Challenges as Europe’s top jobs are filled

Ireland must do all it can to prevent being caught in Europe’s political slow lane as the leading contenders line up to run the EU and European Cental Bank, writes Kyran Fitzgerald.

Challenges as Europe’s top jobs are filled

Ireland must do all it can to prevent being caught in Europe’s political slow lane as the leading contenders line up to run the EU and European Cental Bank, writes Kyran Fitzgerald.

Europe’s leaders have finally come up with the names of the people they would like to see filling the top jobs across the union for the next few years.

As far as Ireland is concerned, three of those jobs really matter: the presidency of the European Commission; the presidency of the Council of Ministers; and last but certainly not least, the presidency of the ECB.

It was clear for some time that the frontrunner for the commission job, the centre-right German MEP Manfred Weber had failed to gain sufficient traction. The baton for a while appeared to pass to the Dutch socialist Frans Timmermans, a straight-talking politician.

However, he was knocked off course by an alliance of rightist east European leaders and western European politicians from the centre-right European People’s Party, which includes Fine Gael.

Mr Timmermans had led the charge against the Hungarians and Poles over clampdowns on the opposition by their governments. He effectively suffered because of his determination that EU countries — many in receipt of generous transfers — should stick by the basic liberal principles promoted by the EU.

The emergence of Ursula von der Leyen as a nominee to head the commission has caused surprise — and not a little disquiet in Germany itself.

Ms der Leyen was once seen as the likely successor to Angela Merkel as chancellor, but her reputation has tanked since she became defence minister several years ago.

She has recovered some ground, securing significant extra funding for the military, this year, after a series of scandals — although none were personal to her.

The German social democrats and elements of the media are furious over her appointment, which is seen as a classic deal crafted by chancellor Merkel.

Ms der Leyen comes from a political patrician background.

Her father, Ernst Albrecht, once served as head of the EC’s Competition Directorate before being appointed as prime minister of the German state of Lower Saxony.

The commission certainly needs a bit of a jump start after the bumpy tenure in office of the bibulous, if politically shrewd, Jean-Claude Juncker.

While its core role is as the EU’s civil service, a strong commission can make a real difference. This requires leadership at the top.

In 1984, Europe had drifted under the dreary presidency of Gaston Thorn, another one of the Benelux bunch which tends to bag the top jobs.

Enter Jacques Delors who gathered a strong team around him including the Briton Arthur Cockfield and Irishman Peter Sutherland. Mr Delors set in train the single market project, which in turn, helped to propel the Irish economy to a new place on the back of US investment attracted by a more vibrant Europe.

Mr Delors pushed through his vision of a “Social Europe”, helping to win over support from the political left while gradually alienating Margaret Thatcher — with the consequences we are now living with.

The incomer — Ms der Leyen, if she secures the backing of sceptical MEPs, faces a huge set of challenges.

Germany’s economic locomotive is creaking as demand in China and other emerging economies stalls and trade wars threaten.

A strong German economy is vital to broader European prosperity. Without it, the Germans will simply shrink back from their commitment to the broader continental cause, pulling their wallets tight to their chests.

Since early 2018, the relationship between the US and its European partners has been fraught. Last summer, Mr Juncker travelled to the US capital and schmoozed his way out of a confrontation with US president Donald Trump. The problem was postponed — but not dealt with.

The chic and understated Ms der Leyen, if nominated, will have to display some steel in standing up to president Trump and his fluctuating team of underlings.

The news that the Danish government is reappointing Margrethe Vestager to the commission has been widely welcomed. Ms Vestager could turn out to be a key lieutenant.

Margrethe Vestager
Margrethe Vestager

She has been an active competition commissioner, cracking down on anti-competitive behaviour with more vigour than is the case with her US counterparts.

Ms Vestager has stood up to the mighty technology sector battalions, even if her sanctioning of Apple over its tax avoidance practices has caused a degree of embarrassment in Government Buildings over here.

