Merkel, Weber to Meet; Berlin Looks Flexible on ECB

Reuters

Bundesbank chief Axel Weber and Chancellor Angela Merkel were expected to confirm his exit from the race to be European Central Bank chief on Friday, as Berlin signalled it might not insist on a German getting the job.

"Germany has never insisted that the next ECB president be a German," Finance Minister Wolfgang Schaeuble said after talks with the French economy minister and French central bank chief.

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Weber, Merkel and Schaeuble were scheduled to meet at 1400 GMT, with the chancellor's spokesman Steffen Seibert saying that a written statement would follow the meeting.

"This afternoon we will be able to put an end to the speculation," Seibert told reporters.

Weber has not yet commented on the news, first reported by Reuters on Wednesday, that he was withdrawing from the contest to succeed Jean-Claude Trichet at the helm of the ECB.

The prospect of a hardline inflation fighter like Weber no longer being top contender to replace Trichet when his term ends in October has fed unease in financial markets about the ability of divided European policymakers to solve the euro zone crisis.

The ECB has played a crucial role in responding to the crisis, buying the bonds of debt-stricken peripheral euro zone countries as part of a concerted push to try to calm markets. Weber's public criticism of that decision may have cost him the top job.

The Frankfurt-based central bank stepped in again for the first time in two weeks to buy Portuguese bonds on Thursday, traders said, after yields hit euro-era highs on concerns about perceived slow progress on solving the year-long debt crisis.

Weber's withdrawal is a blow to Merkel's drive to secure the ECB post for a German and could raise pressure on her to impose strict German-style fiscal rules on Berlin's euro zone partners to satisfy voters at home in a year of seven state elections.

The news comes ahead of two crucial summits -- on March 11 and March 24-25 -- at which European leaders want to agree a comprehensive package to resolve the debt crisis.

Seibert said there was no cause for concern that the Bundesbank would neglect its duties because of doubts over the future of Weber, who could also give up his position as head of the German central bank, which he is mandated to hold until next year.

"The Bundesbank will continue to represent our convictions about a stable currency policy. That does not depend on one individual," said Seibert.

Leaders from the 17-nation euro zone are expected to approve a successor to Trichet by summer and will take their lead from Merkel and French President Nicolas Sarkozy.

A French source said Merkel and Sarkozy had not discussed the ECB succession yet. [ID:nPISADE7XL]

Italy is pushing the candidacy of Mario Draghi, governor of the Bank of Italy and a member of the ECB's governing council. Other contenders include Luxembourg's Yves Mersch and Finnish central Bank chief Erkki Liikanen, a monetary policy moderate.

But Merkel may still seek another German candidate, partly because it is widely seen as Germany's turn to head the ECB and partly because surrendering the post could be unpopular with German politicians and voters.

(Additional reporting by Brian Rohan and Christiaan Hetzner; writing by Stephen Brown, editing by Mike Peacock, John Stonestreet)