BRUSSELS, June 24 (Reuters) – EU leaders appointed Italy’s Mario Draghi as the next president of the European Central Bank on Friday and said another Italian would step down from the ECB’s Executive Board early to smooth the process.

In draft conclusions agreed at a summit in Brussels, EU leaders “appointed Mr Mario Draghi president of the European Central Bank from 1 November 2011 to 31 October 2019.”

The 63-year-old economist and banker will replace France’s Jean-Claude Trichet, who steps down at the end of October after eight years in the euro zone’s top monetary policy post.

French officials had expressed concern in recent weeks about Draghi’s appointment as it would have meant two Italians being on the ECB’s six-member executive board with no French representation. The other Italian, Lorenzo Bini Smaghi, is not due to leave his eight-year post until May 2013.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi’s place on the board to a French candidate in return for France’s backing of Draghi for president.

That proved problematic, with Bini Smaghi saying he had absolutely no intention of stepping down early. However, Sarkozy said at the EU summit that Bini Smaghi had told him he would quit his post on the board early.

“Lorenzo Bini Smaghi telephoned me to say that before the end of the year he would be appointed to new duties,” Sarkozy told a news conference, without saying who might replace him.

BRUSSELS (Reuters) – EU leaders appointed Italy’s Mario Draghi as the next president of the European Central Bank on Friday and another Italian on the ECB’s executive board agreed to step down to smooth the process, EU sources said.

In draft conclusions agreed at a summit in Brussels, EU leaders “appointed Mr Mario Draghi president of the European Central Bank from 1 November 2011 to 31 October 2019.”

The 63-year-old economist and banker will replace France’s Jean-Claude Trichet, who steps down at the end of October after eight years in the euro zone’s top monetary policy post.

French officials had expressed concern in recent weeks about Draghi’s appointment as it would have meant two Italians being on the ECB’s six-member executive board with no French representation. The other Italian, Lorenzo Bini Smaghi, is not due to leave his eight-year post until May 2013.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi’s place on the board to a French candidate in return for France’s backing of Draghi for president.

But that proved problematic, with Bini Smaghi saying he had absolutely no intention of stepping down early.

EU sources said that Bini Smaghi had assured EU Council President Herman Van Rompuy and Sarkozy in discussions on Friday that he would relinquish his post in the coming weeks.

BRUSSELS, June 24 (Reuters) – European Union leaders have formally appointed Italy’s Mario Draghi to be the next president of the European Central Bank, draft conclusions from the EU summit showed on Friday.

The decision clears the way for Draghi, 63, to take over from Jean-Claude Trichet when the Frenchman steps down at the end of October after eight years in the job.

“The European Council appointed Mr Mario Draghi president of the European Central Bank from 1 November 2011 to 31 October 2019,” a draft of the conclusions obtained by Reuters showed.

At a news conference late on Thursday, Herman Van Rompuy, the president of the European Council, said Draghi had not been discussed during the first day of the two-day summit but that his appointment was on the agenda for Friday’s talks.

In recent weeks, French officials had expressed concern about Draghi’s appointement, worried about Italy ending up with two members on the ECB’s executive board. Lorenzo Bini Smaghi is already on the six-member panel, which sets interest rates along with the 17 other euro zone central bank governors.

French officials had suggested that Bini Smaghi should replace Draghi as head of the Italian central bank, opening the way for a French person to be appointed to the board.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi’s place on the ECB board to a French candidate, in return for France’s backing of Draghi for president.

BRUSSELS/ATHENS, June 23 (Reuters) – European Union leaders will pile pressure on Greece at a summit on Thursday to adopt deeply unpopular austerity measures in return for fresh funds to avert a bankruptcy that could shake the global economy.

Euro zone governments are meanwhile arm-twisting banks and insurers to maintain their exposure to Greek sovereign debt when their bonds mature, despite the heightened risk of default, as part of a planned second financial rescue for Athens.

Combining brow-beating and moral support, leaders will tell Greek Prime Minister George Papandreou they will release the next 12 billion euros ($17.2 billion) in emergency aid on July 3, to prevent Athens running out of money in mid-July, provided the Greek parliament adopts key economic reforms next week.

While he has expressed confidence over that vote in public, Slovak Prime Minister Iveta Radicova said Papandreou had voiced doubts in a private telephone call.

