EU scrambles for deal on Draghi's ECB bid

24th June 2011, Comments 0 comments

EU leaders scrambled on Friday to broker a deal to appoint Italy's Mario Draghi as president of the European Central Bank after his confirmation was delayed over French pressures.

At issue is pressure on an Italian to make way for a French national on the executive board if the ECB, which is guaranteed independence as are its members, under the Maastricht treaty.

The leaders were supposed to give Mario Draghi formal approval on Thursday, but France was still seeking "assurances" on Friday that it will get a seat on the executive board once Draghi succeeds Frenchman Jean-Claude Trichet on November 1, diplomats said.

"We are heading towards an agreement. We are hopeful that the nomination will be endorsed," a senior European diplomat told AFP on condition of anonymity.

In another sign of a potential breakthrough, another diplomat indicated that France expected the head of the Bank of Italy to secure an endorsement at the EU summit in Brussels later on Friday.

The confirmation was supposed to be a mere formality after Draghi received the backing of the eurozone's 17 foreign ministers and the European Parliament.

A draft of the conclusions to be adopted by EU leaders on Friday says they "appointed Mr Mario Draghi President of the European Central Bank from 1 November 2011 to 31 October 2019," but similar language was already in a previous version on Thursday.

His appointment would leave France without a seat on the Frankfurt-based bank's board while two Italians, Draghi and Lorenzo Bini Smaghi would both have seats.

French President Nicolas Sarkozy, who attended the summit, has been one of Draghi's most vocal supporters but has insisted that under an unwritten rule, the major eurozone countries should each have a seat on the ECB board.

Under a deal struck with Sarkozy earlier this year, Italian Prime Minister Silvio Berlusconi has asked Bini Smaghi to resign.

"Italy has given its word. I have no reason to doubt its word," Sarkozy said last week.

A European diplomat said Bini Smaghi spoke by telephone with EU president Herman Van Rompuy and Sarkozy and in the conversation "committed to leave at the end of the year."

Another diplomat said that "there has been a lot of backroom movement to find a solution."

Bini Smaghi is willing to step down in exchange for his nomination to head the Bank of Italy, according to several sources. But the powerful coalition partner of Prime Minister Silvio Berlusconi, the Northern League, want a different candidate at the post.

One solution under consideration is to announce a political agreement to back Draghi's nomination at the summit but without signing off on the official confirmation until Bini Smaghi steps down, a diplomat said.

The last-minute bargaining comes as a distraction just as Europeans seek to resolve a Greek debt crisis threatening the eurozone's very existence.

Bini Smaghi has refused to budge for the moment, insisting that the ECB is an independent body which does not bow to political pressure, as guaranteed in the Maastricht treaty which created the eurozone.

Draghi, a 63-year-old former Goldman Sachs banker, secured wide backing as the eurozone hits serious turbulence over fears the Greek debt crisis could ripple across the single currency area.

"In these tough economic times, it is reassuring to know that the eurozone will be in safe hands with Mr. Draghi and I look forward to working with him," said European Parliament president Jerzy Buzek.

© 2011 AFP

0 Comments To This Article