Mr. Wolfowitz had apparently rubbed many on the wrong side at the World Bank and to make matters worse had landed himself in a scandal. His opponents pounced on the opportunity and saw this as a way to get rid of him. They accused him of being “unethical” among other things.
Mr. Wolfowitz being a hand picked appointee of President Bush complicated the matter even more. His opponents were threatening to fire him and to find a replacement candidate. Historically, the US has had control of the top job of the World Bank which has been an appointee of the US President. In short, there was a conflict and three affected parties.
What followed was classic “win-win” politics. Mr. Wolfowitz agreed to quit provided the World Bank withdrew their accusations against him. The President agreed to the compromise, provided he could appoint his replacement. In short, it was time to for some seemingly friendly kisses, although of the goodbye kind! However, the World Bank Group Staff Association, issued a statement trashing both Mr. Wolfowitz and the Wold Bank Board!
While Mr. Wolfowitz has finally done the necessary thing by resigning, he has damaged the institution and continues to damage it every day that he remains as its President. He cannot continue to be the face of the World Bank. He has demeaned the Bank, insulted the staff, diminished its clients, and dragged this institution through the mud. He put his own interests before those of the institution. In making a statement of gratitude to Mr. Wolfowitz, the Board has done the same. They have attempted to save his face and in so doing have destroyed that of the institution that they are entrusted to protect.
The World Bank Group needs to rebuild its credibility immediately, regain its focus and devote its full attention to its clients. This cannot be done while Mr. Wolfowitz remains in his position as President. See all the related statements here.
Its a pity that similar political crisis resolution could not be achieved prior to the Iraq war, given that both President Bush and Mr. Wolfowitz were the key players at that time as well.
Pakora Korner 
you missed one more point. The Europeans did not squack at the US’s “right” to name Wolfowitz’s successor since questioning that would have meant questioning their right of choosing the head of the IMF. It’s quid pro quo to the extreme. Whne will this western dominated status quo end. Maybe when the Iraq crisis is resolved 😦
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