March 16 (Bloomberg) -- Paul D. Wolfowitz, the Deputy Secretary of Defense, will be nominated to be the next head of the World Bank, a U.S. official said.

President George W. Bush will name Wolfowitz later today, the official said. He would replace James Wolfensohn, 71, who said in January that he would leave the institution when his term ends May 31.

Wolfowitz's nomination must be approved by all of the World Bank's member countries, which analysts said would be largely a formality. By tradition, the U.S. chooses the head of the World Bank, and European officials choose the managing director of the International Monetary Fund.

Treasury Department spokesman Rob Nichols declined to comment on the nomination.

Other candidates for the World Bank position included former Hewlett-Packard Co. Chief Executive Officer Carly Fiorina and Bush administration AIDS policy chief Randall Tobias.

Wolfowitz was a strong advocate of the Iraq war, advocating the toppling of Saddam Hussein and helping the administration craft its rationale for the invasion. The U.S. official said Wolfowitz is a proven leader, intellectually and operationally.

World Bank Scope

His management experience running the Pentagon, the largest government agency with nearly 700,000 civilian employees and 1.3 million in uniform will serve him well at the World Bank, the official said.

Responding to a report in the Financial Times earlier this month that Wolfowitz was a candidate for the World Bank, a Defense Department spokesman said he would remain at the Pentagon. ``Secretary Wolfowitz has been asked to stay on in an extremely important job, one that he likes doing very much,'' Defense Department spokesman Larry DiRita said March 1.

Under Wolfowitz, the Bush administration may now try to narrow the focus of the World Bank, returning the international lending institution to its roots of primarily financing large infrastructure projects and limiting the practice of handing out zero-interest loans, analysts such as Alan Meltzer, who led a 2000 congressional inquiry into the World Bank, said.

Management Goal

The lender, the largest financier of projects in developing nations, broadened its scope under Wolfensohn, who sought a more ``humanizing'' role for the bank, according to Joseph Stiglitz, a Nobel Prize-winning professor at Columbia University and former chief economist of the World Bank.

Since taking over in 1995, Wolfensohn cut by 40 percent financing for dams, bridges and infrastructure projects, and shifted that money to programs promoting climate change and development.

The U.S. is seeking to scale back some of Wolfensohn's projects, overhaul the bank's $20 billion a year lending operation and more effectively manage more than 10,000 employees scattered in 109 nations, Meltzer said.

Bush named Wolfowitz, 61, as deputy to Defense Secretary Donald Rumsfeld in February 2001. Then dean of Johns Hopkins University School of Advanced International Studies, Wolfowitz was a veteran of both the State and Defense Departments.

State, Defense Veteran

He served as undersecretary for policy for Vice President Dick Cheney when Cheney headed the Pentagon during the administration of former President George Bush, the current president's father.

From 1986 to 1989, Wolfowitz was the U.S. ambassador to Indonesia, and assistant secretary of state for East Asian and Pacific Affairs from 1982 to 1986. He worked on arms control and disarmament issues in federal agencies in the 1970s.

Wolfowitz was a critic of former President Bill Clinton's approach toward China and Russia, and urged tougher stances on those countries' missile transfers to Iran. He also supported providing international financial assistance to Indonesia during the Asian financial crisis, testifying before Congress that it served U.S. interests.

From 1995 to 2001, Wolfowitz was a director of toy maker Hasbro Inc. He received a Masters degree in administration and a Doctorate in political science and economics from University of Chicago.

To contact the reporter on this story: Simon Kennedy in Washington at skennedy4@bloomberg.net Julie Ziegler in Washington at jziegler@bloomberg.net

Last Updated: March 16, 2005 09:24 EST