The finance ministers of Spain, Ireland and Luxembourg will likely be in the running for Eurogroup president when incumbent Mário Centeno steps down next month.
Centeno resigned from the Portuguese government on Tuesday and announced he will not run for a second term leading the eurozone’s informal club of finance ministers.
The Eurogroup presidency, which carries a term of two and a half years, has no legal status. Yet it became one of Europe’s most influential economic posts during the crises of the last dozen years, leading the 19 countries to thrash out bailouts such as those that kept Greece in the euro.
“On Thursday, I will inform my Eurogroup colleagues of my decision not to seek a second mandate, as by 15 June I will step down as finance minister of Portugal,” Centeno tweeted. “I will launch the call for candidates and outline the process for the election,” which is scheduled for July 9.
North-South divisions exposed in the debates of recent years have turned the talking shop into a battleground, often pitting ministers in all-night negotiations over proposals such as a eurozone budget. The next Eurogroup chief will have to bridge the chasm and bring fresh impetus to plans for deeper financial integration to protect citizens against future crises — as well as the present turmoil brought on by the coronavirus pandemic.
The economic heavyweights don’t always hold sway over the consensus-seeking group.
Top treasury officials from across the eurozone expect Spain’s Nadia Calviño, Ireland’s Paschal Donohoe and Luxembourg’s Pierre Gramegna to come forward as candidates once Centeno calls for nominations Thursday.
All three ministers declined to comment on their possible candidacies.
Gramegna, from a liberal political party, retweeted Centeno’s departure message with the comment “Congratulations Mario for what you achieved as a President of the #Eurogroup, especially the ambitious financial responses to the challenges of the #Covid19 pandemic. I appreciated our bilateral cooperation & wish you all the best for the future.”
Donohoe, a center-right politician, expressed his regret about Centeno’s decision, describing the Portuguese in an emailed statement as an “excellent President of the Eurogroup and he is not only a colleague, but also a friend.”
The Irishman is still in the throes of helping to form a new government in Dublin following February’s general election. “It is hoped this process can be concluded in the near future,” a spokesperson said.
Calviño, from Centeno’s Socialist political group, thanked the Portuguese on Twitter, saying, “It has been a great pleasure to work closely during these last years and I hope we’ll continue to cooperate wherever life takes you.”
Such friendly greetings online paper over policy divisions behind the scenes. Support for the candidates likely will depend on whether other governments agree with their positions on proposals for deeper economic integration among the eurozone countries.
Treasury officials expect France and Germany to back Calviño due to her support for ambitious initiatives such as the eurozone budget.
A Calviño presidency would keep the current balance between party groups and regions among the EU’s top jobs intact. Like Centeno, she hails from a socialist government in Southern Europe.
However, a Spanish socialist, Josep Borrell, already holds another big EU post — that of foreign policy chief. Having two ex-members of Prime Minster Pedro Sánchez’s government in top EU jobs may seem like overkill to other member countries.
And the economic heavyweights don’t always hold sway over the consensus-seeking group. The Netherlands, seen as a bell cow for less integrationist Northern countries, sees Gramegna or Donohoe as taking on concerns of Northern as well as Southern policymakers.
Candidates have been preparing for a race since at least February. Centeno’s departure was widely expected in Portugal where he’s been linked for months with a move to the governor’s office at the Bank of Portugal, which becomes vacant in early July.
Popular and widely respected for overseeing unbroken growth and securing the country’s first budget surplus for decades, Centeno has been a star of the Socialist administration that came to office in 2015.
Yet, in recent weeks, tensions have emerged with Prime Minister António Costa over a €850 million state loan to a loss-making bank in May and, last week, the appointment of former oil company executive António Costa Silva to oversee Portugal’s post-pandemic recovery plan.
A move to the central bank could also raise some resistance from lawmakers in the center-right Social Democrats (PSD), arguing Centeno wouldn’t be independent if he comes straight from the government.
Centeno’s resignation came minutes after the government approved his supplementary budget designed to help the country cope with the impact of the COVID-19 pandemic. According to official forecasts, the economy will shrink by 6.9 percent this year and drive unemployment up to 9.6 percent, from 6.5 percent in 2019.
Centeno’s replacement, João Leão, will present the budget in parliament, where it’s expected to be approved June 19.
As state budget secretary for the past five years, Leão, 46, has worked closely with Centeno and is expected to stick to his predecessor’s commitment to a return to sound finances after the COVID-19 crisis.
“We’re going to get our accounts in order again,” Leão, told reporters in a short statement after his appointment was announced.
Like Harvard alumnus Centeno, Leão, is U.S.-educated. He got his doctorate in economics at Massachusetts Institute of Technology (MIT).
Portugal is pushing ahead with the reopening of its economy, even as the virus makes a recovery focused on Lisbon suburbs. Tuesday saw 421 new cases nationwide, the highest daily increase in a month.
Ivo Oliveira contributed reporting.
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