Sarkozy Backs Italy’s Draghi to Succeed Trichet at European Central Bank
Backing from Sarkozy follows signals from German officials that Draghi, 63, is their preferred banker, adding momentum to a campaign that has been pushed by Italian leaders.
“France will be very happy to support an Italian for the presidency of the ECB,” Sarkozy said at a briefing with Italian Prime Minister Silvio Berlusconi in Rome today. “I know Mario Draghi well. We support him not because he is Italian but because he is a man of quality. And it would be a very good signal for Italy, which may have doubts about its role and position within Europe.”
The key decision maker, German Chancellor Angela Merkel, has yet to indicate a preference. Her aides have said Germany, Europe’s biggest economy, no longer insists on a German to succeed Trichet, 68, at the Frankfurt-based ECB.
With a late-June deadline looming, the appointment may become entangled in German opposition to bailouts. As Portugal’s imminent rescue pushes the cost of aiding euro states past 250 billion euros ($361 billion), Merkel may face domestic criticism for choosing a southern European from a country with a legacy of inflation and debt.
“It looks like a done deal,” said Carsten Brzeski, senior economist at ING Group in Brussels. “The German government now needs to figure out how to sell an Italian candidate to the public.”
Draghi emerged as a front-runner after Germany’s Axel Weber withdrew from the race in February. Now, German Finance Minister Wolfgang Schaeuble sees him as the candidate likeliest to be appointed as the ECB’s next chief, people close to him say. Trichet’s non-renewable eight-year term ends Oct. 31.
German Deputy Foreign Minister Werner Hoyer, who manages European affairs, said in an April 15 interview that Draghi would make a “very good” ECB president and uphold Germany’s goal of a stable euro.
Other candidates include Yves Mersch of Luxembourg, Erkki Liikanen of Finland and Nout Wellink of the Netherlands. Klaus Regling, a German who runs the bailout facility, has never been a central banker.
Picking Mersch, Liikanen or Wellink would leave small countries with three of the six seats on the ECB’s Executive Board and no room for France when Trichet leaves. The selection of Draghi would likely mean the exit of board member and fellow Italian Lorenzo Bini Smaghi, opening a slot for France.
French Board Seat
Berlusconi agreed to support a French candidate for the Executive Board, Sarkozy said. Possible candidates include Sarkozy Chief of Staff aide Xavier Musca and Jean-Philippe Cotis, head of France’s statistics agency.
Draghi, a Massachusetts Institute of Technology-trained economist, has worked at the World Bank and Goldman Sachs Group Inc. (GS) He is also chairman of the Financial Stability Board, which was established by the Group of 20 nations in 2009 to oversee development of standards to strengthen global regulation.
In a sign he understands the need to meet the skepticism head on, Draghi has been appealing to the German inflation- fighting mindset. He said April 13 that monetary policy is still “accommodative” even after the ECB raised its benchmark rate this month.
In February, he told newspaper Frankfurter Allgemeine Zeitung that Germany is an example for other nations, calling for tougher sanctions for budget-rule breaches and vowing to ensure price stability.
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