New Euro Group Head may be Announced Next Week

A battle is shaping up to replace Jean-Claude Juncker as the head of the Euro group of euro zone finance ministers. Juncker has held the largely thankless post since Jan 2005. His current term ends at midyear. His tenure was already extended and now he says enough is enough.

The position has some times been overshadowed by the EU President Van Rompuy and EC President Barroso. The Euro group head convenes and leads meetings and influences the agenda. That is the formal power structure, but the informal one is often the determining one.

The candidacy of the first three potential successors to Juncker have each faltered. Italian Prime Minister Monti, who is also the finance minister, does not seem credible because his fellow country man Draghi is the head of the ECB. Spain's finance minister De Guindos seemed to take himself out of the running, after a local paper said he was the lead candidate. The candidacy of Finnish Prime Minister Katainen has reportedly been undercut Germany objections that office should be filled by a finance minister.

A year ago, it looked as if the Bundesbank head Weber was going to replace Trichet at the ECB. He resigned and left Merkel in a lurch. Behind the scenes Merkel appears to be trying the secure the position for a German. This is for nationalistic as well as ideological reasons.

German Finance Minister Schauble is Merkel's candidate. His tough line on the debtor nations has estranged him in the periphery, but has won support among creditor nations. That said, it is difficult to envisage strong opposition to a German candidate.

A decision could come as early as the March 30th European finance ministers meeting Copenhagen.

There are two other top positions are part of the horse trading that is part of the European modus operandi. The first is the replacement for Gonzales-Parmo, whose term on the ECB board expires at the end of May.

The second is the presidency of the European Bank for Reconstruction and Development. The current term of Germany's Thomas Mirow ends in July. Germany is pushing for Mirow to be granted another term. France surprised many by proposing its own candidate earlier this month, a vice president of the ERBD, which was perceived as unseemly by some in Europe and prompting Britain and Poland to propose their own candidates.

At the risk of being falling victim to nationalism, it is noteworthy that the US is the largest shareholder of the ERBD (10%). An American is most unlikely to be named president. Noticeable by its absence, many observers are wondering aloud when the US will nominate a candidate to replace outgoing World Bank president Zollick.

Of course, in the modern world nationality should not be a determining factor and despite all the official denials, it still does.
New Euro Group Head may be Announced Next Week New Euro Group Head may be Announced Next Week Reviewed by Marc Chandler on March 22, 2012 Rating: 5
Powered by Blogger.