Ire­land’s Dono­hoe sets out to be the bridge to unite a di­vided euro­zone

New Eurogroup pres­i­dent is in a unique po­si­tion to speak to both north and south,

The Daily Telegraph - Business - - Business - writes Lizzy Bur­den

Abun fight in Brussels is on the cards as di­vided lead­ers try to thrash out a deal on the EU bud­get for the next seven years and a €750bn (£676bn) virus re­cov­ery fund.

Into this fray steps Paschal Dono­hoe, the new pres­i­dent of the Eurogroup, made up of fi­nance min­is­ters from the 19 coun­tries that use the euro.

He is likely to po­si­tion him­self as the bridge be­tween the fis­cally con­ser­va­tive north and the south­ern coun­tries that were bailed out in the euro­zone cri­sis and have been hard­est hit by the pan­demic. It is the same ap­proach that won the Irish fi­nance min­is­ter his po­si­tion in Europe and is one rea­son the Irish have been ex­tend­ing their grip on the con­ti­nent’s in­sti­tu­tions: they have man­aged to build ties with the Baltic and Benelux coun­tries in the af­ter­math of Brexit.

Dono­hoe’s com­pa­triot Philip Lane, the for­mer Irish cen­tral bank gov­er­nor, is the chief econ­o­mist of the Euro­pean Cen­tral Bank, while the for­mer Irish en­vi­ron­ment min­is­ter Phil Ho­gan is the Euro­pean trade com­mis­sioner.

Af­ter weeks of in­trigue Dono­hoe, a Dubliner, on Thurs­day won a se­cret bal­lot of the 19 min­is­ters in the Eurogroup, beat­ing the favourite, Spain’s Na­dia Calvino, whom the EU’s four big­gest economies backed. She claimed an un­named mem­ber re­neged on their pledge to vote for her.

His vic­tory was sig­nif­i­cant in part be­cause he will have some in­put on steer­ing the group through what is ex­pected to be a re­ces­sion of his­toric depths – the euro­zone econ­omy is set to con­tract by a record 8.7pc this year. How­ever, Dono­hoe has also strongly crit­i­cised deficits, in­creases in gov­ern­ment spend­ing and a po­ten­tial EU dig­i­tal sales tax, of which Calvino was a strong pro­po­nent.

“I’m deeply con­scious the ci­ti­zens of Europe are look­ing at where their na­tional economies now stand, are look­ing at the Euro­pean econ­omy, and have be­come con­cerned, have be­come fear­ful again for their fu­tures, for their jobs and for their in­comes,” he said.

“As great as the chal­lenges are, and I know how deep they are, I am ab­so­lutely con­fi­dent that with my col­leagues in the Eurogroup, with our gov­ern­ments, we have the abil­ity and we have laid the foun­da­tions to over­come these chal­lenges.”

The in­flu­ence of the Eurogroup pres­i­dent has waned un­der the past two in­cum­bents. The role now is more about build­ing con­sen­sus in a group that has be­come no­to­ri­ous for be­ing con­stantly di­vided.

As Brussels vet­eran An­drew Duff, of the Euro­pean Pol­icy Cen­tre think tank, puts it: “The com­plex­ity of the bud­getary prob­lem of the EU is so great that Dono­hoe’s go­ing to find it dif­fi­cult to be a bridge be­tween the di­vided gaps and there are plenty of them. There are the poor and the rich, the fed­er­al­ist and the na­tion­al­ist, the farm­ers and the pro­gres­sives, there’s east ver­sus west, north ver­sus south, and the in­sti­tu­tional clash be­tween the com­mis­sion, coun­cil and par­lia­ment.”

But Ire­land’s po­si­tion as a “poster child” for the coun­tries that faced the worst of the euro­zone debt cri­sis then man­aged to use their bailouts – how­ever painful – to re­cover, gives it an abil­ity to re­late to both pe­riph­eral and more fis­cally con­ser­va­tive mem­bers.

“It can speak to both sides, which not many are in a po­si­tion to do,” says Fed­erico Santi of the Eura­sia Group.

“At the same time Ire­land does share many of the char­ac­ter­is­tics of the north­ern Baltic coun­tries, in terms of hav­ing a strong pref­er­ence for a low-tax regime and be­ing a small, com­pet­i­tive coun­try with a fairly open econ­omy.” Santi adds that this open­ness has at­tracted large multi­na­tional firms to Ire­land, giv­ing it a global role, hence in part Ho­gan’s ap­point­ment as trade com­mis­sioner.

Cyn­ics also claim that the ad­vance of the Irish in the EU is the bloc’s way of show­ing Bri­tain what it’s miss­ing, but as Santi points out, Ire­land is one of the EU coun­tries most ex­posed to the risks of Brexit go­ing wrong.

No small task awaits Dono­hoe: per­suad­ing the Eurogroup’s net con­trib­u­tors to open their cof­fers while ask­ing its net re­cip­i­ents to ac­cept con­di­tions on the help they get. He may well need the luck of the Irish.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.