ECONOMY

Duisenberg stays

European Central Bank (ECB) chief Wim Duisenberg agreed on Saturday to stay in his post four months more until his already-anointed successor Jean-Claude Trichet of France learns the outcome of a court case against him. European Union finance ministers brokered the agreement at talks in a seaside resort on the outskirts of Athens, finally removing a key uncertainty confronting the global economy at a time when war in Iraq has compounded economic gloom. Officially, the ministers set no deadline for what will be the first handover at the ECB helm since the euro was created. But several ministers made it clear they needed to buy at least a few months for Trichet, until September or later if needed. «I’m not going to tell anyone how long I’m going to stay. I will be president of the ECB up to and until the day my duly appointed successor takes office,» Duisenberg, who had first planned to stand down on July 9, told a news conference. Trichet, currently Bank of France chief, is awaiting a June 18 verdict in a trial where he is charged with complicity in the publication of misleading accounts by the Credit Lyonnais bank a decade ago. Even if he were cleared, officials said formal procedures would prevent Trichet taking up the post in early July. «I personally do believe that Mr Trichet will be the next candidate because I think that the court’s decision to be taken in France will allow him to do so. If not, it will have to be a Frenchman,» said Luxembourg Prime Minister Jean-Claude Juncker, who is also finance minister. Ministers of the 15 EU states also took stock of the wartime weakness of world growth and said they were determined to pursue long-promised reforms to improve economic growth, which they expect to pick up once the fighting in Baghdad was over. War concerns Duisenberg, like other central bankers present, said that inflation was expected to drop in the coming months below the maximum 2 percent tolerance level the ECB uses as a benchmark but that war made highly influential oil prices hard to gauge. «It is currently impossible to estimate how the war will affect the economic situation… It is best to wait and see how things develop,» German central bank chief Ernst Welteke, who is also a member of the ECB’s governing council, said. Beyond their own economic worries, ministers said they also wanted what Finnish Finance Minister Sauli Niinisto described as a «strong role» for the EU in the reconstruction of Iraq after the US-led military action. Greek Finance Minister Nikos Christodoulakis, hosting the talks in Athens because Greece is currently presiding over EU affairs, said humanitarian aid was the top EU priority but that reconstruction efforts were now starting to be discussed too. The war in Iraq began on March 20. Ministers said problems that have reduced expected growth in the eurozone to around a paltry 1 percent this year had begun some time before even the specter of war had reared its head. The issues may arise when Christodoulakis and ministers from France, Germany, Britain and Italy meet finance colleagues from the United States, Japan and Canada for talks under the auspices of the G7 grouping in Washington at the end of next week. Bank of England Governor Eddie George said the Group of Seven rich industrial nations probably would not produce any kind of joint action plan to spur economic activity. «This is not how it works,» he said. German Finance Minister Hans Eichel, however, said that the central banks could do their part by cutting interest rates to boost growth if things got worse. With no clear picture on how oil prices and the economy in general would evolve while war went on in Iraq, one of the more tangible issues ministers dealt with was the leadership succession at the ECB. (Reuters)