MNI SOURCES: Chance ECB Weidmann To Succeed Draghi On The Rise

--German Support For De Guindos, Centeno Seen Aiming For Tactical Support

By Christian Vits

     FRANKFURT (MNI) - Bundesbank President Jens Weidmann may be in a better

position to succeed Mario Draghi at the helm of the European Central Bank after

Germany supported Spain's Finance minister as the bank's new Vice President, a

well-placed German government source told MNI.

     "After [Luis] De Guindos is installed as [Vitor] Constancio's replacement,

Weidmann's chances [for the ECB Presidency] have certainly not worsened," the

source said.

     A senior Eurosystem source told MNI that the German endorsement for De

Guindos and also Mario Centeno, the Portuguese new head of the Eurogroup, were

"clearly aimed to field Weidmann and facilitate his candidacy" for Draghi's

succession.

     It is unusual for Germany to have endorsed two candidates from the Iberian

Peninsula to such powerful macroeconomic roles, so the support is seen as a

tactical move to gain the ECB presidency in exchange.

     Weidmann, the Governing Council's most prominent hawk, cannot be assured of

ascending to Europe's economic top post "even as we now have a Spanish Vice

President at the ECB, given the negative attitude" in many Southern European

countries towards the likely German candidate, the Eurosystem source stressed.

     However, "even if looks like a contentual revolution if Weidmann follows

Draghi, the outcome will be less dramatic than many people think," the source

noted. 

     "His contributions to the discussions in the Governing Council are by no

means confrontational, even as he clearly makes his point and emphasizes his

differing positions."

     The source observed that Weidmann "is very, very flexible. He is not the

guy who is overly dogmatic when assuming a new role." In the past, "he always

quickly adapted to the prevailing conditions."

     French central bank Governor Francois Villeroy de Galhau, seen as a main

contender for Weidmann, might face German resistance if he decides to apply for

the job. 

     But at the time when Villeroy did kind of a roadshow at many events in

Germany, the source was told "that [Chancellor Angela] Merkel approached him and

said he should stop it as the German-French relations wouldn't foresee a chance

for him."

     "Very much would have to go wrong from a German viewpoint that a compromise

candidate such as Villeroy would get on the agenda," the source added.

     --GERMAN MISTAKES

     In another exclusive interview with MNI, former ECB Chief Economist Juergen

Stark reminded of German mistakes in the past. 

     Berlin backed Portugal's Vitor Constancio for the ECB Vice Presidency to

boost the chances of a Northern European candidate getting the top job: Axel

Weber.

     But in the end, Weber threw in the towel,leaving Mario Draghi to take the

helm, forming South-South partnership with Constancio in the ECB's top

management.

     "It was a mistake of the German government to lead this North-South card,"

Stark noted. "And it is not true that always the North-South idea was followed,

think of [Wim] Duisenberg and [Christian] Noyer at the start of the currency

union."

     The German government source also indicated that the issue was discussed in

the German grand coalition exploratory talks to ensure social democratic party

support for Weidmann at home. And, as before, his candidacy is still high on the

agenda for the new Berlin government, the source confirmed.

     At the end of the day, it will be political backing that counts, the source

added. "While the Governing Council's opinion will play an important role, it is

not the decisive body. I doubt De Guindos would get a majority in the Council,

but he will become Vice President."

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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