Europe's finance ministers are meeting in Athens this weekend to determine the future of European Central Bank President Wim Duisenberg. The results could postpone his early retirement.
European Central Bank President Wim Duisenberg
When he took the helm of the euro zone's new central bank in 1998, Wim Duisenberg knew he wasn't likely to serve out his term.
French politicians, eager to get something out of the deal after Frankfurt was selected as the ECB's headquarters, got Germany and the rest of the 11 euro zone countries to agree to have Duisenberg retire this summer, three years before his term offfically expired in 2006.
Replacing him would be a Frenchman: Bank of France Governor Jean-Claude Trichet.
But Trichet has since been implicated in a corruption scandal involving the state-supported bank Credit Lyonnais. He is charged with knowing about the bank’s misleading accounts while he was at the French finance ministry in the 1990s.
Trichet says the charges of complicity against him are groundless. He says he had no precise information over the actual state of the bank’s financial affairs nor the power to dictate what the bank reported in its statements.
Potentially messy succession
With a verdict in the case expected only by June 18, Duisenberg’s scheduled departure on his 68th birthday on July 9 poses a potentially embarrassing situation should Trichet be found guilty. That has increased the likelihood that European Union finance ministers will ask Duisenberg to stay on at the ECB during a two-day summit in Athens this weekend.
Duisenberg oversaw the introduction of the euro
Europe’s leaders are keen to avoid a messy succession at the ECB at a time of flagging euro-zone growth and as the war in Iraq continues to create global economic uncertainty. ECB officials are also concerned with maintaining the young bank’s reputation only four years after the introduction of the euro.
Duisenberg made clear this week the length of his extended stay wasn’t as important as ensuring continuity at the top of arguably the world’s second most important monetary authority after the U.S. Federal Reserve.
“A smooth transition can take a week, a month or two or three months. But so long as the transition is smooth, the ECB council and I would be very satisfied,” Duisenberg said.
Victory for Duisenberg
But the whole incident amounts to a small victory for the no-nonsense Dutchman, who never really hid the fact he would have preferred to serve out his whole eight years in office. The compromise to shorten his tenure emerged after Germany managed to get the ECB headquartered in Frankfurt. French President Jacques Chirac then only agreed to let Duisenberg -- the former governor of the Dutch central bank -- become president if he would step aside for Paris’ candidate Trichet after a few years.
“As long as France isn’t completely closed to the idea, it would certainly be a triumph for Duisenberg,” said an E.U. official in Brussels said on Friday.
Should Trichet be found guilty in the Credit Lyonnais case, he would clearly no longer be acceptable as ECB president. Extending Duisenberg’s stay at the helm of the bank through at least the summer would give euro-zone politicians time to find a suitable replacement.
Former ECB Vice President Christian Noyer and the head of the European Bank for Reconstruction and Development Jean Lemierre are considered frontrunners to step in for Trichet, since the are both French. Duisenberg, once an avid golfer, is expected to move back to the Netherlands after he retires.