MNI SOURCES: Southern Opposition Set To Block Weidmann At ECB

By David Thomas and Silvia Marchetti

     LONDON (MNI) - France, Italy and other southern eurozone states look set to

block the appointment of Bundesbank President Jens Weidmann as the next

president of the European Central Bank, despite speculation Berlin and Paris

were set to broker a deal at a summit next week, sources have told MNI.

     It is understood French officials take the view that even securing the

Commission or Council presidencies for one of their nationals would not be

sufficient compensation for having a monetary hawk like Weidmann leading the

ECB. And, while French objections to Weidmann have been sharpened by recent

tensions with Germany over strengthening euro governance and differences over

Brexit, they are not alone in their reservations.

     "Better have a German lead the Commission than the ECB. Weidmann has so far

proven to be way too hawkish and Germany certainly can't set the example in

terms of handling banking regulation," one Italian government source said.

     Even some in the Eurosystem believe Weidmann faces an uphill struggle,

given the strength of feeling against him in southern member states. This is

despite a recent surge of confidence in German government circles that Weidmann

could be successful in his ECB bid now that Germany's candidate for the

Commission presidency - EU Parliament Centre-Right Leader Manfred Weber - has

been all but ruled out.

     "I think there will be sufficient opposition against Weidmann from France,

Italy and some others to stop him from getting the job," one Eurosystem source

said.

     An EU official told MNI that, given the delicacy surrounding the nomination

negotiations, anyone at the "extremes" has to be ruled out of the running.

     "He's too hawkish, an extremist. We need someone consensual, someone

everyone can live with," the EU source said.

     "Frankly, I don't think he ever stood a chance," the source added.

     --A DANGER TO THE EURO?

     The Italian official suggested Weidmann's nomination could even prove

terminal for the euro: "Is it better to have a French or a German at the helm of

the ECB? Depends on how quickly you want to see the EU break down."

     "Whoever succeeds Draghi will also have a major impact, even if indirectly,

on our fiscal dialogue with Brussels," the official said.

     Sources also suggested France's favoured candidate for the Commission, EU

Chief Brexit Negotiator Michel Barnier, is likely to be unacceptable to the

Parliament's biggest political bloc as a substitute for Weber.

     Nor can Weber be completely ruled out, as it seems he has quietly reached

out to France, making sympathetic noises on key policy demands. He has also

apparently persuaded the Italian government he is still worth considering.

     "Weber is a good candidate for the EC top job. PM Conte met with Weber ...

in Rome and had a positive chat, we share a few points," one Italian source

said.

     That said, Weber's chances are viewed more dimly in Brussels and French

President Emmanuel Macron has been so forthright in his rejection of his

candidacy that officials believe it will be impossible for him to get back into

the race.

     These emerging constraints make it likely the EU's top jobs could end up

shared mainly between smaller countries, although striking the right balance

between regions, political groups and genders will prove challenging.

     One source noted, for instance, that if Denmark's Margrethe Vestager or

Netherlands' Frans Timmermans gets the Commission, that would make it hard for

Finland's Olli Rehn to take the ECB.

     EU President Donald Tusk is currently doing the rounds of EU leaders,

trying to scope out room for compromise, but sources say he will only reveal his

proposed candidates behind closed doors at the summit dinner next Thursday in

Brussels.

     Some sources are sceptical next week's summit will bring a breakthrough,

and one suggested there was now a "relatively high probability" the EU will need

to call an extra summit in July to broker a deal on top jobs.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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