Personnel problems
July 9, 2012
Jean-Claude Juncker, president of the Eurogroup, actually wanted to throw in the towel at the end of June.
Last November, the prime minister of tiny Luxembourg announced his plans to quit, saying the job was too stressful. After almost eight years as head of the 17-member eurozone, Juncker had had enough. "I work four hours a day for the Eurogroup. I'd rather have that time for myself," said Juncker following the most recent EU summit last week.
Juncker, who took office in 1995, is the longest serving prime minister in the European Union. Twenty years ago, he helped co-found the common euro currency. The oft grumpy-looking Juncker has the ability to mediate between the Eurogroup's large and small, rich and poor countries.
In recent years, Juncker has allowed himself to be convinced by several other eurozone leaders to extend his term as head of the Eurogroup. Last week, lacking any suitable candidate to replace him, they again asked the reluctant Luxembourger to stay on for another year. Juncker relented, but only agreed to another six months.
His condition: that Luxembourg's central bank chief, Yves Mersch, fill the current vacancy on the executive board of the European Central Bank. His request was denied, partly due to resistance from Spain, the country to previously occupy the position. Juncker has said he refuses to continue without a firm commitment for his friend Mersch.
Luxembourg ultimatum
A spokesman for Juncker reiterated this condition on Friday, and the meeting of the Eurogroup on Monday is expected to come up with a solution.
Luxembourg has also been pushing for the German Klaus Regling to take over the management of Europe's permanent bailout fund, the European Stability Mechanism (ESM). Until now, Regling has headed up the provisional bailout fund, the European Financial Stability Facility. If the issue is not resolved on Monday, Luxembourg says it will delay the ESM, due to come into effect by the end of July.
For any orderly crisis management to continue, a functioning Eurogroup is absolutely essential, so Juncker has agreed to stay on as head until July 16. But after that date the 57-year-old, who has been plagued by health problems, said his job will finally be done.
Complex solution sought
As is usual in the European Union, personnel problems are part of a larger issue. All the member states want to somehow be included and have their say. And that makes the whole thing so difficult.
For months, the decision over Juncker's successor was postponed again and again. German Chancellor Angela Merkel campaigned for her finance minister, Wolfgang Schäuble, but France's new president, Francois Hollande, refused.
And it's not just the French who now doubt that Schäuble, as a representative of the largest contributor to the rescue fund, would make a good mediator. After Spain was unable to make a suitable proposal for the head of the ESM, this post also remains vacant.
Wrangling in the ECB
Spain, in turn, does not want to give up the post on the executive board of the influential European Central Bank, which has been vacant since March. Germany and Luxembourg have argued that with an Italian president of the ECB and a vice president from Portugal, the eurozone's troubled economies are already well represented.
Luxembourg's Mersch is expected to be an advocate of stability, and Spain has argued that with the appointment of German Werner Hoyer to the top job at the European Investment Bank in January, the followers of stability and austerity are also well represented. France, on the other hand, is peeved, due to the recent decision to appoint a British candidate over the French applicant to the top position at the European Bank for Reconstruction and Development.
Compromise in sight?
Whether this tangle of personnell interests can be unraveled by the time finance ministers meet on Monday is unclear. There have been no official statements on the topic from EU headquarters in Brussels, or from any of the continent's other capitals.
All that remains is speculation. EU diplomats have suggested a compromise candidate for the Eurogroup presidency: Estonia's Finance Minister Jürgen Ligi. Ligi, from a small, relatively stable country in northern Europe, might even convince the Germans.
The former favorite, Germany's Schäuble, seems to have lost his support. If chosen, he would be expected to give up his job as German finance minister, following Eurogroup discussions in November in which EU President Herman Van Rompuy called the position a "full-time job" based in Brussels. Schäuble had thought he would be able to lead the Eurogroup on the side, an assumption that exasperated Juncker, who saw it as diminishing his years of service.
Author: Bernd Riegert / cmk
Editor: Gregg Benzow