Merkel hesitates in backing Draghi for ECB: report

By Erik Kirschbaum

BERLIN (Reuters) - German chancellor Angela Merkel is hesitating to back the nomination of Italy's Mario Draghi as the next president of the European Central Bank because she wants several demands met in return, a magazine said on Sunday.

Der Spiegel said that Merkel wants two Germans to be appointed to top European finance positions in addition to further concessions on the permanent euro zone bailout fund, the European Stability Mechanism (ESM).

"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 ($740 billion), 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.

The magazine added Merkel would also like to revisit an issue that was thought to have been resolved -- whether private creditors will be obliged to take part in future rescues.

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.

Bild newspaper said last week that according to sources in the chancellery Merkel had abandoned the search for a German candidate for Trichet's post.

The Wall Street Journal Europe had said on Friday that Merkel supported Draghi and would try to sell his nomination to a skeptical German public by arguing that his southern European origins will be an asset in persuading the euro's southern members to adopt a stricter financial discipline.

($1=.6753 euros)

(Editing by Greg Mahlich)