France now backs Italian Mario Draghi for ECB post

27th April 2011, Comments 0 comments

The chances of Italian central bank chief Mario Draghi becoming the next European Central Bank president have finally received clear and crucial backing from French President Nicolas Sarkozy.

His support came after a German daily said Berlin was also coming around to the idea of Draghi taking over as ECB chief in the midst of the eurozone's debt crisis.

"We support the candidacy of Mario Draghi," Sarkozy told a joint news conference with Italian Prime Minister Silvio Berlusconi in Rome on Tuesday.

Paris had previously been considered cool to the idea of Draghi, 63, succeeding Jean-Claude Trichet in October as head of one of the world's leading central banks and one of the European Union's strongest institutions.

"Sarkozy's move may not necessarily suggest the final word has been said on the issue, but in view of the remaining list of potential candidates, Draghi's chances seem to have risen substantially," Barclays Capital economist Thorsten Polleit told AFP.

Marco Valli, chief eurozone economist at Italian bank UniCredit said it would be a "big surprise" if Berlin now backed another candidate.

"It is clear that Sarkozy did not take a public position without knowing what Berlin's thoughts were," Valli told AFP.

The French leader's remarks came after the respected German business daily Handelsblatt said German Finance Minister Wolfgang Schaeuble was lobbying for Draghi, dubbed "Super Mario" in the media.

The Italian has wooed German public opinion with interviews in which he stressed the need for fiscal responsibility and cited Germany as a model for other countries.

"Schaeuble prizes Draghi's good reputation as a central banker, his integrity and his personality," the newspaper cited an unnamed high-level German government official as saying.

Handelsblatt had earlier quoted a source from Chancellor Angela Merkel's junior coalition partners as saying: "There is no alternative to Draghi. We will support the Italian."

He and outgoing German central bank president Axel Weber had been tipped as front runners for the job but Weber decided to resume teaching, leaving Berlin without a candidate of its own.

The official announcement of Trichet's successor should take place at the next European summit in late June.

A Jesuit-educated economics professor and former investment banker at Goldman Sachs, Draghi was named governor of the Bank of Italy in 2005.

He has earned greater international visibility by heading up the Financial Stability Board, a body overseeing reforms of the global financial system.

The time he spent at Goldman Sachs, from 2002 to 2005, could weigh against Draghi however, because that bank has been suspected of helping Greece hide vast amounts of debt.

An unwritten rule about the geographic distribution of top EU posts may pose an additional hurdle since ECB vice president Vitor Constancio is from Portugal, another southern eurozone country and one negotiating an EU-IMF debt bailout.

Italy is also burdened with one of the highest levels of public debt in the world, at 119 percent of gross domestic product (GDP) last year, official figures show.

Merkel herself might still have some doubts therefore, and Berenberg Bank chief economist Holger Schmieding told AFP she might use her support "as a kind of bargaining tool" for tougher economic reforms that Germany feels are needed to drag the eurozone out of its debt crisis.

Elsewhere in the eurozone however, Draghi could be just the man many have hoped for.

In Dublin, the Independent newspaper said he "is likely to be more sensitive to the position of so-called 'peripheral Europe,' which includes Ireland, Greece, Portugal, and for some, Spain."

© 2011 AFP

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