Germany without ECB candidate as Weber quits

11th February 2011, Comments 0 comments

The head of the Bundesbank resigned on Friday, dealing a heavy blow to Berlin's hopes to see a German as president of the European Central Bank for the first time.

After days of speculation, Axel Weber told Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble in a meeting in Berlin that he wanted to leave on April 30 "for personal reasons," the government said.

"A successor will be named in the coming weeks," it said.

The 53-year-old Weber, seen as a hardliner on ECB policy and practice, had been in pole position and apparently enjoying solid government backing in the race to succeed Frenchman Jean-Claude Trichet in October.

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, setting interest rates for some 330 million people in 17 nations.

The first person to be in charge of monetary policy for most of Europe from a skyscraper in Germany's financial centre Frankfurt was a Dutchman, the late Wim Duisenberg.

By not pushing for one its own in any top European positions of late, Europe's economic powerhouse was widely seen as having its eye on the ECB presidency instead.

The head of the European Commission is Portuguese, the European Union's president a Belgian and its foreign policy chief is British -- Jose Manuel Barroso, Herman Van Rompuy and Catherine Ashton respectively.

"Over the last years, the German government was often left behind when international top jobs were filled," ING enonomist Carsten Brzeski said, calling Weber's depature "a clear slap in the face" for Berlin.

"It always looked as if the entire focus was on securing the next ECB presidency, with Weber as the ideal candidate."

EU heavyweight France had not been expected to block Weber getting the job, although President Nicolas Sarkozy was reportedly never particularly enthusiastic.

Having a German succeed Trichet would enable Merkel to have her voice be heard even more loudly and clearly as the ECB scrambles to cope with a crisis that has shaken the eurozone to its very foundations.

Last year, Greece and Ireland were forced to go cap in hand for bailouts worth tens of billions of euros (dollars) and investors fear that Belgium, Portugal and the much larger Spain and even Italy could be next.

The bailouts for Greece and Ireland forced Merkel to put astronomical amounts of German taxpayers' money on the table to guarantee debt sold by Athens and Dublin.

This has gone down badly with German voters and Merkel, who faces the first of seven state elections in 2011 on February 20, has set as her price fiscal austerity and much closer economic and fiscal cooperation in Europe.

But Weber has ruffled feathers in recent months with attacks on the ECB's contribution to fighting the crisis, the purchase of 76.5 billion euros' worth of government bonds.

According to media reports, a lack of backing from Berlin gave him cold feet on going for the ECB job. He is now rumoured to be considering a lucrative job at Deutsche Bank, Germany's biggest private bank.

And with only around eight months until Trichet steps down, Berlin does not have an obvious candidate to parachute in as Weber's replacement.

The German most widely touted as a n alternative so far, Klaus Regling, heads the eurozone's rescue fund but has no central bank experience.

"A strong hand and high profile candidate is required to successfully take the ECB forward and out of the exceptional current policy," LBG economist Kenneth Broux said.

"I think the market would not simply accept that an outsider gets the job."

© 2011 AFP

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