Spanish Prime Minister Pedro Sánchez appointed a close ally to head Spain’s central bank, ending the latest chapter in a bitter struggle between the country’s two largest parties over political appointments.
Wednesday’s naming of Jose Luis Escriva, currently digital transformation minister in Sánchez’s minority leftist government, fills an important void in the country’s economic establishment. But the centre-right opposition People’s Party (PP) opposes it, saying it undermines the central bank’s independence.
“Where Sánchez alone has decided, there is a new constitution,” PP leader Alberto Núñez Feijo said. X. “You cannot go from the ministry to direct the Bank of Spain.”
In contrast, Economy Minister Carlos Cuerpo, an independent, told parliament on Wednesday that “Mr. Escriva is an ideal candidate for the position … presenting excellent credentials.”
Escriva, 63, is actually the first serving minister to hold the governorship since Spain’s return to democratic rule in the 1970s.
He meets the legal requirements for the job, which include only being Spanish and having competence and experience in financial or banking matters. He was the first Head of the Monetary Policy Department of the European Central Bank when it began operations in 1999 and previously worked at the Bank of Spain and the European Monetary Institute.
“Escriva would have been seen as a great candidate before he became minister – his credentials are impeccable for the position,” Angel Talavera, chief European economist at Oxford Economics, told Politico. “But going from minister to central bank governor is always controversial.”
The banking crisis
Sánchez’s Socialist Party (PSOE) and the PP have butted heads for months over who should succeed internationally respected technocrat Pablo Hernández de Cos, whose six-year term ended in June. Generally, both informally agree that the ruling party should name the governor while the opposition proposes the deputy.
This time, the PP’s resistance to Escriva ensured that there was no such backroom deal. Contrary to expectations, Cuerpo did not name a new deputy on Wednesday to replace the outgoing Margarita Delgado.
Relations between the two parties – never cordial – have frayed since the collapse of a property boom that left Spain in need of a €100 million bailout in 2012 from the European Union and the International Monetary Fund. The banking crisis ruined the careers of many executives and their banking protégés, and some led to criminal charges and convictions.
The fallout from Catalonia’s attempted secession in 2017 further strained relations between the two parties.
Just a few months ago, the chance for a deal on the governorship seemed high as the two sides finally agreed to end a five-year deadlock over nominations to the Council of the Judiciary, the governing body of Spain’s courts.
That deal – which required the mediation of European Commissioner Vera Jorova – appeared to offer both sides a path back to a more constructive relationship.
Concept of democracy
It is not the first time Sánchez has been accused of parachuting colleagues into non-governmental organizations – a way of shoring up his power to compensate for his lack of a stable majority in parliament.
“For the PSOE, the freedom of institutions is a threat to its form of government and its concept of democracy,” Pablo Saez, economic spokesman for the far-right Vox party, said. said In response to Cuerpo’s announcement. He pointed to similar appointments at state broadcaster TVE and the Attorney General’s office.
“Given the political climate we have in Spain … it will go on [the opposition’s] Rhetoric that Sanchez is populating public institutions with his loyalists,” Talavera said.
The bitterness of the central bank conflict is all the more evident for the fact that Escrivá will no longer have the power to set monetary policy for Spain. The Governor, by virtue of his position, is a member of the Governing Council of the ECB which sets policy for the entire Eurozone.
However, the bank plays an important role in shaping the national debate about the economy, as well as managing some of the safeguards for the national banking system through “macroprudential” instruments designed to improve financial conditions at the domestic level. level
Escrivá will attend his first monetary policy meeting in Frankfurt next week, when the ECB is expected to cut borrowing costs for the second time this year.
Provided by Carlo Boffa Additional reporting.
Post Sanchez sparks anger by picking ally for Spain’s central bank appeared first Politico.