STEVE INSKEEP, host:
It's MORNING EDITION from NPR news. Good morning. I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne.
Here's the way that Paul Wolfowitz agreed to resign from the World Bank. He is leaving after he arranged a pay raise and promotion for a female companion, but the Bank absolves him of much of the responsibility, which leads to a question for NPR's Tom Gjelten, who's covering this story.
Good morning, Tom.
TOM GJELTEN: Good morning, Renee.
MONTAGNE: If Paul Wolfowitz acted in - I'm quoting - "good faith," as the bank says, why is he leaving?
GJELTEN: That's a good question, Renee. The statement from the World Bank Executive Board is really quite remarkable. With respect to that scandal over his girlfriend's pay raise it says, a number of mistakes were made by a number of individuals in handling the matter. And you're right, it says, Mr. Wolfowitz assured us he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that. And then the board lists what it says are Wolfowitz's accomplishments at the bank and thanks him for his leadership.
Now why then does he have to resign? That statement was basically the price that Mr. Wolfowitz demanded for resigning voluntarily. His lawyer said over and over he would not resign under a cloud. He made it clear he essentially wanted to be exonerated of any wrongdoing in connection with that pay raise for his girlfriend and he basically got that.
But you should not underestimate, Renee, how much bad feeling there was between Wolfowitz and the World Bank board. There was real anger at him on the part of a great many board members. That board statement makes it appear that it was Mr. Wolfowitz's decision to leave the bank, but you know it was not. He made it very clear he wanted to stay. And this is, after all, the first time in the history of the World Bank that its president has had to resign.
So that carefully worded statement was just what had to be said in order for his resignation to be arranged diplomatically. The alternative was for the board to fire him. That would have required a vote where the United States was on one side and its most important allies on the other side. No one wanted that.
MONTAGNE: Well, you know, one thing that this has brought up, focused new attention on, is what the World Bank does, actually. What did the institute do in 2007 so far, or 2006, and how much does it matter?
GJELTEN: Well, the bank has been essentially paralyzed for the last couple of months because of all this. I mean, many people have told me at the bank that they're hardly able to work. The bank - and if in fact Wolfowitz had been forced out, I think we would have seen a lot of criticism of the bank.
The bank is basically - people say the bank is no longer needed. It basically gives loans to countries. And in the 60 years since it was founded, of course, there's now a well-developed capital market so countries are able to get access to lending that they didn't have when the bank was founded.
However, the bank also makes a lot of grants to poor countries who don't have access to that. A lot of the bank money goes to them, so the argument in favor of the bank is that as long as there's global poverty, we do need an institution like the bank to help countries get ahead.
MONTAGNE: And has it been changed at all by this controversy?
GJELTEN: I think the most important effect of this whole episode is that it has focused attention on the internal operation of the bank. You know, Paul Wolfowitz has done a lot in focusing the bank on the issue of corruption and bad governance in the countries it helped. Now, in the aftermath of this, we're going to see the bank turning its attention to governance issues within itself, in other words in the way that the bank operates itself. I think the watchword here over the next few months is going be reform within the bank.
MONTAGNE: Well, just very briefly, Tom. Shaha Riza, Mr. Wolfowitz's girlfriend, what does this mean for her? We haven't really heard from her over this last couple of months?
GJELTEN: Well, I hope, Renee, that it means that we finally can hear from her. As I understand it, the bank had essentially barred her from saying or writing anything. Maybe if Paul Wolfowitz is gone she'll be able to return to the bank and go back to work. She's a widely respected Arab woman who is a strong advocate for democracy and woman's rights and she has an important role to play.
MONTAGNE: Tom, thanks very much.
GJELTEN: Thank you, Renee.
MONTAGNE: NPR's Tom Gjelten. And the text of the Bank Executive Board announcement of Paul Wolfowitz's resignation is at npr.org, along with a statement from Wolfowitz himself. Transcript provided by NPR, Copyright NPR.
