Germany still gunning for ECB presidency

14th February 2011, Comments 0 comments

Berlin indicated Monday it might still present a German candidate for the European Central Bank presidency after front-runner Axel Weber's resignation last week left its well-laid plans in tatters.

Less than seven weeks before Germany was to officially endorse the Bundesbank boss as its candidate to succeed Frenchman Jean-Claude Trichet, who steps down in October, Weber on Friday threw in the towel for "personal reasons."

Weber was in pole position for the position, with Berlin having refrained from pushing Germans for other top European jobs such as EU president and EU foreign policy chief, posts held by a Belgian and a Briton respectively.

Trichet's successor will be only the third person to head the ECB, the world's most powerful central bank after the US Federal Reserve. The first was Dutchman Wim Duisenberg.

Chancellor Angela Merkel's spokesman said Monday that Germany did not rule out proposing a new candidate, while insisting the nationality of the next ECB head was unimportant.

"For the government what is important is that Mr Trichet's successor shares our fundamental German convictions on a stable currency, what one does for that, and on tackling inflation," Steffen Seibert said.

"The passport is not the main thing."

This is not strictly true, analysts say, with Portugal's Vitor Constancio as number two at the ECB effectively ruling out another southern European for the top job.

"National interests also matter, and particularly so with the next ECB presidency, several national issues are at stake," ING senior economist Carsten Brzeski told AFP.

That could hamper the man formerly seen as Weber's main rival, Italy's Mario Draghi.

"From a technical point of view, he (Draghi) would probably be the most suitable candidate," UniCredit economist Marco Valli said last week, but his "main problem is his nationality."

Luxembourg's Yves Mersch and Finland's Erkki Liikanen are other names in the hat.

The business daily Handelsblatt said: "The key to the ECB presidency is in Berlin, and the lock is in Paris."

Weber was known for a hard-line position on ECB policy, especially his opposition to ECB purchases of eurozone government bonds, a measure the bank adopted last year to help Greece work through its financial crisis.

Weber told Spiegel magazine that he was resigning, effective April 30, because he did not have enough international support.

"When one defends a minority position on basic questions, that harms the credibility of one's function," Weber told the weekly. "Taking such positions has not always helped my case with certain governments."

Other German candidates are thin on the ground. The one most widely touted, Klaus Regling, heads the eurozone's rescue fund, but he has no central bank experience.

The succession comes as the ECB scrambles to cope with a crisis that has shaken the 17-nation eurozone to its core.

Bailouts for Greece and Ireland went down badly with voters in Germany, Europe's paymaster, and Merkel is now insisting on austerity measures and much closer economic and fiscal cooperation in Europe.

"It would be an advantage if the ECB president could explain to the German public and parliament in their own language why German taxpayer money needs to be put at stake," Holger Schmieding at Berenberg Bank told AFP.

© 2011 AFP

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