The European Union yesterday appeared headed towards a full-blown diplomatic crisis after France and the Netherlands hardened their positions over the presidency of a European Central Bank.
The row, which threatens to mar an almost seamless process towards creating a common European currency, increased the chance that a compromise candidate might be needed to fill the critical post.
"I see that the tone of this discussion is getting much more poisonous and rigid than before," said a senior EU monetary official.
"If this really becomes a political fight to the end, then the chances of a third candidate do increase."
In an interview with Le Monde yesterday the French Prime Minister Mr Lionel Jospin said France could veto a decision on the presidency if no compromise was found.
His comments follow French President Jacques Chirac's renewed support for central bank governor Mr Jean Claude Trichet (55) who emerged last year as a rival to heavily favoured Dutchman Mr Wim Duisenberg, head of the European Monetary Institute.
Mr Duisenberg (62) enjoys the backing of nearly all governments, but is disliked by Mr Chirac who sees his candidacy as a further extension of German hegemony in European monetary affairs.
France would ideally prefer an ECB president who is less rigidly attached to the objectives of monetary and price stability, the hallmark of Germany's powerful Bundesbank, which is a firm supporter of Mr Duisenberg.
Also, the Dutch have been sharply critical of Italy's economic fitness for economic and monetary union, another sore point with France, which considers Italy an indispensable member of monetary union.
German government sources said differences between the two countries made it less likely that EU leaders could agree on an ECB president in early May when the founding members of the euro are chosen in Brussels.
But the German Chancellor Mr Helmut Kohl, seeking to keep a diplomatic solution alive, said he was confident agreement would be reached at the May summit.
"I have every reason to believe that on that weekend in Brussels we will also take the personnel decisions regarding the European Central Bank," he said.
The upshot for some was that a third candidate was becoming a more realistic solution to head off a prolonged battle which would delay the creation of the ECB and selection of key individuals.
In the past, many top European positions have had to resort to third candidates when major powers were at odds over their preferred choices.
EU officials have repeatedly stressed that a timely resolution was preferable to a last minute battle over the top job. During Luxembourg's helm of the EU presidency last year, diplomats considered an agreement which included a retirement age for the ECB post.
The ECB presidency is a non-renewable eight-year term. Speculation that Mr Trichet, as vice president, could take over the top job after about four years was seen as a way to appease France and is still seen by some as the most likely resolution.
