ECONOMY

Slovenian central banker, seen as ECB hawk, fails to get mandate renewed by parliament

LJUBLJANA – Mitja Gaspari failed to win a second term as Slovenia’s central bank governor in a vote in parliament yesterday and will lose the seat on the European Central Bank’s policy council he secured just a month ago. Gaspari, 55, who oversaw Slovenia’s eurozone entry on January 1 and now helps set interest rates on the ECB’s Governing Council, won international praise for ensuring a smooth euro changeover but fell victim to party politics at home. The veteran banker will attend two more meetings of the ECB’s 19-member rate-setting council before his six-year term at the helm of the Slovenian central bank expires at the end of March. Two parties in the ruling conservative coalition refused to endorse Gaspari, who served for eight years as finance minister in the previous liberal government and he fell 3 votes short of the necessary 46 vote majority in the 90-member house. Slovenian President Janez Drnovsek, who in December asked parliament to re-elect Gaspari, is expected to nominate a new candidate in a few weeks. «I received the news with regret. This is a very bad sign… as it shows a continuing trend of damaging independent institutions,» President Janez Drnovsek said in a statement. «Anyone who thinks that long-lasting governing (of a state) can be ensured by controlling financial, economic and media institutions, is wrong,» he said. Drnovsek said he would try to name a new candidate who will be professional and at the same time politically independent but did not say when that would happen. «Maybe this was a result of a grudge against Gaspari which dates back to a period when he was finance minister,» Peter Stanovnik of the Institute of Economic Research at the Ljubljana’s Faculty of Economy, told Reuters. A spokesman for the ECB quoted Jean-Claude Trichet, president of the European Central Bank, as saying, «Governor Mitja Gaspari played an extremely positive role in preparing his country for entry into the euro area and the central bank for entry into the Eurosystem.» «The ECB and the Eurosystem will continue working with him and the Bank of Slovenia until the procedure for the appointment of the governor of the Bank of Slovenia is completed.» Although he has given few clues about his policymaking leanings, analysts placed Gaspari in the hawkish camp at the ECB and his departure was seen as possibly slightly weakening the group that favors a tough line on inflation. «That’s probably one of the shortest terms a central banker has ever had,» ABN Amro analyst Dominic White said. «I don’t think it will mean much for the ECB but it depends on who replaces him, he had a reputation as a bit of a hawk.» White said any possible shift in the balance of power within the ECB council would likely be minimal. Parliament should vote on the new candidate within a month of the president making a proposal. Apart from Gaspari, only Bostjan Jazbec, a 36-year-old economist and member of the central bank council, has applied for the post but the president can pick another candidate. Some commentators said Drnovsek could nominate Gaspari again and try to secure majority backing for him in another vote but Drnovsek did not indicate that could happen.