Wolfowitz will stay on as head of World Bank

WASHINGTON -- Embattled World Bank President Paul Wolfowitz said Sunday he will continue to lead bank efforts to reduce global poverty, resisting calls to step down over his involvement in securing a huge pay increase for a close female friend.

"The bank has important work to do and I will continue to do it," he said at a news conference winding up a meeting of the steering committee for the bank and the International Monetary Fund.

The committee said in its closing communique the Wolfowitz issue was "of great concern to us all" and called on the bank board looking into the matter to complete its work.

"We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as the motivation of its staff," the committee said.

In answering questions from reporters about whether he should resign, Wolfowitz referred several times to the committee's communique and said he did not want any comments he made to get in the way of the board's work.

"I believe in the mission of this organization, I intend to carry it out, I have had many expressions of support," he said.

Several times he was asked how he could continue as head of the 185-nation lending organization leading the fight against corruption after acknowledging a direct role in the pay increase, Wolfowitz referred to the communique.

After the news conference, Alison Cave, head of the World Bank Staff Association, which represents 7,000 of the bank's Washington employees, said the group believes Wolfowitz should resign.

"We do not see how he can possibly regain the trust of the staff," she said.

Eric Guitierrez, a policy coordinator for ActionAid, an advocacy group, also said, "It's time for the board to show Wolfowitz the door."

Wolfowitz appeared alongside Development Committee Chairman Agustin Carstens, Mexico's finance minister, and Rodrigo de Rato, the head of the IMF, the bank's sister institution.

Opening remarks focused on the World Bank's efforts to help poor countries meet goals for reducing poverty, broadening access to health care and education and economic development.

Carstens and Wolfowitz talked about the need for wealthy governments to deliver on promises for increasing spending on development aid.

"The donors are now unfortunately in a position of not fulfilling their promises," Wolfowitz said.

Large donor countries are meeting throughout this year to decide how much funding they will provide to a fund that provides interest free loans and grants to poor countries, the International Development Association.

Last week Wolfowitz told reporters donors would need to provide at least $28 billion if they are to fulfill promises to compensate IDA for income lost because of debt relief granted to poor countries.

Earlier Wolfowitz said misleading information has been circulating over his involvement in the pay increase.

In an e-mail to bank staff Saturday night, some of whom have called for his resignation, Wolfowitz said he had remained largely silent as the bank's board of directors considered his future.

"I feel, however, that this has left a vacuum, which has largely been filled by misleading information" and conceded the 109 pages of documents about the controversy released by the board are "a lot to wade through for significant facts so I would like to call your attention to a number of them."

He attached excerpts that referred to his offer, when he became president of the bank two years ago, to refrain from dealings with his companion, Shaha Riza, who then worked in the bank's Middle East department. But The Washington Post said he did not include his lawyer's subsequent clarification that the recusal offer did not include a ban on "professional contact."

Wolfowitz included a link to the package of documents, as did a posting on the bank's Web site Saturday. He has been under fire since it emerged that he secured a $193,590 job for Riza at the State Department soon after he joined the World Bank in 2005.

A deputy defense secretary and one of the architects of Bush's Iraq war strategy, Wolfowitz has been working behind the scenes at weekend meetings of finance ministers and central bankers to drum up support to stay in his post and presented reports to the bank's policy-setting Development Committee Sunday.

The White House has said President Bush has confidence in Wolfowitz.

Treasury Secretary Henry Paulson said the United States welcomed and supported an updated version of the bank's anti-corruption strategy developed under Wolfowitz's leadership. Since taking over, Wolfowitz has made anti-corruption efforts a priority, prompting concern from some of the board's European members that he was overemphasizing the issue.

Paulson called Wolfowitz "a very dedicated public servant" and said the review process by the board should be allowed to proceed.

As Wolfowitz entered the meeting room, he received a pat on the back from de Rato, the head of the International Monetary Fund, the World Bank's sister institution. Wolfowitz put his briefing papers down and, smiling, greeted members of the committee, headed by Mexico's Agustin Carstens.

The United States, Britain and France, whose governments have a major role in bank operations, said it was important to await the outcome of the board investigation into Wolfowitz's actions.

British development minister Hilary Benn said Saturday, however, that "this whole business has damaged the bank and should not have happened" and was distracting attention away from the bank's agenda.

"This weekend ought to be about the bank's contribution to fighting poverty and I'm looking forward to discussing how we can increase aid, tackle climate change and get clean water to 1 billion human beings," said Benn.

Paulson, however, said that waiting for the board review process to be completed should not be read "as any lessening of support" for Wolfowitz by the United States. A planned demonstration by bank employees calling for Wolfowitz to resign didn't happen, but several dozen members of advocacy groups marched outside the bank headquarters calling for his ouster.

Some African officials attending the meetings expressed support for Wolfowitz, saying he has made the continent a greater priority at the bank.

"We have seen visionary leadership, steadfast progress under Mr. Wolfowitz," said Liberia's finance minister, Antoinette Sayeh. "We can only say that we look forward to that continuing."

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Associated Press Writer Desmond Butler contributed to this report.