It's time to employ a captain on the euro ship

One of the most important men in Europe over the coming years will be the new head of the European Central Bank. But the current row over who will win this post is surrounded in a controversy which will have no real winners.

For the past few months there has been much speculation about who will win the post, the German-backed hardline former Dutch central banker, Mr Wim Duisenberg, or the top man in Paris, Mr JeanClaude Trichet.

Until recently, Mr Duisenberg was considered a virtual shoo-in for the job, particularly given his top job at the European Monetary Institute, the forerunner of the ECB. But given the importance of the job, it is hardly surprising that some controversy sprang up. Indeed, what is perhaps more surprising is that only one country of the 11 prospective members should have decided to back another candidate.

For many, the approach is that what Germany and the revered Bundesbank want is probably best for everyone else. The Germans have dominated European monetary policy since shortly after the end of the second World War and their model is widely considered to be the best working one in Europe.

However, attempts to keep the new European Central Bank completely independent of political power have been inevitably watered down and are not now clearly defined. And the whole issue of political control or influence will not be solved through appointing either Mr Duisenberg or Mr Trichet.

As the International Herald Tribune pointed out earlier this week the entire institution, which is likely to have an effect on the lives of all Europeans, is being brought to life under a cloud of mistrust and controversy.

The struggle for control is about far more than the personalties of the two named contenders. While Mr Duisenberg is credited with being a real "Bundesbanker's" central banker who will be immune to political influence no one is actually questioning Mr Trichet's obvious ability to do the job and probably just as well as the Dutchman would.

But the key issue is about perception and about a row between the French and Germans about who cedes sovereignty after the euro and who actually controls the new monetary authority.

The Germans believe that selecting Mr Duisenberg is the next best thing to having Dr Hans Tietmeyer, the legendary head of the Bundesbank, in the job. As a Dutchman Mr Duisenberg effectively carried out the same policies as Dr Tietmeyer and in a deutschmark zone. Thus his candidacy is in effect maintaining the control they have had over the European monetary system for the past decades.

This is accepted across the political spectrum in Germany and even Mr Gerard Schroeder, the Social Democrat leader expected to beat Dr Helmut Kohl in the elections this autumn said last week that Mr Duisenberg's nomination would be a positive signal.

For France the whole idea behind monetary union was to tie Germany westwards to the rest of the EU and France in particular following the fall of the Berlin Wall. Indeed, it is understood to have been a commitment to monetary union on the part of Dr Kohl which assured the late Mr Mitterrand's backing for German reunification. But with the heart of monetary union already being set in Frankfurt the French are uncomfortable with the idea of a German or even a Dutchman at the helm.

Indeed, the recently elected socialist Government in France is already uncomfortable with the lack of political accountability of the new bank. Last December it won backing for a new "Euro X" council an informal discussion group. France believes that this council made up of the 11 countries participating in the single currency is the first step towards what it calls "economic government" as a counterweight to the ECB's independent status.

While Dr Kohl is still insisting that it is not too late to reach an agreement, other EU leaders say it does not have to be resolved until the ECB formally comes into being on July 1st.

But even if the Germans, and it must be said all other member-states bar France, get their way and Mr Duisenberg gets the job it will be under a cloud. He will now be seen to some as the nominee of the Bundesbank and not likely to be considerate of French worries on unemployment or other social issues.

If, as seems less likely, Mr Trichet wins the job he will be seen as politically damaged and too close to what many would call his political masters to be truly independent.

The third possibility is a compromise candidate. While many names have been mentioned the fact is that none were thought good enough when all states backed Mr Duisenberg's original post. Few can find any fault with the Governor of the Bank of Spain, Mr Luis Angel Rojo, but he is unlikely to prove popular with the German electorate.

Other candidates such as Luxembourg prime minister and finance minister, Mr Jean-Claude Junker, would not have this difficulty but neither is he a central banker. While for many voters this could prove a boon there are likely to be many in the Bundesbank and in other central banks who would recoil from such an idea, despite the man's undoubted linguistic and diplomatic talents.

Europe's leaders should now sort out the row quickly. Otherwise it will prove an uncomfortable backdrop to the May weekend meeting, when the members of the euro zone will be formally chosen. It would be strange indeed if we knew the passengers on the euro ship before the captain was chosen.