EU postpones decision on Draghi's ECB candidacy to Friday

24th June 2011, Comments 0 comments

The nomination of Italy's Mario Draghi at the helm of the European Central Bank was postponed from Thursday to Friday by European Union leaders and still needs to overcome objections from France.

"This was not discussed ... we will discuss this tomorrow and we will decide tomorrow" on the second and final day of the summit, EU president Herman Van Rompuy said at the close of a first day of talks.

Asked too by reporters whether Draghi had received EU backing, Italian Prime Minister Silvio Berlusconi said on departing the talks: "Tomorrow, tomorrow."

A diplomatic source told AFP that France was responsible for the delay in the decision, which had been expected Thursday.

The governor of the Bank of Italy, who officially has the backing of all EU nations including France, had received the support of the 17 eurozone finance ministers last month and this week won a green light from the European parliament.

But French demands for a seat on the ECB executive board once Draghi takes over November 1 from France's Jean-Claude Trichet are holding up the process.

With Draghi in the chair, Italy would have two board members at the bank, including Lorenzo Bini Smaghi, whose mandate expires in 2013.

"I know France has expectations ... that imply Mr Bini Smaghi renouncing" said Luxembourg Prime Minister Jean-Claude Juncker. "The rule is that members of the board are named for eight years and it's up to them to decide."

Although France has said it backs Draghi's candidacy "unambiguously," and does not intend to block it, Paris wants Rome to make a "gesture", diplomats said.

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.

"The support France gives to Mario Draghi is not qualified," French government spokesman Francois Baroin reiterated on Wednesday.

Under a deal struck with Sarkozy earlier this year, Berlusconi has asked Smaghi to resign.

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

But Smaghi is refusing to budge, 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.

A European diplomat said the issue was to find another position that would satisfy Smaghi. "It's complicated," the diplomat said.

The ECB executive board includes the president, vice president and four other members, all chosen for their experience in monetary policy or banking.

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

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