Sarkozy Backs Italian Official to Lead Central Bank

 

President Nicolas Sarkozy of France said he would support a respected Italian monetary official, Mario Draghi, to succeed Jean-Claude Trichet when he steps down later this year. Mr. Sarkozy made his unexpected announcement at a joint news conference in Rome with Prime Minister Silvio Berlusconi of Italy.

But in the political brinksmanship common with appointments at top European institutions, Mr. Sarkozy’s move may have made it harder for Chancellor Angela Merkel of Germany to endorse Mr. Draghi.

Germany’s finance ministry, led by Wolfgang Sch?uble, has recently warmed to the idea that Mr. Draghi is the best-qualified person for the job. But Mrs. Merkel faces a delicate task in preparing German voters for the prospect of an Italian’s having responsibility for keeping European inflation under control and managing the fate of the euro.

Mr. Sarkozy, though, expressed no such reservations.

“France will be very happy to support an Italian for the presidency of the E.C.B.,” he said. “I know Draghi well. We support him not because he is an Italian but because he is a man of quality.”

Mr. Sarkozy made the announcement without consulting Mrs. Merkel, according to a German official who insisted on anonymity.

The European Central Bank’s role in fighting inflation is a major preoccupation for Germany, and Mrs. Merkel retains an effective veto over the appointment, which is scheduled to be decided at a summit in June.

Mrs. Merkel had been hoping that an inflation-fighting German, or a banker from a North European country, would take the helm from Mr. Trichet, who is retiring in October. But her preferred candidate, Axel A. Weber, the former president of the German central bank, took himself out of the running earlier this year. Mr. Weber resigned from the Bundesbank in February.

Mr. Weber’s exit pushed Mr. Draghi’s candidacy to the forefront, despite widespread perceptions, particularly in Germany, that people from Mediterranean countries are not as prudent and responsible with money as those from northern nations.

Despite that stereotype, in the corridors of finance Mr. Draghi, governor of the Italian Central Bank, is widely respected as an experienced economic policy maker with sterling credentials and a knack for navigating turbulent political waters.

But Mr. Sarkozy’s announcement, by appearing to pre-empt Mrs. Merkel, could complicate the process of selecting the next central bank president.

Mr. Sarkozy’s remarks were all the more surprising because both he and Mrs. Merkel have sought to forge a closer relationship to keep the euro from unraveling amid the debt crisis.

They have also worked to overcome differences in their approaches to the central bank. Germany wants to keep the bank free from politics, while France, according to German officials, is more interested in influencing it.

It is not the first time Mr. Sarkozy has bewildered a crucial European partner by announcing policy without giving advance notice. But French officials insisted that they had been encouraged to support Mr. Draghi after Mr. Sch?uble appeared to endorse him; they expect Mrs. Merkel to ultimately support him as well.

In return, France expects Germany to back a Frenchman for the seat that Mr. Draghi would vacate on the bank board, said senior French officials who spoke anonymously because of the political sensitivity of the matter.

Mr. Draghi has a reputation as a consensus builder — an important skill when running a central bank. Mr. Weber dropped out of the running in part because he was out of step with other members of the bank’s policy-making committee.

Mr. Draghi, serious and direct, is also acutely sensitive to Germany’s preoccupation with fighting the specter of inflation, and has spent the last few months underscoring his inflation-fighting credentials. In a rare interview in February, he said monetary policy should “first and foremost be geared toward price stability.”

The central bank recently raised interest rates by a quarter percentage point, a move Mr. Draghi supported. Analysts expect the bank to lift rates perhaps twice more this year.

That policy has come under fire from some experts who warn that higher rates will choke off the faltering recovery in some countries. But Mr. Draghi’s firm position on inflation has helped endear him to Mr. Sch?uble, the German finance minister. He sees Mr. Draghi as someone who can guide a strict fiscal and monetary policy while keeping meddling politicians at bay, according to a German finance official, who spoke on condition of anonymity because he is not authorized to speak on the record.

Mr. Sch?uble also holds the view that choosing a central banker from a southern European country would send a good signal to its troubled neighbors, the official said, because it might show that the politics and economics of the 17-member euro zone are not driven by northern countries alone.

If Mr. Draghi got the job, he would have to navigate the tricky financial and political imperatives of bailouts for the most stricken European countries. He would also have to weigh how much support the central bank can and will continue to give to troubled banks in countries like Ireland and Spain.

Mr. Draghi seems to have managed to overcome reservations about his role as a managing director at Goldman Sachs from 2002 to 2005. The investment bank was the lead manager for a 2001 derivatives transaction that allowed Greece to dress up its books in a way that brought it into the euro club, but Mr. Draghi has made clear that he was not directly involved.

