Finance

With Eurogroup, Donohoe wins the tough job of economic recovery

Paschal Donohoes prize for clinching the Eurogroup presidency: the daunting task of leading an economic recovery from the coronavirus while bridging a north-south divide on fiscal policy.

The Irish finance minister won the job Thursday evening after two rounds of secret ballots from the 19 eurozone countries. He saw off competition from Spains Nadia Calviño from Luxembourgs Pierre Gramegna.

Donohoe officially begins a two-and-a-half-year term on Monday, replacing Mário Centeno of Portugal as the agenda-setter for the currency club.

His start comes during a potentially tense series of talks among EU leaders over the European Commissions proposed €1.85 trillion budget-and-recovery package.

While those discussions are primarily for the EU27 government chiefs, Donohoe has plans to make the Eurogroup a forum for working out the details.

Irelands win also showed small EU countries are willing to band together against the larger powers.

At monthly meetings behind closed doors, the Eurogroup ministers historically have worked out past sovereign debt crises including the Greek bailouts, and more recently a €540 billion emergency package to protect eurozone governments, companies and workers from ruin during the pandemic.

To win the chairmanship, Donohoe needed a majority of at least 10 countries — without at least initial backing among the eurozones biggest economies, as Germany, France, Italy and Spain all lined up behind Calviño.

The 45-year-old Dubliner nonetheless garnered support from colleagues in his center-right European People Party (EPP) along with Northern European nations that opposed the Socialist Calviños bid, which represented a step toward tighter integration of economic policies.

EPP victory

Donohoes victory strengthens the EPPs role in the EU after the party lost their near-total grip on institutional power last year.

The conservative group went from holding the presidencies of all three major institutions — the Commission, Council and Parliament — to just one, the Commission post now held by Ursula von der Leyen.

Brussels is now neatly divided in party influence, with the EPPs two jobs balanced against the social democrats holding the Parliament presidency and the EUs chief foreign policy job. The liberal Renew Europe Group, of which Gramegna is a member, holds the European Council presidency.

Irelands win also showed small EU countries are willing to band together against the larger powers. The outcome potentially foreshadows next weeks summit meeting on the budget, with fiscal conservatives perhaps growing uneasy with the huge sums of money that the Commission proposes to borrow.

There was no talk of division in Donohoes victory press conference.

The Irishman pledged to use the informal group as a place for all EU finance ministers to hammer out how to operationalize the spending package.

“I will be working very hard with all of my colleagues to ensure that the Eurogroup plays a very constructive and positive role in reaching an agreement on the recovery fund,” he said by videoconference from the ministry in Dublin.

Ideology

Calviños election would have signaled unprecedented momentum for greater federal integration while the support for Donohoe suggests a desire to tap on the brakes.

The Spaniard told her Eurogroup colleagues that if elected she would strive to deepen the eurozones outstanding economic and banking safeguards.

Spains Economy and Business Minister Nadia Calviño | John Thys/AFP via Getty Images

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