Germany denies snub as Belgian takes over ECB post

GERMAN FINANCE minister Wolfgang Schäuble has dismissed suggestions that Berlin has lost influence in the European Central Bank after his deputy was passed over to succeed departing economics chief Jürgen Stark.

ECB president Mario Draghi ended months of speculation yesterday by appointing Belgian Peter Praet to head the bank’s economics division, a position filled to date by German officials.

“The new division of tasks in the ECB board is a balanced decision,” said Mr Schäuble. “The ECB is well-equipped on the personnel front for the looming challenges.”

Off the record, German officials were less enthusiastic about the decision but said they “would be able to live with” the new line-up.

Mr Schäuble and German chancellor Angela Merkel declined to lobby publicly for Jörg Asmussen to head the economics division, insisting it was the ECB’s independent decision.

But German officials conceded they would have welcomed the chance for Mr Asmussen to succeed Mr Stark after Bundesbank president Axel Weber resigned last year, leaving Berlin with no candidate for the ECB presidency.

The premature departures of Mr Weber and Mr Stark, two fiscal hawks in the Bundesbank tradition, has been linked to the ECB’s controversial buying of euro zone sovereign bonds on secondary markets. The ECB department which generates data used to assess the bond programme will be headed by French official Benoît Coeuré.

Mr Asmussen (45) will head the ECB’s legal division, which has gained influence since the bond-buying. He will assume responsibility for the bank’s international and European relations and will attend Euro Working Group meetings.

In addition, he will accompany Mr Draghi at Eurogroup, Ecofin and EU leader meetings.

Analysts suggested Mr Draghi’s appointments, in particular assigning Mr Asmussen competences formerly held by vice-president Vitor Constâncio, were a compromise to avoid a Franco-German spat over the Stark succession.

“The ECB has found a pretty good solution to bypass possible national disputes,” said Sebastian Wanke, economist at Deka bank.

“It’s a clever move to hand the international and European relations portfolio to Asmussen. It’s a more important policy area in the coming years than the position of chief economist.”

The 62-year-old Mr Praet will oversee the ECB economics department, which produces the projections on which the bank’s interest rate decisions are based. After working in the Belgian finance ministry, the International Monetary Fund and in academia, Mr Praet joined the six-member ECB executive board last June. He is seen in Berlin and other European capitals as more of a fiscal dove than his predecessor. “Praet is more likely to take the southern European view that, in a squeeze, the bond-buying programme should be increased,” said a senior government source in Berlin.

The six-member executive board, headed by Mr Draghi, is responsible for operations at the ECB’s Frankfurt headquarters. The six also sit on the governing council which sets interest rates.