Merkel cements Draghi's ECB chances: analysts

11th May 2011, Comments 0 comments

Chancellor Angela Merkel support for Italian Mario Draghi cements his chances of becoming the next head of the European Central Bank, one of the world's toughest banking jobs, analysts said on Wednesday.

"Germany could back his candidacy for the position of ECB president," Merkel told Die Zeit in an interview.

Italian Prime Minister Silvio Berlusconi hailed Germany's support for Draghi, saying "we're delighted. It's a good success for Italy."

"I am sure he will be confirmed by the (ECB) Council," he told reporters.

Barclays Capital managing director Julian Callow told AFP that Merkel's backing was indeed "the last box to check" and added: "its the thing that we've been waiting for."

German Finance Minister Wolfgang Schaeuble had already suggested he would also like to see Draghi take over at the ECB when Jean-Claude Trichet of France steps down in October.

The ECB is battling a series of crises that erupted with the global financial meltdown before engulfing debt-laden Greece, Ireland and Portugal.

Eurozone finance ministers are expected to formally recommend Draghi next week ahead of a decision by European Union heads of state and government in June.

"If there were any doubts that the deal was not done yet, this should rule them out," ING senior economist Carsten Brzeski told AFP in reference to Merkel's comment.

She also told Die Zeit that Draghi was "a very interesting and experienced figure. He is very close to our conception of a culture of stability and a solid economy."

The German chancellor had previously remained silent on the question, though French President Nicolas Sarkozy expressed his support for the Italian in late April.

Natixis economist Sylvain Broyer commented that by following Sarkozy and Schaeuble, Merkel demonstrated that "the German government has some enormous communications problems."

Berlin had no viable candidate of its own after former Bundesbank president Axel Weber announced his resignation in February.

Draghi, currently head of the Italian central bank, has emerged as the most qualified candidate though it would mean the ECB has both a president and vice president from southern European countries.

A former Goldman Sachs executive, Draghi is already a member of the ECB governing council and has key experience in international finance as head of the Financial Stability Board, a post he has held since 2009.

"He has the intellect, the experience, the leadership, the judgement, the communication skills that (would) collectively make him an exceptional president of the ECB," Callow said.

Draghi has also played to German public opinion by telling a newspaper in February: "We should all follow the German example" when it came to questions of economic reforms.

A spokesman for Merkel said Wednesday the government had held talks at an international level and was sure of having taken "a good decision."

But Callow said the Italian might find himself at odds with Berlin over the possible restructuring of debt by eurozone members such as Greece, an issue which has "been considered off limits most vehemently by the ECB board."

"That will be an important transistion for Draghi to manage," the Barclays economist noted.

He cited the ECB's inevitable "move back towards a more normal system of support" for troubled eurozone members as another key challenge for Draghi.

Meanwhile, Brzeski noted with bemusement that the quote expressing Merkel's support for Draghi remained in the conditional, which Merkel's spokesman said was only because he was not yet an official candidate.

"There is no reason to tip-toe while all the others are already close to the finish line," Brzeski said.

© 2011 AFP

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