The EU’s job merry-go-round starts at the ECB

The EU’s jobs merry-go-round is whirring and the jostling for top posts has begun apace.

First up is the vacancy for vice-president of the European Central Bank — a position which will help determine how a number of big posts are handed out over the next two years, culminating in the new ECB president in late 2019.

The two men battling to sit next to Mario Draghi at his press conferences are Spain’s Luis de Guindos (left) and Ireland’s Philip Lane (right). In some ways they represent the chalk and cheese of eurozone economic policymaking: Mr Lane is a central banker and academic economist by training; Mr de Guindos a former investment banker turned finance minister. Both represent former eurozone bailout countries turned good.

A bit like the squabbles over where to locate EU agencies, the jobs carve-up will probably be settled by backdoor deal-making between national capitals with half an eye on the prizes they are coveting for themselves.

In the case of the ECB, nationality is a big deal. Spain has long bemoaned its under-representation in the EU’s high profile gigs. Mr de Guindos lost out for the presidency of the eurogroup in 2015 and is now in prime position to get the Frankfurt slot by next month.

Mr Lane, although highly respected in economic circles, is a relative newbie in central bank world. His application is widely seen as an attempt to boost his profile ahead of another key ECB vacancy — that of chief economist — which needs to be filled by May 2019. It’s a post with serious intellectual heft that can shape the ECB’s thinking as it nears the end of QE.

Frankfurt’s revolving doors are part of a changing of the guard in EU’s institutions over the next 18 months. Five members of the ECB governing council need to be replaced, along with the president of the European Commission and European Council by the end of 2019.

Will personnel changes impact the EMU debate? The jury’s out. On big decisions for the banking union or eurozone integration, the direction of travel will still be decided more in Paris and Berlin rather than Brussels or Frankfurt.

The potentially game-changing appointment will be Mr Draghi’s successor. The Italian’s term expires in autumn 2019 and his replacement will be keenly watched by investors for signs of continuity (“whatever it takes”) or disruption.

If Mr de Guindos lands the VP role, it will increase the odds of a northern European in the president’s hot-seat. Northern Europe usually means “hawk”. Rumours are already swirling around Germany’s Jens Weidmann — often an outspoken critic of the ECB’s three-year bond-buying programme and record-low interest rates. The polarising German is a no-go for plenty of southern eurozone capitals. But for his supporters, Mr Weidmann is an experienced and high-profile figure, and a German sounds like the perfect man to manage the normalisation of monetary policy.

Other possible contenders, such as Dutchman Klaas Knot or France’s François Villeroy de Galhau, are hampered by the fact their countries have already had the top ECB job. Add to that considerations about country size, gender and the principle that no country can have more than one member on the ECB executive board at one time, and it’s a merry go-round that will make your head spin.

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Email: mehreen.khan@ft.com
Twitter: @mehreenkhn