World Crisis Online

Merkel is due to convene her Cabinet ministers at 9:30 a.m. in Berlin for the first time since Axel Weber’s resignation as Bundesbank chief on Feb. 11. Caught off guard and robbed of her candidate to succeed European Central Bank head Jean-Claude Trichet when his term expires in October, Merkel was left to seek nominees for both posts.

“If Weidmann gets the Bundesbank job, then I think the odds for the ECB job move towards a non-German,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc.

Weidmann, 42, has Merkel’s backing for the Bundesbank post and faces no significant opposition from within her coalition, according to two people with knowledge of the discussions who spoke on condition of anonymity because the talks are confidential. Merkel’s office has said she will nominate a Bundesbank president this week to replace Weber when he leaves on April 30.

An economist and former Bundesbank analyst, Weidmann helped guide Merkel’s policy through the financial, economic and euro- area debt crises since becoming her chief economic adviser in 2006 at Weber’s recommendation. He emerged as frontrunner to head the Frankfurt-based German central bank as soon as Weber resigned.

Tapping Weidmann may allow Merkel to place her confidant on the ECB’s executive board, which runs the day-to-day affairs of the institution that sets monetary policy for the 17 euro countries.

EU Bargain Weber, who publicly criticized the ECB for buying bonds of euro-area countries to fight the crisis, dropped out just as Merkel seeks a bargain in the European Union that locks in tighter fiscal discipline and coordination on policies such as taxes and retirement in return for expanded pledges of aid to debt-strapped governments.

EU leaders are due to meet twice in March to complete a “comprehensive package” that Merkel says will help put the euro on a stable footing after Greece and Ireland required bailouts last year.

As polls show most Germans disapprove of more aid, she faces elections in seven of 16 states this year, starting Feb. 20 in Hamburg. State votes determine the makeup of the German parliament’s upper house, where Merkel already lacks a majority.

Backing Weidmann to move from government to the Bundesbank will expose Merkel to dissatisfaction among members of her coalition concerned about the central bank’s independence from political influence.

‘Think Again’ “Merkel should think again whether there’s another candidate of the same caliber who would more credibly represent the bank’s long, feisty tradition of independence,” Frank Schaeffler, a lawmaker for the Free Democratic Party, a Merkel coalition ally, said in a phone interview. “The reputation of the bank must not be compromised.”

Economists including Citigroup Inc.’s Juergen Michels have speculated that Juergen Stark, 62, who is currently in charge of the ECB’s economics department, may also be in the running for the Bundesbank nomination.

Stark “would be an unusual choice since he has only three years left on the executive board” of the ECB, said Nielsen at Goldman Sachs Group Inc.

Appointing Weidmann to the Bundesbank may signal “that Berlin was not pushing for a German candidate to become ECB President” on Nov. 1, Julian Callow, chief European economist at Barclays Capital, said in a note to clients.

Schroeder’s Choice Weber, 53, previously the youngest Bundesbank chief, was a surprise choice when then-Chancellor Gerhard Schroeder named him to replace Ernst Welteke after two decades in academia and a stint as one of the government’s economic advisers. He will return to his professorship at Cologne University by the end of this year, Bundesbank spokesman Benedikt Fehr said on Feb. 12.

Weber said a lack of “acceptance” among euro-area leaders for his monetary policy views caused him to give up on becoming the next ECB chief, according to an interview in Der Spiegel published Feb. 12. He suggested Weidmann would make a good replacement, calling him an “absolute professional” and “excellent economist,” the German weekly said.

“He would live and breathe his new job from day one in any capacity,” said Weber.