World Bank President Paul Wolfowitz resigns

The U.S. has always picked the bank president, while the head of the International Monetary Fund is a European.

Wolfowitz's resignation takes effect June 30, APA reports.

The White House said it would soon name an American successor. U.S. Treasury Secretary Henry Paulson said he would help President George W. Bush in identifying a nominee after consultations with other World Bank member countries.

Wolfowitz was the first president to resign under fire since the group was founded in 1944. His departure renews questions about the selection process, which critics say should be based on merit rather than nationality, Bloomberg says.

While the White House cautioned it was too early to speculate over his successor, names being tossed around in the U.S. media included former Deputy U.S. Secretary of State Robert Zoellick, Deputy U.S. Treasury Secretary Robert Kimmit and even Tony Blair, Britain's outgoing Prime Minister.

Others included Stanley Fischer, governor of the Bank of Israel, Ngozi Okonjo-Iweala, a former Nigerian finance minister, Trevor Manuel, South Africa's Finance Minister, and Kermal Dervis, former Turkish minister for economic affairs.

The United States, the bank's largest shareholder, has named the World Bank chief since it led the establishment of the bank and its sister organization, the International Monetary Fund, more than 60 years ago.

The furor was sparked in April by staff complaints over Wolfowitz’s involvement in arranging a 36 percent raise for companion Shaha Riza in 2005, shortly after he took over. Riza, a communications officer at the bank, was transferred to the State Department in compliance with rules forbidding one partner from answering to another. She remained on the bank payroll.

A panel of seven directors on May 6 told Wolfowitz that he had violated staff rules and his employment contract. The panel told the full 24-member board that the bank's reputation had been damaged and that the board should consider firing him.

Wolfowitz, 63, argued that the package represented a good- faith effort to carry out the instructions of the bank's ethics committee. He called the charges against him "bogus" and said he was the victim of a "smear campaign".