which I am personally proud. My Senior Management Team is an exceptional group of talented managers and devoted international public servants who it has been an honor to have as friends and colleagues.

But, I am particularly proud to have appointed two African women as Vice-Presidents in key positions, each of them a former cabinet minister with real world experience in solving problems in democratically elected Sub-Saharan governments. Only when African voices with African experiences are fully empowered at the Bank, will the Bank be seen as a center for solutions in that part of the world. We need senior leaders who have real-world experience in tackling the toughest challenges in the poorest countries.

I am also grateful for the dedicated professionalism of the many staff throughout the World Bank Group who have stayed focused on their work during the recent controversy. In the month of April alone, they delivered nearly $1 billion of support for Africa, an innovative new strategy for Bank work in the health sector, and a strategy for Bank Group support for financial sector work in developing countries, and much more. I am particularly grateful to the entire staff of the President's office who have given me such strong professional support throughout the last two years and particularly during the last month.

It is inspiring to work with people like those and I will miss them.

Finally, I want to say a special word of thanks to the many people inside and outside the Bank who have publicly or privately expressed their support for me and asked me to stay. One of the most moving was a phone call I received from the democratically elected President of a Sub-Saharan African country. It was a private call so I will not quote him by name. But he thanked me for doing so much, in his words, to make the World Bank an institution "that listens, that cares, that understands and that takes action." If that is true, and if I have "touched the hearts of Africans," as he told me, then the last two years have been worth it.

I hope I can continue working with him and with the many other Africans, official and non-official, who have been such an inspiration to me – although I will have to find other ways to do so. They are the ones who have convinced me that Africa has a real chance to turn a corner and join the progress that we have seen in many other parts of the developing world in recent decades. It is those Africans who are stepping up – often at great personal sacrifice and even risk, to bring peace, good governance and sound policies to their countries that are the reason for hope. They deserve all the support that the World Bank Group can give them and I hope they get it.

The next President will have my full support. Hopefully the difficulties of the last few weeks can actually strengthen the Bank by identifying some of the areas of governance and human resource management where reform is needed.

Change should not be feared, it is something to welcome. It is the key to keeping this important institution relevant and effective in the future and meeting the needs of the world's poor, and of humanity as a whole.

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