Handover occurs as focus shifts to ESM bailout fund
The views of new eurogroup president on Irish bank debt remain unknown
Despite a lukewarm response from France, the election of the Dutch finance minister Jeroen Dijsselbloem as eurogroup president had been expected since he secured the support of German finance minister Wolfgang Schäuble and outgoing president Jean-Claude Juncker, Luxembourg’s prime minister, on Friday.
Last week Dijsselbloem sought – and secured – the support of the Minister for Finance, Michael Noonan.
It is a name that is likely to figure regularly over the next few months as Europe continues to try to extricate itself from crises.
Dijsselbloem will assume the role at a comparatively tranquil time for the euro zone. For the moment at least, the threat of an immediate solvency issue from a euro zone member state has receded.
Last night’s meeting was the first for months at which Greece did not top the agenda. The fate of Cyprus is as uncertain as ever, amid growing frustration from Europe and the IMF with the present government’s approach to its debt crisis. But its bailout has been delayed until the second half of March after elections.
With country-specific issues out of the limelight for now, Dijsselbloem takes the helm just as attention turns to the tricky business of giving the ESM bailout fund new powers to rescue banks.
Debate on that topic began in earnest last night after months of prevarication, with the contentious issue of “legacy” assets under the spotlight.
This is crucial for Ireland. Noonan says banks still functioning should be eligible for direct aid from the fund, though banks in wind-down mode would not be. How this debate concludes will have a important bearing on the scope of any ESM intervention in Bank of Ireland and AIB.
With Juncker having been in charge since 2005, the changing of the guard will be closely watched. The eurogroup, traditionally an informal grouping, has steadily become the prime policy-making forum for tackling the debt crisis.
Some commentators predict the emergence of a two-speed Europe eventually, with the eurogroup at its core.
Dijsselbloem (46) became Dutch finance minister barely three months ago, having been an MP since 2000. His views on the Irish bank debt issue are unknown.
Noonan was quick to express support for the new man yesterday, noting his links with Ireland – Dijsselbloem has a graduate degree from University College Cork.
Noonan also welcomed the fact that the new eurogroup president, like his predecessor, comes from a relatively small state and noted there is a “certain balance” in coalitions with smaller countries.
For some, however, the appointment of a Dutch chairman raises the spectre of a dominant northern alliance within the eurogroup, one that favours fiscal austerity.
The Netherlands was one of the three countries, along with Germany and Finland, that publicly questioned the conclusions of last June’s summit, noting that “legacy assets should be under the responsibility of national authorities”, in a statement last September.
Whatever about the past, it is clearly in Dijsselbloem’s interest to secure consensus on the mechanism of the ESM fund – and sooner rather than later.