“Prime Minister Papandreou has serious doubts about whether the necessary steps will pass in parliament,” Radicova told the Slovak parliament’s European affairs committee.

Inspectors from the European Commission, European Central Bank and International Monetary Fund met new Greek Finance Minister Evangelos Venizelos in an effort to iron out differences on the bailout programme, which he has said he wants to amend to appease an angry Greek public.

“Venizelos will not go to Brussels. He will continue the negotiations with the troika,” a lawmaker who took part in a parliamentary committee with the minister told Reuters. “There is a gap of 3.8 billion euros out of the total package of 28 billion euros (in the mid-term fiscal plan) which should be discussed with the troika.”

BRUSSELS/ATHENS (Reuters) – European leaders will try to convince Greeks and financial markets when they meet on Thursday and Friday that they have a workable plan to help Athens avoid a debt default and return to financial stability.

Using a mixture of arm-twisting and moral support, the leaders will tell Greek Prime Minister George Papandreou that they will release the latest 12 billion euros of an emergency aid package, helping Athens to avoid a potential mid-July default, as long as it commits itself to economic reform.

Greece is not formally on the agenda of the two-day summit — the fourth this year as the leaders try to get to grips with the crisis consuming Greece, Portugal and Ireland — but the issue will not escape discussion, diplomats said.

German Chancellor Angela Merkel has underlined that no formal decisions on Greece will be taken at the meeting, but the gathering will be monitored intensely by financial markets for any messages it sends on whether the EU plan can work.

Federal Reserve Chairman Ben Bernanke stressed on Wednesday that much more than the future of Greece was at stake.

“If there were a failure to resolve that situation, it would pose threats to the European financial system, the global financial system, and to European political unity, I would conjecture, as well,” he said.

The summit agenda also involves agreeing to increase the size of the euro zone’s current bailout fund, completing the creation of a permanent crisis fund from June 2013, and discussions on Libya, Syria and EU enlargement to Croatia.

BRUSSELS (Reuters) – In a spartan office on a quiet tree-lined street near the power centers of Brussels sits a man whose role is to promote Libya’s opposition movement in Europe.

Christian D. de Fouloy, 69, a French-American lobbyist and businessman, volunteers his time to Libya’s Transitional National Council (TNC) in support of its newly appointed ambassador to the European Union, Mohamed Farhat.

A smooth-talking PR man whose perfect English is accented with French, De Fouloy sees his job as developing better communications between Brussels, Benghazi, Washington, Paris and London to ensure the TNC is seen as the appropriate government-in-waiting once Muammar Gaddafi goes or is ousted.

That means ensuring that Farhat meets all his EU counterparts and becomes recognized as the legitimate representative of Libya, even though the former Libyan ambassador to the EU, who defected, still lives in Brussels.

To complicate matters, Farhat, 38, was previously the first secretary in the Brussels embassy and worked for the former ambassador. He was catapulted into the top job this week largely because of his good ties to the TNC leadership.

“He still has a key to the embassy, he still has a diplomatic license plate on his car, he’s never left Brussels,” De Fouloy said of Farhat, who has met British, Italian and Maltese diplomats in the past few days and has more appointments lined up.

“We are introducing him around, making house calls, making sure he meets the European Parliament, the French, the Germans, the Spanish, the Russians and Catherine Ashton,” he said, referring to the EU’s foreign affairs chief.

BRUSSELS, June 7 (Reuters) – Plans for a second bailout of Greece are taking shape, with a proposal for a three-year package worth 80 to 100 billion euros set to be ready in the next two weeks, euro zone official sources said on Tuesday.

But key aspects of the scheme, including how to persuade private sector investors to bear part of the burden, have not been resolved and time is tight before late-June meetings at which officials hope to present the plans to decision-makers.

If approved by euro zone governments, the package will consist of revenue from three sources: sales of Greek state assets, a rollover of Greek debt by private sector creditors, and fresh funds from the euro zone bailout facility and the International Monetary Fund, the sources told Reuters.

Euro zone leaders hope the second package, which would effectively replace a 110 billion euro bailout deal agreed with Athens in May last year, will give Greece time to overhaul its economy and return to growth, allowing it to start reducing its 340 billion euro sovereign debt mountain.

The balance between the three sources of funds will depend on the outcome of discussions with private holders of bonds, and on how much can be raised from the sale of Greek assets.

