Germany Tightens Grip on EU Posts as Draghi Succession Nears

  • Bundesbank’s Weidmann is a candidate for ECB President role
  • Country would hold four of region’s high-profile positions

Germany’s grip over the euro area’s financial institutions is getting firmer.

With the reappointment on Thursday of Werner Hoyer as president of the European Investment Bank, Germany’s hold over three key roles for the region’s economy was reaffirmed. A fourth one -- by far the most important -- could follow.

Bundesbank President Jens Weidmann is a frequently mentioned candidate to replace Italy’s Mario Draghi when his term as European Central Bank’s president runs out in October 2019, and Chancellor Angela Merkel may be prepared to back him if she is re-elected in the fall. Further complicating the succession talks will be the large number of European posts coming up for grabs in the next two years, as well as French President’s Emmanuel Macron stated intention of creating a euro-area finance minister.

If Weidmann were to become the first German to hold the ECB’s top spot, the euro area’s largest economy would hold even more of the region’s key roles. Klaus Regling was recently reappointed as managing director of the European Stability Mechanism, while Elke Koenig heads the Single Resolution Board, in charge of winding down the currency bloc’s insolvent banks. Her renewable term runs out at the end of this year.

“It does become a bit harder for Weidmann, but the big positions of the presidents of the ECB and the Commission are in a different ball park from posts at the EIB or the ESM,” said Erik Nielsen, global chief economist at UniCredit. “Should Merkel agree to Macron’s wish for a euro-area finance minister, I could imagine this new post being considered as prestigious as the ECB president and the two being traded against each other.”

Another euro-area role coming up is that held by Dutch Finance Minister Jeroen Dijsselbloem, who could be forced to relinquish the leadership of his euro-area counterparts, known as Eurogroup, after his party collapsed in elections earlier this year.

One of the challenges facing Weidmann on his path to the top floor of the Frankfurt-based ECB is convincing all euro-area countries that, as his predecessor, he would be ready to do “whatever it takes” to save the single currency in a crisis. The Bundesbank president has been a vocal critic of Draghi’s policies in recent years just as Germany’s public opinion became increasingly hostile to the ECB.

An alternative to Weidmann is his French counterpart Francois Villeroy de Galhau, according to media reports. Still, his candidacy may be weakened by the fact that he would be the second Frenchman to hold the ECB top job after Jean-Claude Trichet.

Any candidate requires the endorsement by all European Union finance ministers. They then need to sit through a hearing at the European Parliament, which casts a non-binding vote, before finally being confirmed by euro-area leaders for an eight-year term. The EU parliament has no power to block ECB appointments.

— With assistance by Catherine Bosley

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