Weber Throws ECB Race Open by Ruling Out Second Bundesbank Term
The race for the European Central Bank’s presidency was thrown wide open as Axel Weber told officials he may not seek a second term as head of Germany’s central bank, casting doubt over his future career plans.
Weber told some Bundesbank officials in confidence that he’s not necessarily interested in another eight-year term when his current mandate ends in 2012, said an official who spoke on condition of anonymity. That may also call into question whether he’ll be available to succeed Jean-Claude Trichet as head of the world’s second-most powerful central bank.
European Union leaders need to appoint a new ECB chief by the time Trichet’s term expires on Oct. 31 and economists had named Weber as a leading candidate to succeed him. Reuters earlier reported that Weber was pulling out of the running to head the ECB. At the same time, Weber could rule out a second Bundesbank term and still take over at the ECB provided he resigns this year.
“This is pure chaos,” said Carsten Brzeski, senior economist at ING Group in Brussels. “Europe has already made a mess of the sovereign debt crisis, are we going to make a mess of the succession of Jean-Claude Trichet? This mess needs to be cleared up very quickly.”
The euro earlier lost half a cent, declining to $1.3611 after the Reuters report. The currency later recovered and traded at $1.3709 at 4:10 p.m. in Frankfurt. Bild later reported that Weber could step down as soon as this summer.
A Bundesbank spokeswoman declined to comment on Weber’s intentions. Weber, 53, may be bombarded with questions about his future tomorrow when he speaks at a German-Austrian economic forum in Vienna.
Weber, who has headed the Bundesbank since 2004, emerged as the ECB frontrunner even after breaking from European policy- making consensus by opposing the central bank’s bond-buying program. Such opposition to a main plank of Europe’s crisis- fighting campaign fanned speculation he may not win the support of some EU leaders and lacked the ability to forge consensus on the ECB’s 23-member Governing Council.
Chancellor Angela Merkel, who has not yet publicly backed Weber’s candidacy, spoke with Weber by phone today, government spokesman Steffen Seibert told reporters in Berlin today. The German government has “no comment and no interpretation” of Weber’s future, he said.
“Before we have any official statement from the Bundesbank or Weber himself it’s certainly premature to draw any conclusions on Trichet’s succession,” said Juergen Michels, chief euro-area economist at Citigroup Inc in London.
Weber may end up joining Deutsche Bank AG, Deutsche Presse- Agentur said, without reporting where it got the information. Deutsche Bank spokesman Ronald Weichert declined to comment.
The political jockeying that will determine who gets the ECB top job started more than a year ago, when European leaders named Vitor Constancio vice president of the ECB. The real deal- making over Trichet’s replacement has only just begun and may culminate at a leaders’ summit in June.
“I could imagine that Weber wants to pressure the government to decide on its position on Trichet’s succession,” said Holger Sandte, chief European economist at WestLB AG in Dusseldorf.
Weber, a onetime marathon runner, specialized in studying applied monetary and international economics before becoming the surprise choice to take the helm of the Bundesbank in 2004. The son of a teacher, he grew up in southwestern Germany before teaching at German universities in Siegen, Bonn, Frankfurt and Cologne.
His two-decades in academia, status as head of Europe’s largest national central bank and the fact that Germany hasn’t held a top European post since the 1960s were among the reasons for his rank as the chief candidate to replace Trichet.
Some economists are already considering alternative possibilities, including Italy’s Mario Draghi, Erkki Liikanen of Finland, Luxembourg’s Yves Mersch and Nout Wellink of the Netherlands. Klaus Regling, head of Europe’s bailout fund, has also been mentioned.
“Draghi would be the best candidate but I doubt there will be convergence on his name because it’ll steer the ECB too much to southern Europe,” said Marco Valli, chief euro-area economist at UniCredit Global Research in Milan. “In any case, the ECB will remain committed to price stability.”
EU history is littered with favorites who ultimately failed to get the top job, from failed bids to run the European Commission by Belgium’s Jean-Luc Dehaene in 1994 and Guy Verhofstadt in 2004 to Tony Blair’s campaign to be the first EU president in 2009.
“The markets will have to live with the suspense,” said Jens Sondergaard, chief European economist at Nomura in London. “We’ll probably only know who it’s going to be when the new president is standing at the podium.”
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