Eurogroup President

The mouse that doesn’t roar

RC1275EB91B0
Portugal’s Mario Centeno, right, beat out three other small-country officials to head the group of euro finance ministers. Source: Reuters

There are many reasons why the top European Union jobs go to officials from small countries, and the widely expected selection of Portuguese Finance Minister Mario Centeno as head of the group that steers policy on the euro exemplifies all of them.

The Portuguese official succeeds former Dutch Finance Minister Jeroen Dijsselbloem in the role of president and spokesman for the 19 finance ministers in the so-called Eurogroup. Mr. Dijsselbloem has been a lame duck since March, when elections in the Netherlands made it clear his party would not be part of a new coalition. But the Dutch only reached agreement on a new government in October, so he has stayed on in caretaker mode.

Not that it mattered, since Mr. Dijsselbloem was never calling the shots for the Eurogroup, and neither will Mr. Centeno. Over the past several years, it was former German Finance Minister Wolfgang Schäuble who had the decisive voice in what the euro finance ministers would decide, especially during the Greek crisis, as the Eurogroup took a hard line on what Greece had to do to get any bailouts.

Portugal ranks 14th among EU economies, so Mr. Centeno, like Mr. Dijsselbloem before him, will do as he is told by the powers that be (hint: they are not in Lisbon or Brussels). It is far more important for the future of the euro and the policies of the Eurogroup to see who will become the new finance minister in Germany, whenever a new government is finally formed in Berlin.

This is the main reason the nominal head of many EU groups comes from a small country – so it won’t be obvious that it is the big countries dictating policy. By the same token, this small-country official won’t offer any serious pushback to those dictates. If Mr. Schäuble had to make any compromises – and he didn’t make many – then it was with the ministers from France or Italy or Spain.

None of the countries putting up candidates can muster the clout even of the Netherlands.

Mr. Dijsselbloem, for his part, dutifully did as he was told, even though his center-left Labor Party might have been inclined to take a softer stance than Mr. Schäuble’s center-right Christian Democrats. (In any case, the Labor Party imploded to just 5.7 percent of the vote in March from 24.8 percent in 2012.)

This is a pattern throughout the EU. European Commission President Jean-Claude Juncker is from Luxembourg, which ranks 20th in the EU in terms of GDP. European Council President Donald Tusk is from Poland, relatively big at 8th place, but still not among the biggest members. The exception is the European Central Bank, where the president tends to come from a big country, so he (so far) has the clout to stand up to big-country politicians. Italy’s Mario Draghi has shown himself up to that task.

The other candidates for the job that went to Mr. Centeno after a Eurogroup vote on Monday were Pierre Gramegna from Luxembourg, Peter Kazimir from Slovakia (19th place) and Dana Reizniece-Ozola from Latvia (25th). None of these countries can muster the clout even of the Netherlands, which after all ranks 6th among EU economies, albeit a distant 6th after Germany, Britain, France, Italy and Spain.

Small-country officials who take on EU responsibilities have more time to devote to the job than those managing larger economies. They often speak several other languages, which is useful in dealing with colleagues from so many different countries. Mr. Centeno, for instance, who completed graduate studies at Harvard in addition to his studies in Lisbon, speaks five other languages in addition to his native Portuguese.

Mr. Centeno had the support of Germany’s caretaker finance minister, Peter Altmaier. Berlin’s initial favorite for the post, Austrian Finance Minister Hans-Jörg Schelling, last week announced his departure from politics because the winner of October’s election in that country, Sebastian Kurz, indicated Mr. Schelling would not be part of the new government. As a result, Mr. Centeno’s election had been widely expected and was notable only in that it continued the snub of East European members.

The Portuguese official thus becomes the first from southern Europe to head the Eurogroup, coming after Mr. Dijsselbloem and his predecessor, Mr. Juncker. Mr. Centeno, who belongs to the center-left Socialist Party in Portugal, has been his country’s finance minister since 2015. He has closely followed the Eurogroup script and earned the confidence of Germany’s Mr. Schäuble, who affectionately nicknamed him the “Ronaldo of the Eurogroup,” after the star Portuguese soccer player Cristiano Ronaldo.

In his application for the post, Mr. Centeno dutifully ticked off the Eurogroup priorities as his agenda – furthering the banking union, especially the joint deposit guarantee plan; a “credible” system for monitoring compliance to the euro rules; more dialogue with the European Parliament; and other reforms set out in a clear timetable. He committed himself specifically to the “stability pact” – the debt and deficit rules governing the euro.

All worthy goals, no doubt. But in the end, Mr. Centeno will just be chairing the meetings and it will be the finance ministers of Germany and France who decide what happens in the euro zone.

Darrell Delamaide is a writer and editor for Handeslblatt Global based in Washington, DC. Handelsblatt reporters Ruth Berschens and Jan Hildebrand contributed to this report. To contact the author: d.delamaide@extern.handelsblatt.com.

We hope you enjoyed this free article.

Subscribe today and get full access to market-moving news in Europe's leading economy.