EU Power Struggle Haunts Mersch as ECB Women Row Looms

EU Power Struggle Haunts Mersch as ECB Women Row Looms

European Parliament lawmakers will today decide whether to escalate a gender row with governments as they ponder if Yves Mersch’s appointment to the European Central Bank Executive Board would make him one man too many.
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A euro sign sculpture is seen outside the European Central Bank headquarters in Frankfurt. Photographer: Hannelore Foerster/Bloomberg
Mersch, 63, will testify to the European Union assembly’s Economic and Monetary Affairs Committee before it then votes on his candidacy for the ECB post in a session starting about 7 p.m. in Strasbourg, France. The Luxembourg central bank governor’s career move has been held up by the panel’s objection to the total lack of female policy makers at the ECB.
The ECB seat has been vacant since Jose Manuel Gonzalez- Paramo of Spain ended his eight-year term on May 31. Euro region finance ministers then wrangled over his replacement until July. EU lawmakers have since impeded the appointment of Mersch, the euro-area’s longest serving central bank chief, raising the prospect that government leaders will need to intervene and overrule their objections to secure the move.
“The Mersch appointment has now turned into a power struggle between the European Parliament and the region’s governments,” said Carsten Brzeski, a former European Commission official now working for ING Group in Brussels. “If the Parliament genuinely rejects Mersch’s candidacy, there will be some serious knocking-of-heads together and a compromise will have to be found where maybe the next big European post, maybe in banking, will have to go to a woman.”
Two women, Sirkka Haemaelaeinen of Finland and Gertrude Tumpel-Gugerell of Austria, have previously sat on the ECB’s six-member Executive Board. If the five men currently there serve their full terms, another position won’t become available until June 2018 when Vice President Vitor Constancio retires.
No Witch Hunt
Lawmakers highlighted the lack of senior female officials for years and governments simply ignored the issue until now, said Sharon Bowles, who chairs the EU Parliament committee.
Mersch’s nomination will be opposed and the committee will request European leaders submit a new candidate, according to a draft report published on the EU Parliament’s website on Oct. 19. The full Parliament will vote on the matter on Oct. 25.
There “won’t be a witch hunt against Mersch, who is a very competent man,” Bowles said in an interview. “But the Parliament may withhold its approval unless we get a satisfactory road map” to more senior women in central banking.
All 17 central bank governors in the euro area are male and within the ECB itself, few of its managers are women. The ECB added one more female senior official on Oct. 19 when it announced that it hired Christine Claire Graeff, 39, as Director General for Communications and Language Services.
‘Best Available’
“The ECB gender imbalance is evident,” a group of 19 signatories including former Deutsche Bank AG Chief Economist Thomas Mayer and former Bundesbank President Ernst Welteke wrote in a letter published Oct. 19 in the Financial Times. Still, the ECB is “under strength at a crucial time,” and “it is critical to give priority to the best available candidate to the board, who in this case happens to be a man.”
The row has prompted pleas from ECB President Mario Draghi and Executive Board member Joerg Asmussen not to further hamper the ECB’s work trying to help solve Europe’s sovereign debt crisis, which has seen the central bank’s workload multiply as it embarks on unprecedented unconventional monetary policy measures and takes on additional supervisory roles.
Debt Crisis
“We need to look seriously and act” on the issue of gender imbalance, Draghi told Bowles’s panel in Brussels on Oct. 9. “But in this time of crisis, the Executive Board should be completed and this nomination should go through.”
Management upheavals and an increasing crisis-related workload has also been cited by the ECB’s chief legal counsel when he pleaded for more time to respond to an investor lawsuit, according to a letter obtained by Bloomberg News. Draghi will have the option to transfer the legal portfolio to Mersch, who is a lawyer by training.
While a European Parliament veto can’t hold up Mersch’s appointment if leaders push ahead, “it would nevertheless be a serious affront,” ING’s Brzeski said. “It’s part of the political games that are played.”
Now is not the time for those games though, said David Marsh, chairman of the Official Monetary and Financial Institutions Forum, a London based research group. He also signed the letter to the Financial Times.
“This wrangle lowers the credibility of the monetary union in the eyes of the outside world,” he said. “If you’re sitting in China, you’d be quite startled and wondering why Europe can’t get its act together.”