Friday 21 June 2019

Draghi succession race could drag on until after summer

ECB president Mario Draghi. Photo: REUTERS/Kai Pfaffenbach
ECB president Mario Draghi. Photo: REUTERS/Kai Pfaffenbach

Jan Bratanic, Jeannette Neumann and Birgit Jennen

European Union leaders could push their decision on the next European Central Bank president into July or later as they focus on appointing the bloc's top political positions.

The negotiations over who gets the most powerful posts are especially tricky as they've never come up at the same time before.

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With a June summit just two weeks away, the emphasis appears to be on reaching a deal over the European Commission presidency, according to EU officials who spoke on condition of anonymity.

Delaying the naming of a successor to ECB President Mario Draghi would go some way to disentangling the appointment of an independent central banker from the political horse-trading.

The risk is that it unsettles investors over the summer when market liquidity is thin and global economic risks are mounting. Mr Draghi's term ends on October 31 and the front-runners to replace him have widely differing views on how much stimulus the eurozone needs. If leaders don't take a decision this month, the talks are likely to be punted to finance ministers who meet on July 8-9.

They could ease investors' nerves by coming up with a single nominee for the ECB presidency, with leaders calling an extraordinary summit to approve it. After that though, the summer break means the next opportunity is likely to be a summit in mid-October, just two weeks before Mr Draghi leaves.

The officials noted that national political considerations will still influence the eventual choice with France and Germany, as the EU's biggest economies, each staking a claim to one of the positions.

The ECB has never had a German president and there is growing internal pressure on Chancellor Angela Merkel to change that. The EU has charged six negotiators with discussing the posts, and they'll meet for dinner in Brussels on Friday.

Leaders will hold a summit on June 20, where the political jobs - primarily a successor to Jean-Claude Juncker as commission president and Donald Tusk as president of the council of leaders - could be unveiled.

Bloomberg

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