Elusive Grand Bargain on EU Jobs Builds Suspense Before Brussels

(Bloomberg) -- European Union leaders are hunting for a candidate to break the deadlock over who should lead the next EU Commission ahead of a key summit on Sunday. 

Officials speculating on who might fit the bill suggested Brexit negotiator Michel Barnier’s stock was rising while World Bank CEO Kristalina Georgieva and even IMF chief Christine Lagarde were also mentioned. All three are from the center-right party that will form the biggest group in the next European parliament. 

“I’m getting a lot of indications, but I should keep them to myself because most of them are given in confidence,” Dutch Prime Minister Mark Rutte told Bloomberg TV Friday at the G-20 in Japan. Officials from the European People’s Party, a center-right group allied with German Chancellor Angela Merkel, have privately signaled they may be ready to consider an alternative to their official candidate Manfred Weber, said Rutte, who belongs to the rival liberals.

With French President Emmanuel Macron and Merkel discussing the matter at the G-20, just two days before EU leaders meet in Brussels, the prospect of a grand bargain between the bloc’s two foremost heads of government looks like its best hope for a breakthrough for now.

At stake is the direction of the region as it carves out its role in an international system upturned by the advent of U.S. President Donald Trump. The replacements for European Commission President Jean-Claude Juncker and European Central Bank President Mario Draghi will need to navigate a world beset by trade tensions at a time when Europe’s economy remains hooked on stimulus.

As frictions intensify in the battle for the EU leadership, France’s Barnier is emerging as a compromise candidate for the commission job, according to several officials. Though in the frame, Georgieva and Lagarde would encounter opposition, they said. Either way, it’s widely acknowledged that the EPP has first claim on the position.

French-German Face Off

The race for ECB chief also appears to be one between France and Germany. In Berlin, France’s top contender for the post was appealing to Germans to treat him as one of their kind. Speaking -- in German -- to an audience of family businesses on Friday, Bank of France Governor Francois Villeroy de Galhau highlighted his cultural and ideological links to the country.

“In today’s world, in today’s Europe, there is no more reliable partner for France than Germany -- and none for Germany than France,” Villeroy said. “France and Germany need each other more than ever in order to master these common challenges.”

He acknowledged strains. “Without a doubt we’re facing growing uncertainty, unprecedented geopolitical tensions and populism on the rise -- including in Europe, from Brexit to Italy,” he said. “Germany and France also unfortunately experience these tensions in their relationship with each other.”

Wary of Macron

Europe’s center-right alliance suspects that Macron’s determination to kill Weber’s bid for the commission job is part of a broader plan to undermine the bloc’s traditional parties -- like he did in France. They’ve been putting considerable pressure on Merkel to stand up to him.

Economists surveyed by Bloomberg consider Germany’s Bundesbank President Jens Weidmann to be the most likely ECB chief, after he unexpectedly backed Draghi’s crisis-fighting program. Finnish central-banking veteran Erkki Liikanen tied with Villeroy for second place in the poll.

See our survey on the ECB presidential race

Germany has never had an ECB president, and Weidmann tried to dispel the controversy over his opposition to unconventional measures by saying this month that the bond-buying program underpinning Draghi’s “whatever it takes” pledge to save the euro is legal and valid.

The process of filling the posts has been deadlocked as competing governments make conflicting pitches and the EU tries to make sure power is shared across geography, gender, and political parties. The meeting of the EU’s 28 leaders on Sunday will be their third to discuss how to fill the vacant positions, and leaders acknowledge time is running out and the credibility of the EU is at stake.

--With assistance from Yvonne Man and John Follain.

To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net;Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Raymond Colitt, Zoe Schneeweiss

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