Italian strongly tipped to be euro panel chief

Date: 14/05/1998

By Tim Jones

A LEADING Italian official has emerged as front runner for the chairmanship of the EU's key financial policy-making panel following the decision of the serving British president to stand down.

The appointment of the director-general of the Italian treasury Mario Draghi as chairman of the Union's revamped monetary committee would be a major coup for Rome following on the heels of the nomination of Tommaso Padoa-Schioppa to the board of the European Central Bank.

Until last summer, Italy's chances of being a founder member of Europe's single currency zone had been written off.

The chairmanship of the panel, which will be renamed the economic and financial committee once the euro is introduced, will become vacant at the end of the year when UK Treasury official Sir Nigel Wicks' term of office ends.

Several monetary committee members had been keen for Wicks to go on heading the panel even though his country has chosen not to join the economic and monetary union.

However, officials say Wicks recently told committee members that he planned to stand down and felt the position should be held by a representative of one of the 'in' countries.

The most senior candidates are the 49-year-old Draghi and Luxembourg treasury director Yves Mersch, but officials say the Italian has the upper hand as the political representative of a large EMU state.

Italian treasury representative on the committee since 1991, he is a highly respected economist educated at the universities of Rome and Florence as well as the Massachusetts Institute of Technology.

Draghi was the Italian executive director at the World Bank in Washington from 1984 to 1990, followed by a short stint at the Bank of Italy. He went on to become director-general of the treasury responsible for international affairs, dealing with the country's awesome public debt, privatisation, macroeconomic policy and management of Italy's big state holding companies.

Indeed, in this last capacity, Draghi was sucked into the 'clean hands' inquiries along with his boss, Prime Minister Romano Prodi. The two men were under investigation for alleged abuse of office, when Prodi was chairman of industrial holding company IRI, in the privatisation of food company Cirio-Bertolli-De Rica in 1993.

If Draghi is elected by his peers as committee chairman, he would take office just as the panel takes on a new role. Since it was established four decades ago, this nominally 'advisory' committee has accrued powers well beyond those set out in the Treaty of Rome.

It has come to be the key body in negotiating realignments of currency parities in the Exchange Rate Mechanism, a role which will grow in importance as the EU enlarges into central and eastern Europe, and carries out the bulk of intergovernmental negotiations before meetings of finance ministers.

The committee's chairman plays a key part in setting the agenda and making the concluding remarks. When he goes to ministerial meetings, he makes short recommendations from his committee which set the tone for subsequent debate.

In future, the chairman of the economic and financial committee will be given the role of preparing meetings not just of the 15 finance ministers but also of the Euro-11 ministerial group, which meets for the first time in June.

Director-General of the Italian Treasury, Mario Draghi, is rumoured to be the frontrunner for the chairmanship of the important Monetary Committee (to be renamed the Economic and Financial Committee).