Business World

Tuesday 30 May 2017

Sarkozy support adds more weight to Italian banker's bid for ECB job

Emmanuel Jarry and Gavin Jones

The candidacy of Italian Mario Draghi for the job of ECB president is starting to look unstoppable, unless there is a late intervention by German Chancellor Angela Merkel.

French President Nicolas Sarkozy threw his weight behind Mr Draghi's candidacy to head the Frankfurt-based bank yesterday, giving a major boost to the Bank of Italy chief's hopes of succeeding Jean-Claude Trichet.

Mr Sarkozy's public endorsement raised pressure on Ms Merkel to accept Mr Draghi as successor to Mr Trichet when the Frenchman's eight-year term expires in October.

If Mr Draghi gets the job, it will mean both the ECB president and vice-president come from southern European countries, after Portugal's Vitor Constancio was appointed to the number two position last year. This strong presence of two men from heavily indebted European nations could help countries such as Ireland.

Until recently, this was considered an obstacle to Mr Draghi's candidacy at a time when northern Europeans are balking at paying for the largesse of their debt-laden counterparts.

Mr Draghi's background at investment bank Goldman Sachs and the fact he came from a country with a history of high inflation and fiscal ill-discipline could also have counted against him.

Credentials

Yet his personal credentials are widely respected and his candidacy has gathered momentum since former Bundesbank president Axel Weber withdrew from the race two months ago.

"France will be very happy to support an Italian at the presidency of the European Central Bank," Mr Sarkozy said at a joint news conference in Rome with Italian Prime Minister Silvio Berlusconi.

Referring to Mr Draghi, Mr Sarkozy said: "We aren't supporting him because he's Italian. We're supporting him because he's an excellent candidate."

Mr Sarkozy also said Mr Berlusconi had agreed that Italy would yield its current place on the executive board, held by Lorenzo Bini Smaghi, to a French candidate when Mr Trichet steps down at the end of October.

"It's almost a done deal," said Unicredit analyst Marco Valli. "I think it's just a matter of time before Ms Merkel endorses him formally."

Analysts are already considering what sort of president Mr Draghi (63) will make.

They say he is one of the most difficult ECB members to pigeon-hole in traditional hawk-dove terms, though he has recently begun speaking more frequently about inflationary pressures and has warned of the risks in the ECB's policy of buying the bonds of distressed eurozone states.

Mr Draghi heads the Financial Stability Board in charge of global banking regulation and has private sector experience with Goldman Sachs as well as government experience as a former director of the Italian treasury in the 1990s. (Reuters)

Irish Independent

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