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Spain to Propose Sainz De Vicuna to Keep ECB Seat

(Corrects to add appropriate headline. For more on the euro crisis, click on EXT4.)

Spain sought to retain its seat on the European Central Bank’s Executive Board, setting up a potential clash with northern countries that want more control over its policies as the debt crisis persists.

Spain will nominate Antonio Sainz de Vicuna, head of legal services at the ECB, to replace Jose Manuel Gonzalez-Paramo in May, said a Spanish government official who declined to be named in line with policy. Spain has joined Germany, France and Italy in staking claims to permanent seats on the six-member board.

Smaller northern countries led by the Netherlands are chafing at that arrangement at a time when they are footing the bill for the euro rescue fund and Spain is battling to avoid becoming the next casualty of the crisis. The ECB now has an Italian president and Portuguese vice president, a potential source of resentment for the richer north.

The ECB seat will be the fifth to change hands in less than a year, enabling Italy’s Mario Draghi -- at the helm since November -- to put his stamp on an institution struggling to reconcile its mandate to fight inflation with the imperatives of battling the sovereign debt crisis.

While a coalition of six smaller countries would be enough to block a Spanish candidate, they would have to gain support from Germany, France and Italy to push through their own nominee.

Nominations Due

Nominations are due tomorrow evening, in time for a first discussion at the Jan. 23 meeting of euro-area finance ministers in Brussels. Spain believes it has enough allies to win the post for Sainz de Vicuna, the Spanish official said.

National egotisms have dominated ECB appointments ever since France in 1998 forced the bank’s first leader, Wim Duisenberg of the Netherlands, to agree to step down midway through his term to make way for a Frenchman, Jean-Claude Trichet.

Trichet ran the ECB for a full eight-year term. His retirement last year had echoes of the 1998 imbroglio, this time with Italy’s Lorenzo Bini Smaghi coming under French pressure to cede his ECB post to a Frenchman after a fellow Italian, Draghi, was named president.

Bini Smaghi initially clung to his job, reminding politicians that he was appointed for eight years to a bank independent of governments’ control. He eventually relented, making way for France’s Benoit Coeure at the start of 2012.

The leader who engineered that switch, French President Nicolas Sarkozy, said this week that he would back a Spanish candidate.

“France supports with all its strength the participation of a representative from Spain in the ECB’s executive bodies,” Sarkozy said at a press conference with Spanish Prime Minister Mariano Rajoy in Madrid on Jan. 16 after both countries had their credit ratings cut by Standard & Poor’s.

To contact the reporters on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net; James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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