French President Nicolas Sarkozy threw his weight behind Mario Draghi's candidacy to head the European Central Bank on Tuesday, giving a major boost to the Bank of Italy chief's hopes of succeeding Jean-Claude Trichet.
Sarkozy's public endorsement raised pressure on German Chancellor Angela Merkel, leader of the euro zone's biggest economy, to accept Draghi as successor to Trichet when the Frenchman's eight-year term expires later this year.
If Draghi gets the job, it will mean both the ECB president and vice-president come from southern European countries, after Portugal's Vitor Constancio was appointed to the number two position last year.
Until recently this was considered an obstacle to Draghi's candidacy at a time when northern Europeans are balking at paying for the largesse of their debt-laden counterparts.
Draghi's background at investment bank Goldman Sachs and the fact he came from a country with a history of high inflation and fiscal ill discipline could also have counted against him.
Yet his personal credentials are widely respected and his candidacy has gathered momentum since former Bundesbank president Axel Weber withdrew from the race two months ago.
France will be very happy to support an Italian at the presidency of the European Central Bank, Sarkozy said at a joint news conference in Rome with Italian Prime Minister Silvio Berlusconi.
Referring to Draghi by name, Sarkozy said: We aren't supporting him because he's Italian. We're supporting him because he's an excellent candidate.
Sarkozy also said Berlusconi had agreed that Italy would yield its current place on the executive board, held by Lorenzo Bini Smaghi, to a French candidate when Trichet steps down at the end of October.
It's almost a done deal, said Unicredit analyst Marco Valli. I think it's just a matter of time before Merkel endorses him formally.
Analysts are already considering what sort of president Draghi will make.
They say he is one of the most difficult ECB members to pigeon-hole in traditional hawk-dove terms though he has recently begun speaking more frequently about inflationary pressures and has warned of the risks in the ECB's policy of buying the bonds of distressed euro zone states.
Of the possible candidates, he is the one who is most like Trichet in the sense of having the capability to reach consensus within the Governing Council, said Valli. Personally, I think he is slightly more hawkish than Trichet.
RBS analyst Nick Matthews noted Draghi had tended to adopt a relatively low public profile and that needs to change if he becomes the porte-parole for the whole ECB governing council.
While policy decisions are taken by consensus, Trichet has demonstrated the power the top person can wield at the ECB.
OVER TO MERKEL
Draghi, 63, heads the Financial Stability Board in charge of global banking regulation and has private sector experience with investment bank Goldman Sachs as well as government experience as a former director of the Italian Treasury in the 1990s.
Other possible candidates such as Yves Mersch, the central bank chief of Luxembourg and Erkki Liikanen, the head of Finland's central bank, are considered to have less varied curriculums and less international experience than the Italian.
A German government spokesman declined to comment on Sarkozy's endorsement of Draghi and said the decision on Trichet's successor will be taken at the next EU summit in June, but most analysts doubt that Germany will oppose him.
Germany has not made its stance public, though Handelsblatt business daily last week quoted a senior German government official as saying Finance Minister Wolfgang Schaeuble supported Draghi.
Even French officials have privately acknowledged that it is up to Merkel to choose a successor to Trichet. Only if her choice encountered strong opposition from France and other euro zone countries, would it not go through.
There looks to be an overwhelming majority among ECB Governing Council members, politicians like him and markets are positive about him, Unicredit's Valli said of Draghi. I would be very surprised if he doesn't get the job.
The decision is expected to be made by September at the latest and maybe as early as June, in the first open contest for the job since it was created in the late 1990s.
The next ECB president will take over at an extremely sensitive time for the central bank. The ECB raised interest rates earlier this month for the first time in nearly three years after euro zone inflation rose above its target.
It must balance further hikes against the risks faced by vulnerable countries on Europe's periphery.
Speculation about a restructuring of Greek debt, which the ECB strongly opposes, has reached fever pitch in recent weeks and ECB officials are currently in Lisbon discussing what would be the euro zone's third taxpayer-funded bailout of a member state in the past year, following rescues of Greece and Ireland.
(Writing by Gavin Jones in Rome, Editing by Mike Peacock)