SOMETIMES GETTING political colleagues to toe the line is like herding cats, even if you’re officially the most powerful woman in the world.
Last week German chancellor Angela Merkel had to deal with a recalcitrant coalition partner and supposed ally Alexander Dobrindt, who undermined her by predicting that Greece would leave the euro by 2013. Merkel reacted by sending out a warning that everyone was to “weigh their words carefully”.
What happens next? Merkel’s former economic adviser, and now head of the Bundesbank, Jens Weidmann, tells Der Spiegel that the highly-anticipated “Draghi plan” – which is expected to involve the ECB buying up Spanish and Italian bonds, and which drove a market rally during August – could break the rules against the ECB providing financing to governments. “We should not underestimate the risk that central bank financing can become addictive, like a drug,” he said.
Weidmann, who is proving more of an old-school inflation hawk than expected, made these statements despite the fact that Merkel had already given tacit support to the Draghi plan.
Although Merkel didn’t say so publicly, Der Spiegel reported that the chancellor was tiring of Weidmann’s intransigence.
On Thursday, Draghi is expected to set out his bond-buying plan after a crunch meeting of the ECB’s 23-member governing council.
It will be interesting to see whether Weidmann manages to stall the deployment of the Italian’s “big bazooka” approach, or whether the Bundesbank chief has merely succeeded in isolating himself at the ECB.
