Bank of Italy pick set to anger Sarkozy

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Bank of Italy pick set to anger Sarkozy

Bank of Italy pick set to anger Sarkozy
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Rome’s choice as the new head of the Bank of Italy is almost certain to anger French President Nicolas Sarkozy.

Deputy governor Ignazio Visco will replace Mario Draghi who is about to replace Frenchman Jean-Claude Trichet as European Central Bank president.

France wanted Italian ECB board member, Lorenzo Bini Smaghi, to get that job and be replaced by French candidate to keep the national balance within the board.

In April, when Sarkozy gave his backing to Draghi as ECB chief, he obtained in return a public promise from Italian Prime Minister Silvio Berlusconi that Italy would yield Bini Smaghi’s place to France.

Replacing Draghi with Bini Smaghi as BOI chief was a solution seen as obvious to many foreign observers who noted that Bini Smaghi had proved his worth during a generally impressive five-year stint at the ECB.

Yet this route was blocked at the last minute by ferocious resistance at the Bank of Italy, which wanted an internal appointment, and large sections of the Italian media and political establishment who said it would be pandering to France.

The result is that ahead of two critical EU summits intended to tackle the euro zone debt crisis, Sarkozy is likely to be angered by Berlusconi’s failure to deliver.

It seems Berlusconi, who is in steep decline and under almost daily attack both from within and without his centre-right coalition, made the calculation that he desperately needs domestic political support even at the expense of a row with France.

Visco’s nomination was greeted with a chorus of approval from the government to the centre-left opposition, trade unions and employers’ confederation Confindustria.