Merkel 'wants concessions' to back Draghi for ECB

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Merkel 'wants concessions' to back Draghi for ECB

Merkel 'wants concessions' to back Draghi for ECB
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German chancellor Angela Merkel reportedly wants something in return before she supports Italy’s Mario Draghi as the next president of the European Central Bank.

According to a report in the magazine Der Spiegel, Merkel is looking for concessions on the permanent euro zone bailout fund, the European Stability Mechanism before she will endorse.

She also wants two Germans to be appointed to top European finance positions.

German government officials on Friday rejected media reports that Merkel has already agreed to back Draghi, the head of the Bank of Italy, to succeed ECB president Jean-Claude Trichet after France threw its own support behind Draghi last week.

“Merkel is hesitating in endorsing Draghi (because) she wants to win at least a few consolation prizes through bargaining,” Der Spiegel said, a reference to her dashed hopes of having a German succeed Trichet when Bundesbank head Axel Weber quit.

“But more important for Merkel are concessions on the ESM,” added the normally well-informed magazine in its Monday edition.

“Even though government leaders agreed to a permanent crisis fund in March there are still many disputed issues,” it said.

The ESM, with an effective lending capacity of 500 billion euros, will raise funding for and provide loans to euro zone states in financial trouble to safeguard the stability of the euro zone.

Der Spiegel said Merkel would like to have the unresolved details on the ESM cleared up definitively by June whereas countries such as Italy are pushing for non-binding language.

“And these aren’t minor issues but rather include questions such as what kind of majority will be needed for ESM decisions and whether the fund itself will be empowered to create new instruments,” Der Spiegel said.

On top of that, Merkel would also like to see two Germans appointed to key European jobs in exchange for her supporting Draghi’s nomination — leading the EU’s Economic and Financial Committee (EFC) and the London-based Financial Stability Board (FSB).

Deputy Finance Minister Joerg Asmussen should take over the EFC, while continuing in his role as deputy to Finance Minister Wolfgang Schaeuble, and new Bundesbank president Jens Wiedmann should replace Draghi as the FSB’s chairman.