Weber exit won’t reduce Germany’s influence on ECB

February 9, 2011

By Pierre Briançon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON — Axel Weber’s exit wouldn’t reduce Germany’s influence over the European Central Bank. News that the Bundesbank chief isn’t likely to be on the list of candidates to replace Jean-Claude Trichet in October has more bearing on the euro zone’s politics than on its monetary policy. Whatever the identity of its future president, the ECB’s near-term future will remain firmly anchored in the hawkish, German-inspired orthodoxy that presided over the euro’s creation 11 years ago.

The reasons for Weber’s possible withdrawal aren’t clear — it’s possible he may not want the job. Alternatively, the German government, his main sponsor, may have dropped its support. Even then, this may reflect his personality as much as his nationality. Weber has long shown a tendency to shoot his mouth off when he should abstain. The ECB president should be a consensus-builder and a shrewd communicator, and Weber doesn’t tick these boxes.

It’s possible that chancellor Angela Merkel has identified another credible German candidate for the ECB job. Klaus Regling, currently in charge of Europe’s bailout fund, has a strong background as an economist and head of Economics Affairs at the European Commission, and would probably be more palatable to other euro zone members.

But it may also be the case that Merkel and French president Nicolas Sarkozy — the duo without whose support nobody can get the ECB job — want to show they’re not trying to force a candidate on other euro zone members. Last week’s Franco-German proposal for a “competitiveness pact” raised a ruckus among smaller countries, which protested against the possible encroachment on their sovereignty.

Agreeing serious reform of the euro zone will require tough negotiations in the coming weeks. Insisting on a German-born ECB president could have backfired. In this case, the field of possible candidates to succeed Trichet must be widened to include the likes of Italian central bank governor Mario Draghi and Finland’s Erkki Liikanen.

National pride aside, the truth is that Merkel doesn’t need a German ECB president to have a German-style central bank. The ECB is a collective body, working by consensus. It is fixated on fighting inflation. Its president’s personality certainly matters. But not as much as its policy, which is unlikely to change soon.

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