On another monetary policy issue, Mr. Draghi has discreetly voiced concern about the central bank’s continuing intervention in markets for European government bonds. He emphasized that intervention was justified only to make sure that the bank maintained its influence over interest rates, and not as a form of economic stimulus or stealth financing for overindebted governments.

Judy Dempsey reported from Berlin and Liz Alderman from Paris. Katrin Bennhold contributed.

 

Iraq Must Decide Within Weeks if U.S. Troops Will Stay Past 2011, Top Official Says

The official, Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, said there were “irrevocable logistics and operational decisions” that had to be made by the United States before the withdrawal of forces was scheduled to accelerate.

“For the withdrawal, there’s what I call a physics problem,” Admiral Mullen said at a news conference at Camp Victory, the sprawling American base here. “We have 47,000 troops here, lots of equipment, and physically it just takes time to move them.”

He said, “Time is running short for any negotiations to occur.”

Admiral Mullen made his statements after meeting with Prime Minister Nuri Kamal al-Maliki and high-ranking Iraqi military officials on Thursday. He said that there had been no formal discussions about United States forces remaining here.

“Should the Iraqi government desire to discuss the potential for some U.S. troops to stay, I am certain my government will welcome that dialogue,” he said.

The United States and Iraq agreed in 2008 that all American U.S. forces would leave by the end of this year.

Since the agreement, violence has decreased significantly, and Iraqi security forces have taken over patrolling the streets. But the Iraqis still lack the capacity to defend their borders and airspace, and they rely heavily on the American forces for intelligence sharing and training.

Independent military analysts and officials of both countries believe that if all American forces leave as scheduled, it could threaten security in Iraq, where there are daily explosions and where ethnic tensions remain high. A continued American military presence could also serve as a counterbalance to Iran, which has significant influence here.

Complicating matters are plans for the State Department to have a huge presence in Iraq after the end of this year. There are many questions among policymakers in Washington about whether the State Department can operate here without the logistical support and protection of the American military. The State Department is planning to roughly double its size in Iraq, to about 16,000 people, and it will require an army of private contractors to protect its personnel.

When the leaders of the United States and Iraq negotiated the agreement in 2008, the timetable was primarily created so that Iraqi political leaders could show their constituencies that they were taking a stand against the long-term presence of American troops. It was understood by both parties at the time that Iraq’s security forces would not be ready to defend the country by 2011, and that a new deal would be needed.

But since then, domestic politics in both countries have made it difficult for American troops to stay on beyond this year, even as military leaders on both sides acknowledge that Iraq’s security forces are not ready to defend the country on their own.

President Obama rose to national prominence opposing the Iraq war, and in his recent public comments, like his State of the Union address and his recent speech on Libya, he has emphasized that American troops will be leaving Iraq.

In Baghdad, Mr. Maliki has to contend with constituencies and coalition partners who oppose the United States’ presence. Moktada al-Sadr, the radical and anti-American Shiite cleric, for one, has vowed to renew insurgent warfare if American soldiers stay.

Mr. Sadr, whose Mahdi Army twice fought significant battles with American and coalition forces, became a prominent political player in Iraq after candidates loyal to him won 39 seats in last year’s parliamentary election.

“Sadr has been a significant complicating factor in Iraq for a long period of time,” Admiral Mullen said.

Referring to Mr. Sadr’s threat against American forces if they remain beyond this year, Admiral Mullen said: “Iraq has seen more than its fair share of violence and death. So I think a statement like that is irresponsible in terms of taking care of Iraqi citizens in the future.

“And obviously it will take the political leadership here in Iraq from every single party to come together to make sure that Iraq is stable and better for the Iraqi people and not return to the violence, which has been so devastating in recent years.”

 

Motorola Xoom UK pricing official at £580 for 3G and £480 for WiFi-only

 By Vlad Savov posted Apr 8th 2011 3:50PM Motorola has now confirmed that the latest round of prices the Carphone Warehouse, PC World and other UK retailers are listing for its Xoom tablet are indeed the officially sanctioned price points for the Honeycomb slate. After being listed at ￡600 for the 3G model and ￡500 for the WiFi-only version initially, the 32GB-equipped 10-incher is now mercifully ￡20 cheaper, at ￡580 and ￡480 for each variant. A quick glance at Apple's online store tells us that those levies match up exactly to what a corresponding 32GB version of the iPad 2 will cost you, signaling Motorola's intent to at least be on par in terms of pricing. Stores are still showing the Xoom under a pre-order status for now, but that should be changing swiftly if Motorola wishes to live up to its promise of availability this very week.