BRUSSELS – The finance ministers from the 19 countries that use the euro are deciding who should lead their regular meetings, with Portugal’s Mario Centeno widely tipped to take the helm of a group that has been at the forefront of the single currency bloc’s crisis-fighting efforts.
The decision of who will succeed Dutchman Jeroen Dijsselbloem as president of the so-called eurogroup is expected later Monday. Dijsselbloem, who has held the post for nearly five years, has been one of the most high-profile European politicians during a period that saw a number of countries, notably Greece, teeter on the edge of bankruptcy and the euro currency itself come under threat.
Three other candidates are in the frame, too: Luxembourg’s Pierre Gramegna, Slovakia’s Peter Kazimir and Latvia’s Dana Reizniece-Ozola.
Whoever gets the presidency will inherit a eurozone in far better shape than the one that existed during Dijsselbloem’s tenure. The economy is growing strongly, while worries over Greece’s future in the bloc have subsided and the country is poised to exit its bailout era next summer.
All the talk is that Centeno will win out. The outgoing eurogroup president appeared to indicate that it’s a done deal.
“I am president until Jan. 12 and Mario Centeno on Jan. 13,” Dijsselbloem said ahead of the meeting. “Did I say Mario Centeno? Well I really don’t know. It apparently is in my head, apologies.”
A victory for Centeno, who in Portugal has favored an easing of budget austerity policies, has the potential to symbolize a new era for the eurozone, all the more so as he comes from less-wealthy southern Europe.
While eurozone governments still insist that countries must keep their public finances in shape, there’s a greater acknowledgement that austerity has taken a heavy toll people, particularly in countries like Portugal and Greece, and that it could be counter-productive by potentially helping populist politicians with programs that could involve ditching the euro. Following the departure of long-time German Finance Minister Wolfgang Schaeuble, considered the high priest of austerity in the eurozone, a Centeno victory would encapsulate that shift.
Portugal was one of four eurozone countries that had to be bailed out during the region’s debt crisis. In 2011, the country required a 78 billion-euro ($93 billion) rescue after its budget deficit grew too large and bond market investors asked for hefty premiums to lend to the government. In return for the financial lifeline, Portuguese governments had to enact a series of spending cuts and economic reforms. Portugal exited its bailout program in 2014.
Though the strategy may have worked in bringing Portugal’s public finances into better shape, austerity accentuated a deep recession and sharply raised unemployment. Following a backlash against austerity, the Socialist Party came to power in December 2015, with Centeno, a former Bank of Portugal analyst, taking the post of finance minister.
Though the Portuguese government has eased up on the austerity, the economic numbers appear to be heading in the right direction. Portugal’s deficit has fallen to 2 percent, the lowest in more than 40 years, while the unemployment rate is down to an almost 10-year low of 8.5 percent from a record 16.2 percent in 2013.
Ahead of Monday’s vote, Centeno said his aim, should he come out on top, would be to “generate consensus” in the “challenging” period ahead.
“We have showed everyone that we can reach consensus, we can work with other parties, we can work with institutions,” he said. “Portugal is an example of that.”
Achieving that consensus is not always easy given that the governments of the eurozone come from a variety of political traditions with differing mandates and economic agendas. Key in all discussions is the position of Germany, Europe’s biggest economy and the top contributor to the bailouts.
During the crisis, Germany insisted that nations wanting bailouts should implement painful budget austerity policies – something that didn’t go down well in those countries receiving the bailouts. Germany’s views overwhelmed calls for more public spending to stimulate growth and get the bloc’s economies out of recession.
Dijsselbloem was considered a skilled operator in bridging differences and maintaining a consensus over austerity. That was especially the case during the Greek crisis of 2015, which saw the country nearly crash out of the euro before the newly elected left-led government in Athens agreed to a last-minute international bailout.
Ahead of Monday’s meeting, Dijsselbloem, whose Labor Party fared poorly in Dutch elections this year and is no longer part of the coalition government, said that keeping the eurogroup “together and united” should be the primary purpose of the next eurogroup president.
“It’s the only way we take decisions in the eurogroup,” he said.
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