Trichet's legacy unclear as he steps down from ECB

19th October 2011, Comments 0 comments

Not much appears to have been able to ruffle Jean-Claude Trichet during his eight years as president of the European Central Bank.

Throughout his time at the helm -- even during the heavy storms that have battered the single currency in recent years -- Trichet, a great lover of poetry, has come to personify the suave, impeccably mannered Frenchman, the complete opposite of his gruff, chain-smoking predecessor, Dutchman Wim Duisenberg.

At the ECB's regular monthly news conferences, Trichet has never raised his voice when answering journalists' questions.

Never, that is, until last month when he was pressed about increasing calls from some in Germany for a return to the deutschmark.

What followed was an angry, passionate defence of the ECB's record that lasted almost six minutes.

"We have delivered price stability over the first 12-13 years of the euro! Impeccably!," Trichet raged.

"I would like very much to hear some congratulations for this institution, which has delivered price stability in Germany over almost 13 years."

In fact, when Trichet, who turns 69 in December, took over the reins of the guardian of the euro on November 1, 2003, it had been the eurozone's three biggest economies -- Germany, France and Italy -- that had been pushing for an easing of the EU's strict budget rules enshrined in the Stability and Growth Pact, he pointed out.

"The governments in question, despite everything that we had said to them, did not behave properly and did not monitor things as they should have done," Trichet continued, visibly rattled.

But at the end of this astonishing tirade, the Frenchman smoothly switched back on his usual charm, graciously thanking the journalist "for your excellent question, which was very stimulating."

Born on December 20, 1942, Trichet is a graduate of the prestigious Ecole Nationale d'Administration (ENA).

He served as an advisor to former French president Valery Giscard d'Estaing and was chief of staff of then finance minister Edouard Balladur in 1986-1987.

He also held key posts under the Socialists and was treasury director from 1987 to 1993.

In 1993, Trichet became the first governor to run the Bank of France after the central bank was made independent.

But his appointment to the ECB in 2003 was not without its hiccups, since he was only able to take up the position after he had been cleared of any wrongdoing in connection with a 1990s fraud scandal at the former French state-owned bank Credit Lyonnais.

It was during his term as treasury director that the then state-owned Credit Lyonnais was bailed out by the government at a cost of 100 billion francs and Trichet allegedly falsified and published inaccurate information on the bank.

He was cleared of those charges in June 2003.

The perception of Trichet by his staff is similarly not wholly untainted. In a recent survey, IPSO, the only recognised trade union at the ECB, asked staff to rate his performance.

And while two thirds of those who responded felt he had been a "good" or "excellent" president, enhancing the ECB's reputation and communicating clearly to the markets, less than half said he demonstrated team spirit or transparency and accountability.

And more than half of the staff also felt Trichet had taken the ECB beyond its mandate -- which is to keep a lid on inflation in the 17-nation eurozone -- in its decision May 2010 to start buying the bonds of troubled eurozone countries.

It was this decision, in fact, that led to the resignation of two of the ECB's most experienced German policymakers -- Bundesbank President Axel Weber and chief economist Juergen Stark.

Analysts, too, believe Trichet's legacy is not yet clear.

"We still have to see whether he will be the 'man that saved the euro'," wrote Guntram Wolff, deputy director of the Brussels-based think-tank Bruegel, in a new report on the "Changing of the Guard" at the ECB.

"Trichet's legacy is unfinished" and "major challenges remain" for his successor Italy's Mario Draghi, Wolff wrote.

Fellow director Jean Pisani-Ferry said Trichet had been in the "euro adventure" since the very beginning and while European leaders tended to have their country's own national interests at heart, Trichet was one of the few to have the interests of the eurozone in general in mind.

The German conservative daily Die Welt agreed, writing that Trichet "believes in Europe life like few others. He is one of the last of his kind."

© 2011 AFP

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