NEWSMAKER-Nationality is main hurdle for Draghi's ECB hopes
* Draghi is frontrunner but being Italian a big obstacle
* Monetary policy pragmatist, no clear hawk or dove profile
* Goldman Sachs experience may come under closer scrutiny
By Gavin Jones
ROME, Feb 22 (Reuters) - If the European Central Bank's president were chosen purely on ability and qualifications most analysts say Mario Draghi would be a shoo-in to replace Jean-Claude Trichet when his term expires in October.
A former Harvard economics professor with top level experience of government, financial regulation, at the World Bank and in the private sector, the 63 year-old Bank of Italy chief would seem to have a near-perfect curriculum vitae.
A Reuters survey last week showed 29 economists out of 45 tipped Draghi as favourite and he has growing backing from the financial press, with the Financial Times and the Economist both running commentaries saying he is the right man for the job.
Yet the decision -- likely to come by June but possibly as late as September -- will not be taken by markets or newspapers, but by governments who must answer to their voters.
As such, Draghi's biggest problem is his nationality.
"Please, not this Italian!" top-selling tabloid Bild said in a piece last week calling for Berlin to back a German candidate.
"Mamma mia, in Italy, inflation goes with life like tomato sauce goes with pasta! Signore Draghi can say the opposite as much as he likes," it said.
Tabloid sensationalism aside, political sources say Berlin is reluctant to accept an Italian. Germany wants a president it feels sure will run orthodox policy that keeps a tight grip on inflation, if necessary at the expense of the growth that the euro zone's southern states desperately need.
The lurid sex scandals involving Prime Minister Silvio Berlusconi are unlikely to have helped. And in terms of the hard political bargaining, southern Europe already has the ECB vice presidency in Portugal's Vitor Constancio.
"Draghi will have to convince people that he is representing himself and not Italy, and that won't be easy," a senior European central banker said.
Having worked for four years as an executive at Goldman Sachs could also hurt Draghi as the ECB appointment nears, because of the role of investment banks in the financial crisis and a row over deals Goldman did with Greece a decade ago.
For now, though, support for the man known for his sharp intellect, unflappable temperament and immaculate black suits appears to be gathering momentum following the shock withdrawal of Bundesbank President Axel Weber from the race.
HAWK OR DOVE?
Draghi is well aware of the strength of resistance to an Italian ECB chief among German public opinion and he is also aware he will not get the job without the support, or at least the acceptance, of German Chancellor Angela Merkel.
It is no coincidence that he has chosen German dailies for two of his very rare press interviews over the last year.
In a recent interview with the Frankfurter Allgemeine Zeitung, Draghi praised Germany's economy and opposed a proposal by his own economy minister for the issuance of common euro zone bonds, but some readers were not buying it.
"Mr Draghi shouldn't speak so much, he should clear up at home in Italy, in Rome, Naples, Milan," was just one of a raft of sceptical reader responses on the FAZ's web page. "If he manages this Labour of Hercules, then he can be ECB President, but certainly not before."
An effective communicator in fluent English, Draghi has won wide praise among policymakers over the last two years as president of the Financial Stability Board, charged with creating new rules to make financial markets more solid.
But on monetary policy itself, he has not carved out a clear public profile. While he stressed the importance of price stability in the FAZ interview, analysts say he remains one of the hardest ECB members to pigeon-hole in traditional "hawk-dove" terms.
His speeches address the need for more co-ordination in euro zone governance, structural reform, market imbalances or banking stability, but it is hard to find warnings about price pressures, second round effects or pre-emptive action. Indeed, he tends to avoid issues with clear interest rate implications.
So there may be no justification for German fears he would not be tough on inflation, but there is equally little clear public evidence that he would be.
THE GOLDMAN CONNECTION
The Bank of Italy said last February he had no role in the complex swap deals conducted by Goldman Sachs for Greece that may have allowed it to mask the size of its public debt.
In an interview with German business daily Handelsblatt Draghi went further, saying he had never worked with any government while at Goldman but only with corporate clients, in order to avoid any conflict of interest stemming from his time at the Italian Treasury.
The issue is likely to be brandished again by his opponents, but most analysts see it as a minor threat unless improbable wrongdoing is unearthed.
"It would only be really important if there were still some skeletons in the closet," said ING economist Carsten Brzeski.
"Just having worked at Goldman Sachs at the same time as it did the forex swaps to tweak the numbers, it's a small issue."
