Papademos picked for ECB post
OVIEDO, Spain – European Union finance ministers on Saturday picked Lucas Papademos, governor of the Bank of Greece, as the next vice-president of the European Central Bank, replacing Christian Noyer, who steps down at the end of May. Economy and Finance Minister Nikos Christodoulakis said the Greek candidacy won on merit and that it had nothing to do with nationality although «indirectly [it] reflects the progress Greece has made.» This was confirmed by ECB president Wim Duisenberg, who stressed that «nationality was not an issue and was never mentioned.» While Papademos, 54, was the frontrunner, the selection process was far from smooth as Belgium insisted on its own candidate, Paul De Grauwe, a professor of economics and a politician. Sources said that other finance ministers withstood pressure from Belgium, which had proposed a package deal for the ECB deputy post and other forthcoming board appointments. Belgian eventually abstained from the voting while the other 14 countries voted for Greece’s candidacy. The situation was also complicated by the fact that an announcement on Spain’s official website saying that the Ecofin ministers had reached an agreement on the ECB vice-presidency was later withdrawn. The website said the information had been «released by mistake.» Rodrigo de Rato, Spanish finance minister and chairman of the informal Ecofin meeting, said there had been a mistake regarding the premature announcement. Observers said that Papademos’s appointment is not expected to change ECB policy with its central focus on price stability. He is however widely respected by the markets and other central bankers for sticking to his word. «He hasn’t misled the market to this day. He did what he said he would do,» said one observer. Prime Minister Costas Simitis expressed «the great satisfaction of the government but also of every Greek citizen» at Papademos’s selection. «This historically important decision recognizes in practice the efforts, the progress and the result of our economic choices, which led our country to new horizons… in the modern European and international environment,» Simitis said. «It also acknowledges the great possibilities of our contribution to the more effective planning of tomorrow’s European Economic and Monetary Policy.» The New Democracy party also congratulated Papademos, said shadow finance minister Giorgos Alogoskoufis. He added that this was a great success both for Papademos and for Greece. Appointed to the Bank of Greece in 1994, Papademos played a key role in steering Greece into the single European currency on January 1, 2001. His hard drachma policy between 1995 and 1997 helped bring down double-digit inflation to a level which allowed Greece entry to the eurozone. However he has also displayed an ability to conform to prevailing market conditions, notably in 1997, when he pursued a disinflation strategy culminating in the drachma’s devaluation. While the ECB vice presidency is principally an administrative and planning job, Papademos could play a vital role in the years ahead. His eight-year term comes as the EU and the ECB itself prepare for major changes. The EU’s biggest challenge this decade is the enlargement process, as countries from central and eastern Europe angle for a place in the club. Ten are aiming to join the EU in 2004. Papademos’s experience in the Greek convergence process could play a crucial role. Papademos’s nomination will be forwarded to EU foreign ministers today. It will be examined by the ECB’s governing council on Thursday. European Parliament approval is also needed. The next issue for the Greek government now is finding a successor to Papademos at the Bank of Greece.
