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08 April 2015

Financial Times: New eurogroup president - Dijsselbloem vs de Guindos

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The second quarter of 2015 will not only bring a crescendo in the ongoing Greek crisis for eurozone finance ministers, who must decide whether Athens gets the bailout funds it needs to avoid bankruptcy. It will also trigger something nearly as closely-watched: an active race to head the group.

Jeroen Dijsselbloem, the Dutch finance minister who was the surprise pick to preside over the powerful committee when he was plucked from obscurity just weeks after national elections pushed his party into government in late 2012, will see his two-and-a-half year term end in July.

Unusually for such high-profile EU posts, both Dijsselbloem and his leading challenger, Spanish finance minister Luis de Guindos, have publicly declared their interest in the job. Indeed, de Guindos received a very public, full-throated endorsement from his prime minister, Mariano Rajoy, at last month’s EU summit in Brussels.

Although the politicking hasn’t really begun in earnest yet – the group is somewhat preoccupied with Greece at the moment – the Brussels Blog has talked to a handful of insiders to gauge where the race stands. Most believe it will come down to a political showdown between the EU’s two main pan-European party groups, the centre-right European People’s Party and the centre-left Party of European Socialists.

Here’s how most are handicapping it now – plus a few dark horses who could emerge if the two men cancel each other out.

The Incumbent

Jeroen Dijsselbloem, Dutch finance minister
Party affiliation: Labour (Party of European Socialists)

Pros: Despite his controversial image in Greece and Cyprus, Dijsselbloem has won high marks from his eurozone colleagues for maintaining a united front in negotiations with Athens. Although he was originally anointed two years ago by Wolfgang Schäuble, the powerful German finance minister who pushed for a eurogroup head from a triple-A country, he’s been able to carve out some independence, occasionally clashing with Schäuble in both the recent Greece talks and last year’s pivotal negotiations on the EU’s new banking union. That has been welcomed by some smaller countries who occasionally bristle at Schäuble’s dominance.

He also benefits from the current partisan mix in top jobs: the presidents of the European Commission and European Council are both from the centre-right EPP, and next year the EPP will take over the presidency of the European Parliament, too. The centre-left Socialists, of which Dutch Labour is a member, are expected to push to retain the eurogroup job as compensation.

Cons: Dijsselbloem’s support in the PES may be broad, but it’s also thin. His hard-line stances in bailout negotiations have not won many allies in the two most important countries in the Socialist camp, France and Italy. Paris has signalled it will back Dijsselbloem, but Rome has been more circumspect. There is also some sentiment that the job should go to a minister from a country that successfully emerged from an EU rescue programme – which Spain has – in order to make a symbolic statement.

Dijsselbloem’s future as finance minister is also not fully assured. His Labour party is on unsteady legs back home, having suffered serious losses in last month’s regional elections. Although national elections are not due until 2017, Labour’s setback has called into question the future of the party’s leader, Diederik Samsom, who is Dijsselbloem’s political patron.

The Challenger

Luis de Guindos, Spanish finance minister
Party affiliation: Popular Party (European People’s Party)

Pros: The most significant thing de Guindos has going for him is the explicit endorsement of Europe’s most powerful leader, German Chancellor Angela Merkel, who last year announced she would back her fellow EPP member for the post. In addition, there is a general sense that Spain is owed a big job: three years ago, Madrid lost what it thought was a permanent seat on the European Central Bank’s executive board when Spaniard José Manuel González Paramo was replaced by Luxembourg’s Yves Mersch, making Spain the largest eurozone economy without a countryman in the ECB’s inner sanctum.

De Guindos has also carefully positioned himself close to Schäuble on several eurozone debates, including the recent Greece controversy, and has something of a non-partisan, technocratic reputation, having come into the current Rajoy government after stints at Lehman Brothers and PwC.

Cons: The most widely-voiced argument against choosing de Guindos is that he might not be finance minister for much longer. Spanish elections are due before the end of the year, and the ruling Popular party has seen its poll numbers collapse in recent months at the expense of insurgent populist parties. Even if Rajoy’s government hangs on, there is persistent talk that de Guindos – who has never been a party insider – could be replaced.

De Guindos’s chances would probably be better if eurozone leaders decide to create a permanent Brussels-based eurogroup president, as France and Germany have suggested, but there is no clear momentum towards making it a full-time job rather than the current practice of handing it to one of the sitting finance ministers. Also, many insiders think Germany’s support for de Guindos is thin. Merkel has a reputation of changing horses in such leadership races – she promised Britain’s David Cameron that she would not back Jean-Claude Juncker as commission president, until she changed her mind – and some believe Berlin will abandon the Spaniard if there is no unanimity among the 19.

The Dark Horses

Pier Carlo Padoan, Italian finance minister
Party affiliation: Democratic Party (Party of European Socialists)

Maria Luís Albuquerque, Portuguese finance minister
Party affiliation: Social Democrat (European People’s Party)

Finnish finance minister
Party affiliation: as yet unknown

Full article on Financial Times (subscription required)

© Financial Times

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