Cause and Effect in European Politics and Law

Juncker: the Next Eurogroup Chief Should Treat Eurozone and Non-eurozone Members Equally

Adelina Marini, January 11, 2013

The next Eurogroup chief for sure will speak a Benelux language (French, Dutch or German), said the Prime Minister of Luxembourg and Eurogroup President for only a few days more Jean-Claude Juncker during a farewell hearing in the economic affairs committee of the European Parliament on January 10th. He refused to elaborate on the issue that has been bothering the European public domain for almost a year now. In June the veteran politician asked to leave his post after his term as president of the group of the eurozone finance ministers expired, but because of the lack of a successor or in fact a lack of desire back then the EU leaders to deal with administrative issues forced Mr Juncker to accept leading the Eurogroup by the end of 2012. This time, he seems determined and said he would resign for certain, which means there will be a new president.

The names brought up so far were of the minister of finance of France, Pierre Moscovici, and of his German counterpart Wolfgang Schäuble, who would have made a worthy successor to the colourful Juncker, but the German refused. The name that is now in the public domain is that of the young minister of finance of the Netherlands, Jeroen Dijsselbloem. The German economic daily Handelsblatt claims that the born in 1966 Dijsselbloem will be proposed for the post at the first meeting of the Eurogroup on January 21st. According to the newspaper, the Dutch enjoys special support from Germany which believes that the next leader of the group should come from a country with a financially stable government, to be a member of the eurozone and to maintain the maximum credit rating of AAA. Handelsblatt also writes that Dijsselbloem has already started a tour in European capitals and has already met European Council President Herman Van Rompuy.

But to sit in Jean-Claude Juncker's chair is an extremely challenging task, especially with Dijsselbloem's CV, who is a former civil servant. He is a member of the Dutch Labour Party and is a minister of finance from November 5th last year. He was a member of parliament from 2000 until 2012, but in that capacity of his he mainly worked on issues related to youth, special education and teachers. To compare, Jean-Claude Juncker is the longest serving prime minister in the EU - since the 20th of January 1995. He was a minister of finance, of the economy, he chaired the Council of the EU twice during the Luxembourg rotation presidencies (during one of which Bulgaria signed its accession treaty). Juncker is one of the key architects of the Maastricht Treaty, due to the above capacities of his, and is deemed responsible for many clauses behind the Economic and Monetary Union (EMU).

Junker is known for the sharpness of his speech and mind, as well as with his remarkable leadership skills. He is one of the few politicians for whom could be said that they are European leaders. It is no accident that during his hearing in the economic affairs committee in the European Parliament on January 10th, a MEP asked him whether the position of a European Commission chief or the chair of Van Rompuy wouldn't have suited him more. According to Juncker, however, the Eurogroup is a sufficiently responsible position which has its pluses and minuses. Juncker is a favourite of journalists, although quite often they get not very nice and direct answers to questions the Luxembourg premier does not like. Will Dijsselbloem handle the task, especially when he will have to face the very influential and with not less sharp and fast mind than that of Juncker's German Finance Minister Wolfgang Schäuble? We are yet to see.

Compulsory minimum wage in the eurozone

May be because the meeting was a farewell one, many of the skills Juncker is loved for both by media and MEPs, stepped aside to give ground to emotions and even nostalgia, but nonetheless Juncker left some recommendations, although he explicitly said he did not wish to give any pieces of advice to his successor, aside from one or two: always to treat equally the eurozone and the non-eurozone countries and to know that Europe is something more complex than it looks. A fact which, in Juncker's words, is often ignored and that is true - by media, politicians, societies.

In the beginning of the hearing, Juncker made a very long and not quite orderly review of the past year, but he refused to review the almost 8-years of his presidency of the Eurogroup, because, as he put it, in my head pop up only the delays and the wrong decisions. In his words, the European Council in December was very disappointing against the backdrop of the in fact pretty good 2012 for the eurozone. Good because the zone of the single currency did not break up, as there were such forecasts. The fiscal compact has been adopted and entered into force on the 1st of January 2013, but is still not ratified by key members, one of which is Luxembourg, together with Belgium and the Netherlands. And in his home country it is not ratified because of the resistance of the Greens party who are against the "German diktat".

