Pierre Gramegna, future boss of the MES?
Candidate for the general management of the European Stability Mechanism, the former Minister of Finance will be Monday, during an informal vote of the Eurogroup, if he has a chance to reach this post.
Europe
Candidate for the general management of the European Stability Mechanism, the former Minister of Finance will be Monday, during an informal vote of the Eurogroup, if he has a chance to reach this post.
Former Luxembourg finance minister Pierre Gramegna (DP) is trying again to land a top international job. After two failed attempts to become head of the Eurogroup, the body of eurozone finance ministers, the DP politician is keen to take up another monetary union leadership position: that of head of the European stability (MES).
On Monday, during the Eurogroup meeting in Brussels, a first informal vote will take place between the 19 members of the Eurogroup to find a potential successor to Klaus Regling, who has led the institution since its creation in 2012.
Based in Luxembourg, its mission is to support over-indebted member states of the euro zone by granting them loans and guarantees conditional on reforms. The ESM is arguably the most visible part of the so-called ‘euro bailout’, which was put in place during the euro and Greece crises to stabilize the eurozone.
For Pierre Gramegna, who has retired from Luxembourg political life, the stakes are high. The former finance minister has already flirted several times with leading European posts. In 2017 and 2020, he failed to take the lead in the Eurogroup, twice because he failed to muster much support for himself. In 2020, he only obtained the votes of his two Benelux partners. A third defeat would be a real snub.
Slight advantage for Buti
The other three candidates for the post are the Italian Marco Buti, the Dutchman Menno Snel and the Portuguese João Leão. Both men have government experience, but the Luxembourger is by far the most experienced candidate among the four. However, it is not certain that this is enough to gain access to the head of the MES.
Especially since the selection procedure is very unpredictable: unlike the election for the presidency of the Eurogroup, each country does not have an equal vote. The votes are in fact calculated according to the share of each country in the capital of the ESM. The candidate who gets 80% of those votes then becomes the leader. Everything therefore depends on the preferences of the four major countries of the euro zone, namely Germany, France, Italy and Spain. Marco Buti therefore leaves with a slight advantage.
“Slightly preferred” for German media
But nothing is yet decided, heard in Brussels. A first vote must certainly take place on Monday, but a final decision is unlikely. According to Eurogroup sources, the ideal would be to halve the number of candidates – the two candidates with the least support would be kindly priced to withdraw their candidature after the votes. There is then time for diplomacy and negotiations until the deadline: the meeting of the Board of Governors of the ESM in mid-June, of which the 19 finance ministers of the euro zone are also members.
“Pierre Gramegna has been invited by several Member States to apply for this post”, indicates the Ministry of Finance, which believes that the DP politician has every chance. The German media the same as “slight favorite”, since the German federal government would have come out in favor.
Borrowing under the ESM seems politically toxic to many governments
Economist Nils Redeker
Pierre Gramegna is indeed considered uncontroversial. On the other hand, the Dutch are seen as strong supporters of a strict austerity policy on euro-related issues, which makes it difficult for Menno Snel to vote for governments in southern Europe. Italy has always struggled with the ESM, which is seen in Rome as synonymous with European austerity policy. This is why Rome’s candidacy is seen as something a bit odd. The fact that the country has not yet been able to ratify the latest reform of the Montreal institution how controversial the MES is in Italy.
The MES: a catch-all institution?
However, the MES is not only controversial in Italy. Throughout southern Europe, the institution bears the scars of austerity policies. The post-Covid-19 recovery plan created during the pandemic also questions the need for the ESM as a crisis instrument. Because the RRF fulfills a similar role and at the same time is much less controversial: to receive money from it, governments themselves can draw up reform plans, which are then scrutinized by the European Commission. In addition to loans, the RRF also provides grants.
It is indeed only a prestigious position for Pierre Gramegna, which will have little importance for Luxembourg.
Sven Clement (Pirate)
“The ESM has not been granted new financial aid to member states since 2015,” explains Nils Redeker, economist at the Jacques Delors Centre. For him, the reason is clear: “Contracting credits from the ESM seems to be politically toxic for many governments. We saw it, for example, during the pandemic. Although some countries have been under considerable financial pressure, they have completely ignored ESM credits”.
For Nils Redeker, the problems of the MES cannot therefore be solved without fundamental reforms: “For reasons, the institution turns out to be little used. In the context of the war in Ukraine and the energy crisis, we are currently talking about many new funding opportunities at EU level. But the MES is not mentioned at all in this debate”. For the economist, it would therefore be wise to integrate the dormant expertise and resources of the MES into the European Commission under a new name.
Sven Clément (Pirate) wonders, however, “if it really makes sense for the government to spend diplomatic capital on this. It is indeed only a prestigious post for Pierre Gramegna, which will have little importance for Luxembourg”.
This article first appeared on wort.lu/de
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