Berlin backs Bundesbank president to be next ECB chief

GERMAN FINANCE minister Wolfgang Schäuble was working last night to win the support of his Ecofin colleagues for Bundesbank president Axel Weber to become the next chief of the European Central Bank (ECB).

After securing France’s backing for Mr Weber to succeed Jean-Claude Trichet in October 2011, Berlin hopes to clear the next hurdle with the nomination last night of Portugal’s central banker Vitor Constancio as deputy president.

In a traditional nod to regional proportion, the appointment of a candidate from “southern Europe” would clear the way for a “northern” candidate for the main job next year. It would also knock out Mr Weber’s main competition for the job, Italy’s Mario Draghi.

Officially, the German government has described as “premature” the notion that it is jockeying for one of its own for the top job.

Even though Mr Trichet’s term ends in the autumn of 2011, Mr Schäuble was heard complaining recently that Germany feels underrepresented in the current ECB leadership.

“In its current composition of the board of directors, southern European countries are unusually strongly represented,” he said, “with three directors from Greece, Italy and Spain.”

The price of French support for Mr Weber is that a Frenchman inherit the chief economist position from Germany’s Jürgen Stark.

As one Frankfurt analyst put it yesterday, filling the ECB top job is a “political game, not a beauty contest”.

Mr Weber, an economics professor remembered for lecturing in a bomber jacket, has served as one of Berlin’s “economic wise men” and in the International Monetary Fund. He was catapulted to the Bundesbank in 2004 amid a scandal surrounding his predecessor Ernst Welteke, who had admitted accepting from Dresdner Bank a free stay at a luxury Berlin hotel for himself and his family on the night of the euro launch.

In office, Mr Weber has established a reputation as a traditional Bundesbank “hawk”.

Mr Weber told the Wall Street Journal recently that “excessive deficits can cause tensions with monetary policy” and, if uncorrected, might require higher interest rates. That has prompted concern in some euro-zone quarters that Mr Weber’s stance could spark tension in the 16-country bloc and create volatility around the euro.