Draghi Succession May Go Down to Wire Unless EU Sorts Other Jobs
(Bloomberg) -- The appointment of the next European Central Bank head could potentially be delayed until just weeks before President Mario Draghi’s term expires amid a swathe of top European Union vacancies.
That’s one of the scenarios being discussed among EU diplomats, according to a person familiar with the matter who asked not to be identified. The complexity of upcoming negotiations could see the ECB post decided together with the head of the European Council in the autumn.
The bloc’s politicians face filling an unprecedented number of high-level posts this year that also include the presidency of the EU Commission -- the hottest potato of the lot -- and there’s currently no consensus on who should get the positions. They were meant to be selected in one go after elections this month for the European Parliament, which has forged a crucial role in ratifying the commission leadership.
The potentially messy outcome of those elections heightens the risk of a summer disagreement that prevents posts such as the ECB being agreed on in good time. Draghi’s non-renewable term ends in October.
“Whatever happens with the commission top job, then the ECB can be decided afterwards,” said Christian Odendahl, chief economist at Centre for European Reform in Berlin. “The commission seems to me a much more complicated decision politically. The ECB top job will probably be a part of the horse-trading at the end, but that’s not the priority.”
Such an outcome would potentially raise suspense among investors already battered by a slowing global economy and shifting rhetoric on trade tariffs, wondering who will take the lead shaping the region’s monetary policy for the next decade. This is the first time the top political and economic jobs are coming up at the same time.
A key element of the calculation centers on whether Bundesbank chief Jens Weidmann, who opposed Draghi’s creation of a crisis-fighting tool during the region’s sovereign-debt turmoil, can still manage to step into the Italian’s shoes.
The ECB presidency has previously been the subject of standoffs between EU leaders. A bitter disagreement over who should serve as its first chief was only resolved with a compromise that Dutchman Wim Duisenberg stand down during his term for his French colleague, Jean-Claude Trichet.
Draghi’s selection in June 2011, more than four months before he started, came after a bruising race in which the favorite, Germany’s Axel Weber, dropped out and a last-minute dispute arose over whether Italy should lose its existing Executive Board member.
The possibility of a quarrel over Weidmann’s candidacy by countries unconvinced of the German’s suitability to take up Draghi’s legacy is just one of possible disagreements facing EU leaders.
The bloc is no stranger to complicated bargaining, but it has still never endured such a tricky combination of personnel negotiations all at once. Reaching agreement would be hard enough without the unknown of what opposition the Parliament will pose should populist and anti-establishment parties make significant gains.
“The Commission is politically more complicated and more out of the hands of politicians than the ECB job, which heads of state decide themselves,” said Odendahl. “It’s not impossible that it would drag into the autumn.”
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