Slovene President Taps Vasle in Second Pick for ECB Council

(Bloomberg) -- Slovenia’s president picked Bostjan Vasle to lead the country’s central bank and sit on the council that sets the euro zone’s monetary policy, a surprise choice after two initial front-runners failed to secure the backing of the five-party ruling coalition.

President Borut Pahor nominated Vasle on Friday, his office said in an email. Previously, Prime Minister Marjan Sarec’s party had said it favored Joze Damijan, an economics professor who once called the euro currency “dead.” Sarec’s coalition partner, former premier Alenka Bratusek, had backed another economics professor, Igor Masten, who holds more traditional views on the euro. Vasle is the head of the state economics research office.

“The candidate meets high professional criteria and possesses the required experience to perform the job,” Pahor said in the statement. Pahor’s office, will host a public presentation of Vasle Dec. 6. Slovenia’s parliament must vote on the nomination within 30 days.

This is Pahor’s second attempt to find a central bank chief after lawmakers shot down his first nominee in October. His new nomination comes amid a cloud of uncertainty among eastern European countries with representation on the European Central Bank’s Governing Council. Latvia’s delegate to Frankfurt is fighting bribery charges, and Slovak central bank Governor Jozef Makuch on Tuesday said he will step down on March 1, without giving a reason for the move.

Compromise Candidate?

Tilen Podergajs, a spokesman for Sarec’s party, said it hadn’t decided whether or not to support Vasle but it would by the time of the vote. Bratusek’s party declined to comment.

Vasle told Delo newspaper that his focus will be on the economy, which is slowing, and policies in Slovenia and the euro area will “have to be adjusted.” He praised European Central Bank President Mario Draghi for his “integrity” and determination in defending the euro, and voiced concern that Brexit and the Italian budget could “increase risks in the euro area.”

If approved, Vasle would replace former Governor Bostjan Jazbec, who resigned early in May. He stepped down amid a police investigation into the central bank’s role in a 2013 bailout of state lenders that cost taxpayers 3.2 billion euros ($3.7 billion). A group of those investors want their money back, and they’re pushing for legislation that will force the state to grant compensation that could reach hundreds of millions of euros. Whoever next controls Banka Slovenije will have influence over that legislation.

Vasle told Delo he wouldn’t rush to conclusions over whether or not the state would have to pay compensation. “I can approach the whole procedure very openly, look at all the facts and all the decisions, and then decide on the changed circumstances, how to proceed,” he said.

In the past, Vasle has been an advocate of Slovenia consolidating its public finances and selling state assets. The Balkan state has been one of the slowest ex-communist members of the European Union to sell off its state assets, and it was years of mismanagement under government control that helped trigger the 2013 bailout.

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