Candidates jostle to replace ECB head Trichet amid debate

The race to succeed European Central Bank (ECB) President Jean-Claude Trichet is heating up as political leaders line up candidates for the post after his term ends on October 31.

German Chancellor Angela Merkel will start lobbying for Bundesbank President Axel Weber, Bild said on January 16, citing unidentified government officials. A spokesman for Merkel didn’t deny the report. Italian Prime Minister Silvio Berlusconi said on January 12 he’d be “honoured” if his central bank governor, Mario Draghi, was chosen.

Jostling for the top ECB post comes as European Union leaders negotiate ways to step up their response to the sovereign debt crisis. A successful Weber candidacy may help Merkel on two fronts as she walks a fine line between backing EU efforts to revamp bailout programmes for debt-strapped nations, a policy opposed by most German voters and her own coalition partners, while campaigning for seven state elections this year.

“It doesn’t take much to imagine what the German population will think about Merkel agreeing to more aid,” said Carsten Brzeski, a senior economist at ING Groep. “If she can show she’s doing it for Europe and manages to heave Weber into Trichet’s chair, at least she can say: ‘Don’t you worry about inflation. That’s what Axel is there for.’”

The ECB last week brought inflation-fighting back into the ring, signalling it’s prepared to raise interest rates if needed after euro-area consumer prices breached the bank’s limit for the first time in more than two years. Weber, who has steered the Bundesbank since 2004, is perceived by economists as one of the ECB’s inflation-fighting “hawks” because of the emphasis he places on curbing risks to price stability.