European leaders have agreed a deal to fill the EU's most important jobs, backing Christine Lagarde to lead the European Central Bank and Ursula von der Leyen to be president of the European Commission.
On the third day of a gruelling summit in Brussels, EU leaders gave near-unanimous support for a package based around Lagarde, France's former finance minister who is now head of the IMF, and von der Leyen, Germany's defence minister.
But the proposed deal remains unconfirmed because it is facing resistance from parts of the European Parliament, which must back von der Leyen's appointment. German Chancellor Angela Merkel had to abstain on the deal because of resistance from some of her party's coalition partners in Berlin.
The breakthrough among leaders ends five weeks of wrangling to fill the most important policymaking roles in the EU, which are all falling vacant at the same time. The bloc has never had to fill all its key roles within such a short period.
The chosen team will steer the bloc through an age of upheaval, handling Brexit, the aftermath of the financial crisis, and trade policy with regard to US protectionism and Chinese economic power.
The agreement means the two most important policymaking jobs in the EU will be held by women for the first time, a factor in von der Leyen's favour as she seeks the backing of parliament.
Other parts of the package agreed on Tuesday place Charles Michel, Belgium's liberal prime minister, as the next European Council president, while Josep Borrell, Spain's foreign minister, is set to become the EU's foreign policy chief.
The selection of Lagarde, not an economist or one of the front-runners to replace Mario Draghi, was unexpected. She has become a superstar of international finance after eight years as head of the IMF and four as French finance minister.
But she has no direct experience of monetary policy, which could prove a disadvantage as the ECB searches for new ways to combat weak inflation and boost the eurozone economy.
Lagarde said she was honoured to have been nominated for the ECB presidency. "In light of this, and in consultation with the ethics committee of the IMF executive board, I have decided to temporarily relinquish my responsibilities as managing director of the IMF during the nomination period," she said
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Asked about Lagarde's lack of central banking experience, Merkel said she had shown real leadership as head of the IMF, and "whoever can do that can also head the ECB". "A lot of things happen for the first time," the chancellor added.
Von der Leyen is a longstanding ally of Merkel and the only minister to have served in every cabinet under the German chancellor since she took office more than 13 years ago.
Her nomination to replace Jean-Claude Juncker at the commission is set to ensure the centre-right European People's party retains the most coveted post in Brussels. Von der Leyen would be the first German to head the commission in half a century.
Several senior officials attending the summit said Lagarde's name had been tied to von der Leyen as part of the deal between Paris and Berlin. Emmanuel Macron, the French president, was first to propose von der Leyen during one of the most chaotic and difficult parts of the negotiation on Monday. He described the overall agreement as "the fruit of a deep Franco-German understanding, and of our ability to work with all the European partners".
Frans Timmermans and Margrethe Vestager, the lead candidates for the socialist and liberal groups in May's elections would be rewarded with jobs as vice-presidents under von der Leyen.
The position of European Parliament president would be a separate but related part of the compromise. The five-year term is expected to be split between Sergei Stanishev, a Bulgarian socialist, and Manfred Weber, the German MEP who led the EPP election campaign.
Merkel was forced to abstain on nominating the first German commission president since 1967 because of the fierce criticism of her SPD coalition partners, who insisted on supporting Timmermans and Weber, the two so-called "Spitzenkandidaten" who led party campaigns in May's European elections.
Leo Varadkar, the Irish premier, said the chancellor had told her she was "confident" the dispute would not imperil her coalition in German. "It's politics," he said. "I think the German government will be here for some time yet."
The SPD's concerns also underline the challenge facing von der Leyen in the parliament in Strasbourg, which she will visit on Wednesday. Bernd Lange, a German centre-left MEP, said the package was "not acceptable" to his group. The Green group has also said it would not back the package.
Martin Schulz, the former European Parliament president who remains influential in the pan-European socialist group, called Von der Leyen Berlin's "weakest" minister and said Timmermans relegation was a victory for illiberal governments like Viktor Orban's Hungary.
Macron rode to the defence of Merkel. "Listen, seriously, if someone in Germany, can tell me that the agreement we have just found, which for the first time in 40 years gives to Germany the presidency of the European Commission, is something that has weakened Germany, bring them to me," he said.
Donald Tusk, European Council president, said he was "very happy" with the gender balance of the agreement. "After all, Europe is a woman," he said — a reference to Greek mythology.
Written by: Michael Peel, Jim Brunsden and Mehreen Khan
© Financial Times