Analysts say the institution has been "severely weakened" by the Wolfowitz controversy and the recent scrutiny of its unwieldy bureaucracyThe ugly showdown at the World Bank has all the signs of a no-win situation. And if the standoff between embattled bank President Paul Wolfowitz and its board of directors isn't resolved soon, analysts say that continuing American leadership of the 62-year-old institution could be in jeopardy. The bank itself could face lasting damage.
"This is the biggest crisis of leadership that the bank has ever had," says Sebastian Mallaby, a senior fellow at the Council on Foreign Relations and the author of an acclaimed history of the bank. "If this was a private company, its stock price would be down 25% and its board would say it needs a new and effective leader."
But the World Bank is not a private company, and the Byzantine political machinations of recent weeks have exposed a difficult-to-govern organization that's scarred by internal battles. Its staff has demanded Wolfowitz's departure. The European Union parliament has called on him to step down. An investigative committee of the bank declared that he was guilty of a conflict of interest in a pay-raise-and-promotion case involving his girlfriend. And on May 7, a top Wolfowitz aide, Kevin Kellums, abruptly resigned. Kellums had previously served as Vice-President Dick Cheney's communications director. "Given the current environment surrounding the leadership of the World Bank group, it is very difficult to be effective," he said in a written statement.
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