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Spain Stalls Mersch’s ECB Board Appointment, Prolonging Tussle

November 05, 2012

Spain Stalls Mersch’s ECB Board Appointment, Prolonging Tussle

Spain prolonged what is already the most protracted personnel battle in the euro’s 13-year history by stalling the appointment of Luxembourg’s Yves Mersch to the European Central Bank’s board. Photographer: Jock Fistick/Bloomberg

Spain prolonged what is already the most protracted personnel battle in the euro’s 13-year history by stalling the appointment of Luxembourg’s Yves Mersch to the European Central Bank’s board.

Making use of arcane legal procedures, Spain forced the issue onto the agenda of a European summit, possibly on Nov. 22 when the leaders are set to struggle with the European Union budget and debt crisis. Spain, relying on 100 billion euros ($128 billion) in European aid for its banks and potentially seeking more to shore up its public finances, had put forward a losing candidate for the post.

Bailout politics and a protest by European parliamentarians against the central bank’s all-male cast have combined to leave the seat empty since June, the first time since the euro’s debut in 1999 that governments have failed to fill an ECB vacancy.

“The battle continues to avoid an ECB board made up only of men, in violation of the fundamental principles of the EU,” Sylvie Goulard of France and Sven Giegold of Germany, members of the European Parliament committee that weighed Mersch’s candidacy, said in an e-mailed statement in Brussels today.

The fight is over a successor to Jose Manuel Gonzalez- Paramo, a Spaniard whose term on the ECB’s six-member Frankfurt- based Executive Board ended on May 31. Spain originally counted on European leaders to uphold an informal understanding that the four largest euro countries -- Germany, France, Italy and Spain -- would always have ECB board seats.

Gentlemen’s Agreement

Germany led the way in tearing up that gentleman’s agreement, chafing at the perception that southern European countries were gaining the upper hand at the ECB after the selection of Mario Draghi of Italy as president last year. The bank’s vice president, Vitor Constancio, is from Portugal, one of four countries drawing on financial aid.

As Luxembourg’s representative on the ECB’s wider interest- rate-setting Governing Council, Mersch, 63, is the euro area’s longest serving central-bank chief and enjoys a reputation as a German-style inflation hawk.

The Spanish candidate, Antonio Sainz de Vicuna, head of legal services at the ECB, stayed in the running until he was deserted by the new French government. Euro-area finance ministers backed Mersch in July, mustering a “qualified majority” with votes weighted by each country’s size.

All previous ECB nominations by finance ministers have been rubber stamped. In Mersch’s case, the parliament voted 325 to 300 with 49 abstentions to make its first-ever negative recommendation of a central banker to decry the shortage of women in top European jobs.

Government Leaders

Following that non-binding resolution, EU President Herman Van Rompuy went ahead with the appointment. Van Rompuy sent letters to the 17 euro government leaders, setting noon today as a deadline for them to respond by mail, fax or e-mail with an assent to the Luxembourger.

Spain’s national interests meshed with the parliament’s opposition today, when Spanish Prime Minister Mariano Rajoy employed a delaying tactic by objecting to the use of the written procedure to make the appointment.

“We don’t agree with the written procedure, given that the European Parliament has voted against,” Carmen Martinez Castro, Spain’s deputy minister for communication, said in a telephone interview. “We think there must be a debate” among euro-zone leaders.

She declined to say whether Spain might propose a female alternative to Mersch. One candidate might be Belen Romana Garcia, a Spanish woman floated by the media as a contender for the job of running the euro zone’s rescue fund. That post went to Klaus Regling of Germany.

Voting Rules

As a result, the decision will be made at a face-to-face meeting of leaders, with the next ones set for Nov. 22 and Dec. 13. At a summit, the regular voting rules would apply, denying Rajoy a veto. He would have to get one larger country -- Germany, France or Italy -- or a coalition of smaller ones to block Mersch.

Leaders were “not today in a position to take a decision by written procedure,” Van Rompuy’s office said in a statement. “The issue will be on the agenda of an upcoming meeting” with the goal “of taking the formal decision.”

To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net; Jim Brunsden in Brussels at jbrunsden@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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