RPT-ECB FOCUS-Italy’s Draghi on track to replace Trichet

(Repeats Monday item without changes)

* No viable rivals to Draghi seen as ECB decision nears

* Berlin not seen wedded to German, north European candidate

* Extending Trichet, split-term solution ruled out

* Goldman past will not doom ECB bid – euro officials

By Noah Barkin, Giselda Vagnoni, Daniel Flynn

BERLIN/ROME/PARIS, April 11 (Reuters) – Italian Mario
Draghi’s chances of becoming the next president of the ECB have
risen steadily over the past weeks with some euro zone officials
now describing his bid to replace Jean-Claude Trichet as close
to a “done deal”.

The officials, all of whom requested anonymity due to the
sensitivity of issue, said no viable alternative to Draghi has
emerged since leading contender Axel Weber, the outspoken head
of Germany’s Bundesbank, withdrew his name from consideration
two months ago.

Also working in the Italian’s favour are signs that German
officials see Draghi as the most qualified of a small group of
contenders for the second most powerful central banking job in
the world after the chairman of the U.S. Federal Reserve.

Contrary to what some euro member states surmised after
Weber’s abrupt withdrawal, Berlin does not appear determined to
secure the post for a German or a northern European, the
officials indicated.

“I think we are beyond the point in Europe where the
qualifications of a person are seen primarily through the prism
of their nationality,” one senior German government official
said, praising Draghi’s work as head of the Financial Stability
Board, a body which coordinates global financial regulation.

“We can’t put forward a candidate just because he is German.
And another candidate wouldn’t be bad just because he’s
Italian,” the official said.

Chancellor Angela Merkel is only now turning her attention
to the ECB succession after hectic weeks dominated by an intense
domestic debate on the future of nuclear energy, the conflict in
Libya and Europe’s drive to overcome its sovereign debt crisis.

Apart from Draghi, the 63-year old head of the Bank of
Italy, other contenders include Finnish central bank chief Erkki
Liikanen, Yves Mersch of Luxembourg, Dutch central bank chief
Nout Wellink and Klaus Regling, a German who runs the euro
zone’s rescue fund, the European Financial Stability Facility.

Trichet’s eight-year term at the helm of the Frankfurt-based
bank that sets monetary policy for the 17-nation euro zone
expires at the end of October and a successor is expected to be
agreed by the end of June, although some officials suggest it
could take longer.


Factbox on possible successors to Trichet [ID:nLDE71F1OL]

No Goldman smoking gun to hit Draghi [ID:nLDE72H24M]

Draghi profile [ID:nLDE6751IU]



Getting the decision right is crucial. The ECB has become
arguably the most powerful common European institution, for lack
of a federal government, and has shouldered the brunt of crisis
management since 2008’s global financial turmoil.

Despite debt woes and economic weakness in Greece, Ireland,
Portugal and other member states, the ECB raised interest rates
last week for the first time in nearly three years.

Deciding on future hikes, assessing when to wind down
extraordinary measures to help weak euro zone banks, and selling
ECB policies to sceptical politicians and publics will require
finely-tuned diplomatic skills.

Ultimately, Merkel’s view on who should get the job will be
decisive, as long as other big countries like France do not
voice strong objections to her choice.

She has kept her cards close to her chest since Weber’s
shock exit, making predictions on the succession difficult.

But signs increasingly point to Draghi, who on top of five
years running the Bank of Italy has taught at Harvard
University, served in government, worked at the World Bank and
for investment bank Goldman Sachs.

One official from a small euro zone country, who described
Draghi as a shoo-in for the post, said he had detected no signs
from Merkel or other Germans that she was prepared to invest
political capital on pushing through another candidate.

In France, a well-placed government official said Draghi’s
chances were getting better by the day and played down the
significance of his past work at Goldman, a firm that has come
under sharp criticism for its role in the financial crisis.

Some sources in Paris have privately portrayed Draghi’s
2002-05 stint at the investment bank as a reason to veto his
candidacy, but they may be motivated by a desire to keep the
door open for Bank of France chief Christian Noyer, who is
believed to harbour hopes for the post himself.

The government official acknowledged that the chances of
another Frenchman succeeding Trichet were next to nil. Any new
horse entering the race now would be seen as an anti-Draghi
candidate, he said, and require extremely strong backing to
stand any chance of success.


That does not appear to be the case for any of Draghi’s
current rivals. Liikanen has only lukewarm support from Finland,
and Mersch is from Luxembourg, a tiny country whose prime
minister already chairs the euro zone’s finance ministers.

Regling has no central banking experience and has fallen out
of favour in Berlin due to some of his comments during the euro
crisis. Wellink is seen as a no-go because of his handling of
the Dutch banking system during the financial crisis, criticised
in an independent commission’s report.

Sources say euro zone finance ministers have also ruled out
the idea of extending Trichet’s mandate beyond October or opting
for a split-term, as Europe did with Wim Duisenberg, the first
ECB president who served five years instead of the full eight.

Draghi has remained tight-lipped, but did give an interview
with German newspaper Frankfurter Allgemeine Zeitung shortly
after Weber pulled out in which he praised German economic
discipline as an example for the rest of Europe — perhaps an
answer to the Bild tabloid’s warning that the euro risked
becoming a “spaghetti currency” if he took over.

In Italy, where Draghi has enemies as well as supporters,
officials seem convinced he will get the post after early
concerns that his Italian heritage would doom his chances.

“His rivals are either invented or supported by an
anti-Italian sentiment which is difficult to justify,” one said.
“I think Draghi’s path to the ECB is clear.”

(Additional reporting by Sakari Suoninen in Frankfurt,
Julien Toyer in Brussels)

(Writing by Noah Barkin; editing by Patrick Graham)

RPT-ECB FOCUS-Italy’s Draghi on track to replace Trichet