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Deal said to be offered for Wolfowitz exit

European countries will drop demand that they pick next World Bank president if Wolfowitz agrees to leave soon, newspaper says.


NEW YORK (CNNMoney.com) -- Leading governments of Europe are willing to let the United States again choose the next World Bank president if embattled current President Paul Wolfowitz agrees to step down soon, according to a published report.

The New York Times reported the European governments had wanted to end the tradition of the United States picking the World Bank leader, but they signaled Monday they were willing to drop that demand if it meant that a public split on the international bank's board could be avoided.

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European countries have proposed a deal that could lead to Paul Wolfowitz leaving his post as president of the World Bank.

"What I'm hearing from colleagues is, 'Let's not push the Americans too hard,' " a senior European official involved in policy on the bank told the paper. "We want to avoid a split between the United States and its European allies. We're willing to say: 'OK, you find a capable American to run this institution and we can live with that.' "

There is some general resentment against the tradition at the bank that the president is always an American, named by the U.S. president.

The paper reported that even before Wolfowitz took office in 2005, leading European countries had begun pushing to discard the custom that had existed since the 1940s that allowed the United States to select the bank president, a prerogative it received because it contributes the largest share of the bank's financing.

But the United States has only 16.4 percent of the voting share on the World Bank board that chooses the president, while European countries have twice that vote.

Wolfowitz broke rules

An internal panel concluded Monday that Wolfowitz violated staff rules in arranging a promotion and pay raise for his girlfriend, according to a source close to the investigation who has seen the panel's unreleased report.

Wolfowitz rebutted statements from former World Bank officials who claimed that he ignored Bank ethics committee directions on the Riza case and that he acted improperly. He blamed what he calls "ambiguous bank rules and unclear governance mechanisms." He has been fighting a high-stakes campaign to hold onto his job.

His private attorney, Robert Bennett, told CNN Monday evening Wolfowitz has 72 hours to respond to the report with a rebuttal. That 72 hour deadline began with delivery of the report to Wolfowitz Monday.

Bennett called it "unfair" that Wolfowitz was given such a short time to respond and "proves once again that the ad-hoc committee is rushing to judgment." Bennett said they hoped that the full board would be even-handed when they receive the report.

The 24-member World Bank board will have the final say on Wolfowitz's future, which could include a reprimand, asking him to step down, or firing him. There is no word on when a decision will be made.

Some of the criticism of Wolfowitz dates back to when he was the No. 2 official at the Pentagon and one of the chief architects of the Iraq war. He also drew fire for his anti-corruption policy at the bank, which some long-time bank employees thought unfairly victimized the poor in certain countries.

The brewing controversy at the World Bank also led to Kevin Kellems, Wolfowitz's top communications advisor, to resign from the bank Monday, effective next week.

"Given the current environment surrounding the leadership of the World Bank Group, it is very difficult to be effective in helping to advance the mission of the institution," Kellems said.

-- CNN Producer Elise Labott contributed to this report. Top of page

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