But the sources said current thinking was that about 25-30 billion euros would come from asset sales; 30 billion from the debt rollover; and the rest, 30-40 billion euros, from the IMF and the bailout fund, the European Financial Stability Facility. As with rescues of Ireland and Portugal, the EFSF would provide two-thirds of official loans and the IMF one-third.

The new package would fund Greece for up to three years, or until it can return to financial markets to fund itself, which is now expected to be in mid-to-late 2014 or early 2015, the sources said. The initial bailout scheme envisaged Greece gradually returning to the markets from next year.

BRUSSELS, June 1 (Reuters) – European Union officials are examining how Greek state assets marked for privatisation could be used as security for Greek government bonds to be sold to banks, EU sources said on Wednesday.

Such an arrangement could provide an additional leg of financial support for Greece as it attempts to obtain fresh aid from other euro zone governments and the International Monetary Fund. At present Athens is unable to borrow money from the markets at affordable rates.

The idea could also be used as an incentive to persuade commercial banks to roll over their exposure to Greece when their existing holdings of Greek government bonds mature. EU officials have been considering the concept of a rollover but it remains unclear how banks could be persuaded to participate. [ID:nSTR552845] Under the proposal to use state assets as security, Athens could employ assets which it is reluctant to sell off or unable to sell quickly, the sources said — although such a scheme might be opposed by holders of existing Greek debt who did not benefit from the security, such as the European Central Bank.

The scheme might also hinder the Greek privatisation programme which the EU and the IMF are demanding, since anything earmarked as security for a fresh bond issue could not be sold to investors.

“It is a possible part of the solution although I don’t see it as the only solution,” said one source familiar with the matter. Others confirmed that the idea was being examined as part of efforts to secure funding for Greece.

The proposal is one of a number circulating among EU officials and diplomats as concern grows about the scale of Greece’s financing hole as well as the country’s ability to implement fiscal reform.

NO GOOD OPTIONS

DEAUVILLE, France (Reuters) – G8 leaders demanded an end to Syria’s killing of protesters but rowed back on proposing a U.N. Security Council resolution amid opposition from Russia, which said there were no grounds to consider such a move.

In its summit communique, the Group of Eight said it was “appalled” at the bloodshed in Syria and called for an immediate end to the use of force, yet the language of the final draft was watered down to remove an explicit proposal to act against Damascus in the Security Council.

The shift in language to a vaguer threat of “further measures” appeared to be driven by Russia, which has a Security Council veto and has generally taken a softer line than Western states against autocratic Arab leaders.

“There are no grounds to consider this issue (Syria) in the U.N. Security Council,” Russian Deputy Foreign Minister Sergei Ryabkov told reporters as the summit wound down in the northern French seaside town of Deauville.

He said a draft resolution circulated to the 15-nation council on Wednesday by Britain, France, Germany and Portugal, was “untimely and damaging,” adding: “We will not even read the text.” The draft resolution could also face a Chinese veto.

European diplomats said Russia’s longstanding relations and what they called close communications with Syria had led to the final G8 communique being “more nuanced” than it was at first.

Russia — which says that the Western coalition carrying out airstrikes in Libya is violating its Security Council mandate — has urged Syrian President Bashar al-Assad to conduct promised reforms, but has spoken out against foreign involvement.

DEAUVILLE, France (Reuters) – Group of Eight leaders had to soften a statement urging Israel and the Palestinians to return to negotiations because Canada objected to a specific mention of 1967 borders, diplomats said on Friday.

Canada’s right-leaning Conservative government has adopted a staunchly pro-Israel position in international negotiations since coming to power in 2006, with Prime Minister Stephen Harper saying Canada will back Israel whatever the cost.

Diplomats involved in Middle East discussions at the G8 summit said Ottawa had insisted that no mention of Israel’s pre-1967 borders be made in the leaders’ final communique, even though most of the other leaders wanted a mention.

President Barack Obama last week laid out a vision for peace in the Middle East, saying pre-1967 borders should be a basis of talks to achieve a negotiated settlement. Israel quickly dismissed the idea as unworkable.

“The Canadians were really very adamant, even though Obama expressly referred to 1967 borders in his speech last week,” one European diplomat said.

Harper, pressed repeatedly by reporters, declined to confirm he had objected to the language on borders but said he would oppose what he called unbalanced statements on finding peace in the Middle East.

“We are very much at ease with President Obama’s speech but you cannot cherry pick elements of that speech,” he said.