German Chancellor Angela Merkel is upset. After months of effort to smooth the path of German Central Bank head Axel Weber to be named president of the European Central Bank after Jean-Claude Trichet steps down later this year, Weber on Wednesday backed out. Political capital, it would seem, was wasted.
Even worse, it is political capital that Merkel desperately needs as she pushes for a vision of the euro zone's future that she hammered out recently with French President Nicolas Sarkozy. Called the "Pact for Competitiveness," the plan envisions much closer coordination among euro-zone member states when it comes to national economic policy. Weber's vanishing act also leaves Merkel without a candidate for the ECB position. Though his ultimate selection was far from a sure thing, she valued his brand of hard-nosed fiscal conservatism. And many had assumed that the chancellor would get her way.
Weber's about-face has also fanned the flames of resistance to her plan by making her seem vulnerable. The pro-business Free Democratic Party (FDP), Merkel's junior coalition partner, was already unhappy with Merkel's euro rescue package and upset about not having been adequately informed before she and Sarkozy went public with the plan last week. On the other side of the aisle, the opposition is using Weber's move as a way of chipping away at Merkel's standing. The Green Party has quipped about her "clear defeat" at the EU level, and Frank-Walter Steinmeier, floor leader for the opposition Social Democrats, has called Weber's move "a severe blow for Angela Merkel and a vote of no confidence in her EU policies."
Several papers have reported that Weber backed out of ECB contention in order to move into the private sector, perhaps even taking a job with Deutsche Bank. Weber, however, has kept quiet so far, preferring to speak to Merkel first, a conversation scheduled to take place on Friday afternoon -- and one which many observers believe could end in his dismissal.
German papers joined in the chorus of criticism once again on Friday.
The center-left Süddeutsche Zeitung writes:
"The Central Bank mishap is just the latest in a series of personnel debacles. Merkel's government, for example, sent Günter Oettinger to Brussels as the German member of the European Commission -- a man whose greatest qualification was the fact that Merkel's Christian Democrats no longer wanted him as governor of Baden-Württemberg. The Germans haven't nominated anyone for Commission president for years.... The impression is that Europe, for the Germans, is of little interest. Globally, Germany does no better."
"German governments act with a mixture of disinterest and clumsiness when they do show interest in putting forward a candidate for an internationally influential position. In the most recent case, Weber did his candidacy no good by heavily criticizing the provision of aid to heavily indebted euro-zone members. Countries like France blasted Weber, who in turn felt that he didn't receive enough support from his government. His relationship with the chancellor is so fragile and erratic that she was surprised by his about-face. It was an international embarrassment -- and clearly demonstrates to the rest of the EU that she doesn't have the situation under control."
The center-right Frankfurter Allgemeine Zeitung writes:
"There are two main currents in the sea of speculation (surrounding Weber), and neither of them are particularly flattering for those involved. According to the first theory, Weber lost his nerve in the contest for the ECB presidency. In the second, Weber is following the alluring call of money and transitioning into the private sector ."
"Whichever might be true, it has become clear that such stories damage not only the people involved, but also their offices. Weber is not just an individual. As president of the Bundesbank, he has obligations both to his office and to the institution. The same holds true for the Chancellery, which is required to represent the country's interests during the greatest crisis the currency union has ever faced. It's high time to bring this farce ... to a close."
The financial daily Handelsblatt writes:
"Although it is currently just a smoldering fire, the fact that Axel Weber has dropped out of the running to become the next head of the ECB could be explosive. In Merkel's coalition and in the German public, there is growing rage over plans to save the euro. Those who always harbored doubts about the euro now feel like they've been betrayed and sold out, and have the impression that (Merkel) is losing ground and may no longer be able to push through her positions in Europe. Merkel has but limited time to bring this dangerous situation under control."
Conservative Die Welt writes:
"Just two weeks back, at the World Economic Forum in Davos, (Merkel) proclaimed that Germany would play a leading role in Europe. But now an important cornerstone of the plan has crumbled. Berlin has needlessly lost its candidacy for the top ECB position unless Merkel can quickly find a second candidate."
"But what if there is no fitting candidate to be found? This rather probable scenario is Merkel's dilemma. Politically, it would be risky for her to put forward a candidate who wasn't right for the job. It would be better for her to back the head of a foreign central bank who would be acceptable to Germany. That's certainly not what Merkel imagined when she proclaimed a leading role in Europe. But all that is left to her is damage control."
SPIEGEL ONLINE writes:
"Axel Weber's abrupt announcement has brought chaos to the complex personnel roster (at leading international financial institutions, including the ECB, the European Financial Stability Facility (EFSF) and the International Monetary Fund (IMF))."
"Given the complexity of this roster, it is understandable that Berlin was not able to immediately present a successor to Weber. But that does nothing to change the fact that the current vacuum is a disaster. It is dangerous because it threatens to weaken the credibility of the ECB and because German interests in the currency union could be trampled underfoot."
"By making an uncoordinated and extremely sudden departure, (Weber) is endangering his own legacy of success (as head of the Bundesbank). On the one hand, this is because he will soon no longer be part of the ECB's governing council. On the other, it is because the issue of who holds important central-bank positions could become politicized.... "The future president of the Bundesbank must make it clear from the very beginning of his term that he and the institution itself will remain independent."
The left-leaning Berliner Zeitung writes:
"Axel Weber's announced departure from his position as president of the Bundesbank is an affront. In a country that might not believe in God but surely believes in the Bundesbank, as the European great Jacques Delors once joked, the currency's supreme guardian enjoys a renown that only a very few politicians share ."
"Weber's word carries a lot of weight, especially in these times of euro crisis. His out-of-the-blue resignation is highly irresponsible because it stokes uncertainty in this era of uncertainty. This kind of departure provides ammunition to all those who would like the currency union to fail without realizing that, if that were to happen, Germany's economy would suffer the most."
-- Josh Ward
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