By the way, Juncker is famous with his acrimonious remarks and exchange of words with Germany - the big neighbour. He underscored, however, that he did not share the Greens' position, but admitted that for small countries the implementation of the compact would be a tough task mainly because of the lack of sufficient experts who could be tasked to review budgets of other member states and also to exercise surveillance. "But we will manage", he assured. Another important achievement in 2012, according to him, was the agreement for the single supervisory mechanism (SSM) for the banks. "Who could have thought 14 months ago that we will have something like this?", he asked. And in spite of that, although it has some flaws, the report of the four presidents (mainly led by Herman Van Rompuy) was good but was not adopted in its entirety. Instead, the leaders preferred the short-term decisions at a time when the whole world was watching us, which is a fact often forgotten, Jean-Claude Juncker added. The Americans and the rest are constantly asking us in what direction are we going to go in the next decades.

He recalled that Luxembourg spoke of enhancing economic policies coordination as early as in 1997 when he was an economic minister and a chief of the European Commission was another famous politician from Luxembourg - Jacque Santer. We have been repeating since then, Juncker recalled, that we cannot go on with a system where we have a strong arm in Frankfurt and a feeble, underdeveloped arm for economic policy. Now, those who then refused are the strongest voices who call for that. Juncker did not name those forces but offered the audience geographic hints - those are a neighbour of Luxembourg and a small kingdom not far from Luxembourg. The countries that fit best that description are Germany and the Netherlands.

And although Juncker's Christian-Social People's party belongs to the European People's Party's family (EPP), he touched a favourite subject of the European Parliament, saying that one of the flaws of Rompuy's report is that it lacks social dimension of the eurozone. According to him, it is necessary all the eurozone countries to agree on introducing a compulsory minimum wage because, otherwise, the support of the working class will be lost. Separately, a basis of minimum social rights for workers should also be proposed.

Juncker praised the adoption of the single supervisory mechanism for the banks but expressed fears regarding the planned direct recapitalisation of banks through the permanent bailout fund of the eurozone (ESM). In his words, a big question mark is related to the inheritance - will the ESM be allowed to recapitalise banks supplying narrowly the provisions that apply to it or we should limit the ESM to new problems that might occur in the future. Juncker's position is that a possibility of retroactivity must be agreed for the mechanism because otherwise it will lose its sense. It's not that we should ignore the wrong behaviour of some countries but the ESM should be a tool box that sould be used for recapitalisation of banks. Juncker hoped that a well articulated decision on the issue will be taken in the first quarter of 2013.

The programme countries should be rewarded

One of the questions Juncker was most frequently asked by the members of the economic committee of the Europarliament was about the consolidating measures in the troubled countries. The issue proved friendly for the premier of Luxembourg, because he again had an opportunity to send a cannonade of words against Germany. For him, the division of Europe into north and south was absolutely groundless and was done mainly by the countries on that axis. As the countries to the south, those to the north, if they dig deeper into their books, they will see that they have not always been as virtuous as they claim. He recalled that Luxembourg was the only eurozone country that has never violated the Stability and Growth Pact, while the Netherlands, for instance, did that on two occasions.

Juncker said that he was a supporter of a minority school in the Eurogroup, according to which the countries that need huge structural adjustments, like for example the pigs (Portugal, Ireland, Italy, Greece, Spain), should be compensated for their efforts. I'm a big friend of Greece, he added, unlike a big neighbour of ours. We should all remember what these countries went through in order to fulfil the criteria for eurozone membership. And as Europe is solidarity, it is no surprise that Juncker is among the supporters of a common eurozone budget - one of the elements in Van Rompuy's report and Jose Manuel Barroso's blueprint - which, however, was left without attention at the December EU summit. A mechanism that could absorb shocks is needed and this job cannot be done by the bailout funds of the euro area, he added.

The meeting ended after an hour and 40 minutes with the irritating recalling by the committee chair, Sharon Bowles (ALDE, Britain), the planned time to be respected. Either the time was not enough or the MEPs had too much questions, but nonetheless the meeting ended with applause and multiple statements that Juncker will be missed. Bowles herself said she will miss his humour and sharpness. She rewarded him with a medallion that was supposed to remind the veteran what it was to appear in the Europarliament. Something he will hardly need after all those sleepless nights in the past 3 years, numerous meetings of the Eurogroup until the early hours of the day, the telephone and video conferences, the disputes, the writing of statements, declarations, documents. At the final news conference after the hearing in Brussels, Jean-Claude Juncker looked tired and somewhat isolated from the upcoming events. Whoever will take his place, will feel pretty uncomfortable in his chair.