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German politicians are closing to agreeing on Italian Mario Draghi to be the next ECB chief.Draghi has the support of the junior coalition party in Chancellor Angela Merkel’s government, but has not yet received the vocal support of Merkel herself, according to Bloomberg.
It’s an extremely political decision. While Merkel may prefer Yves Mersch of Luxembourg, because he’s not from PIIGS member Italy, she may be forced to yield to Draghi for the sake of France.
If Mersch is picked, Draghi will stay on the ECB’s board, as will fellow Italian Lorenzo Bini Smaghi. So when Trichet goes at the end of his term, there will be no one from France on the ECB’s board, something likely to upset Merkel’s frequent political partner, French President Nicolas Sarkozy.
But if Merkel ignores the potential domestic political repercussions of picking an Italian, Smaghi will leave the board and another Frenchman will ascend.
So, like many current political debates in Europe, the choice of a new ECB chief is coming down to the public perception of nationalities.