Donohoe’s new role puts State at centre of debate over EU’s future

Minister for Finance to lead Eurogroup as talks over euro zone rescue reach height

Minister for Finance Paschal Donohoe was chosen as the candidate who could bridge divides. Photograph: AFP via Getty

Minister for Finance Paschal Donohoe was chosen as the candidate who could bridge divides. Photograph: AFP via Getty

 

The appointment of Paschal Donohoe by his fellow euro-zone finance ministers to lead their powerful Eurogroup for the next 2½ years puts Ireland at the centre of debates that will shape the future of the European Union.

The timing is significant. Donohoe takes the presidency as negotiations over a vast rescue package aimed at saving the bloc from a recession of historic proportions work up to a fever pitch. 

On the table is a proposal to fund the initiative by jointly guaranteed borrowing, a step towards further integration of the bloc that supporters argue would fix flaws in the euro zone but that a group of conservative detractors fear could end up burdening their taxpayers with debt. Germany has joined France and a belt of Mediterranean countries to insist that an unprecedented situation requires an extraordinary response.

Donohoe was chosen as the candidate who could bridge such divides. This reflects the high regard in which he is held by his fellow finance ministers. It’s because he had the support of the EU’s big right-wing political grouping the European People’s Party, and because smaller member states backed him to stop larger ones having overbearing power. But it’s also because of the country he represents. 

Ireland doesn’t fit neatly into either camp of the economic debate, siding with the Mediterraneans when it comes for the need for joint borrowing, but backing up the Netherlands and Luxembourg as a defender of free trade and opponent of efforts towards common EU corporation taxes.

It matters as well that Ireland is a country that once took a bailout but that fought its way back to growth, making it an EU success story but also allowing for empathy with the experience of struggling economies. 

One observer describing the appeal of an Irish candidate for the post used the phrase “Siberia teaches”, meaning that a certain wisdom is granted to those who have survived through the cold Russian winter of the troika.

This isn’t enough alone to win over the southern capitals. Some are bitterly disappointed at the defeat of the runner-up, Spanish finance minister Nadia Calvino, an economist with experience working within the EU institutions who Mediterranean countries believed would help champion their crusade for a unified and generous response to the crisis, and who would have been the first woman to hold the post.

In Donohoe’s address after his election, he referred to his fellow finance ministers as “my friends and colleagues”, making clear he would bring the full force of his gentle, matter-of-fact patter to the task of finding common ground in Europe.

Super finance minister

Eurogroup presidents become a kind of super finance minister, continuing their duties at home while setting the agenda for discussions with their euro-zone counterparts, chairing the talks, acting as co-ordinator and becoming the public voice of the group in the press conferences that follow the regular meetings.

Outgoing president Mario Centeno described the role of the president as “a co-ordinator, but not a passive one. It is a co-ordinator with an agenda, to strengthen integration and protect the euro.”

The power of the role depends upon the ability of the person to wield it. The Eurogroup is largely an informal institution, and comes into its own during crises, when it is forced by circumstance into a decisive position to combat threats to the single currency.

With Donohoe in the role, Ireland now has a constellation of figures in key posts in what could be an era-defining moment in history. With a seat on the United Nations Security Council, commissioner Phil Hogan in the key role of EU trade chief, and even Dr Mike Ryan over at the World Health Organisation, the stage is set for a moment of global Irish influence.

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