GERMAN CHANCELLOR Angela Merkel’s support for Mario Draghi’s presidential nomination to the European Central Bank makes it a virtual certainty that the Italian will succeed Jean-Claude Trichet in the Frankfurt-based institution.
Draghi was not the chancellor’s first choice. But former Bundesbank chief Axel Weber’s resignation three months ago set in train the search for an alternative.
Italy’s central bank governor immediately moved to prime position, winning the support of France and Spain. The big question, however, was whether Berlin would back him.
In finally opting for Draghi, Merkel has brushed aside German anxiety about assigning this most sensitive of posts to a candidate from a country whose heavily-indebted economy still bears the scars of rampant fiscal ill-discipline.
Not for nothing did the mass-circulation tabloid Bild declare that inflation was a way of life for Italians “like tomato sauce with spaghetti”.
If that smacks of prejudice against Draghi because of his nationality, the man himself carries serious clout and respect among his peers in the economics community.
Characterised as “unItalian” when it comes to fiscal matters, he has made a point in recent months of lauding German economic rigour.
“We all have to follow Germany’s example.”
It follows from Merkel’s blessing that she expects him to pursue that mantra when he takes over in November from Trichet, a Frenchman whose anti-inflation ethos is more than a mite Germanic. Draghi would not have received Berlin’s imprimatur if he was perceived to be any different.
Indeed, his likely appointment may well suit Merkel as it may be less easy to accuse the Italian of slavishly following orders from Berlin when he inevitably continues the ECB’s unforgiving policy agenda.
The ECB defends its independence, but such accusations would surely have been de rigueur if the post had gone to Weber.
Draghi (63) is fluent in English, the ECB’s working language, and brings private sector experience from a three-year stint at Goldman Sachs. While he insists he had nothing to do with highly questionable deals through which Goldman helped Greece mask its true debt level, MEPs may well challenge him on that when his appointment goes before the European Parliament.
He was educated at Rome’s Jesuit school and the Massachusetts Institute of Technology (MIT). He made his name as an economics professor, a World Bank executive and was director general at the Italian treasury in the 1990s when the country overcame severe financial difficulties to qualify for euro membership.
He now seems set to succeed Trichet. The task is monumental. With bailout recipients like Ireland and Greece still mired in turmoil, the ECB has started to increase interest rates after a three-year hiatus.