Ms Vestager, who was tipped for the top job herself, is likely to be a very strong force in the next commission, ready to back the new EU president should she — or perhaps he — be really willing to roll up their sleeves and embark on a new wave of reform.

A US-EU trade war combined with a possibility of a disorderly UK departure threatens a disruptive recessionary downturn that could expose further fissures across the eurozone, in particular.

The nomination of the IMF head and former French finance minister Christine Lagarde to head up the ECB caused surprise as Ms Lagarde had been mentioned in connection with the commission job.

Certainly, she would be well capable of filling Mr Delors’ large shoes. But now she is headed instead for Frankfurt.

Despite quibbles about a lack of a background in finance, Ms Lagarde’s near certain arrival is a source of much relief.

She is likely to emerge as the leader among central bankers. The head of the US Federal Reserve, Jerome Powell — who is a lawyer by background like Lagarde — does not have the Frenchwoman’s air of authority, easy grace and communication skills.

The great fear among centre-left apostles and those from heavily indebted countries such as Ireland was that a more hawkish figure such as a German central banker would take charge at the ECB.

This threat has disappeared for the next five years, almost certainly.

Quantitative easing has its critics and many argue with force that it has promoted a credit bubble, but few question the decisions of the outgoing ECB president Mario Draghi.

Mr Draghi is credited with nothing less than “doing all it takes” to save the euro and economic and political disaster across Europe. Ms Lagarde’s nomination is not universally popular, however.

ECB policymaker Benoit Coeure defended on Sunday her nomination, saying that she was “uniquely qualified”.

Ms Lagarde has faced criticism that she is not a trained economist since European leaders tapped her last week to replace Mr Draghi.

“Christine Lagarde is uniquely qualified to lead the ECB at a time when challenges are both internal and external to the eurozone,” Mr Coeure told journalists on the sidelines of an economic conference in southern France.

“She knows how the global economy works. She knows how Europe works. And she knows how to talk to financial markets,” he added.

French finance minister Bruno Le Maire had earlier said that European finance ministers need to find a compromise candidate to replace Ms Lagarde as the head of the IMF.

European leaders nominated Ms Lagarde last week, raising the question of who would in turn replace her at the IMF.

Speaking on the sidelines of an economics and business conference in southern France, Mr Le Maire said that European finance ministers would discuss the issue at a meeting in Brussels on Tuesday.

Christine Lagarde
Christine Lagarde

“We need to find a compromise at the European level... I hope that we will find a compromise about the best candidate, the best European candidate for the IMF,” he told journalists.

“If we have a good European candidate we might have a good candidate for the IMF,” he added in response to a question about whether Bank of England governor Mark Carney could be fielded as Europe’s candidate.

Though born and raised in Canada, Mr Carney, who is also a former governor of the Bank of Canada, holds Irish and British passports in addition to his Canadian citizenship.

A French official said that Mr Le Maire was due to discuss the issue with French president Macron over the weekend and that he was likely to speak with Mr Carney beforehand.

France was aware that support was building for Mr Carney, the official added, saying that if Paris decided to back him it would be sooner rather than later.

Traditionally the Washington-based IMF has been led by a European, while its sister institution the World Bank has been run by an American.

Back at the ECB, Ms Lagarde is likely to rely heavily on the ECB’s Irish chief economist, Philip Lane. Mr Lane is set to be Ireland’s key representative at the top end of the European top table.

The ECB faces a huge challenge in ensuring that the benefits of quantitative easing are felt by the broader economy.

The ECB needs the cooperation of member governments in implementing reforms to labour markets and preparing their economies for the challenges posed by climate change and the new smart economy which could upend many of Europe’s traditional industries, agriculture included.

Christine Lagarde and Philip Lane
Christine Lagarde and Philip Lane

To date, Frankfurt has largely been left with the lion’s share of the task of doing what it takes to drive the EU economy forward. The burden should be shared.

The EU could — and must — play a key role in coordinating the response to this challenge that will include a major programme of reinvestment.

Member states will have to act together to minimise duplication and disruption.

The EU federalists should soon have their own man at the top of the system as president of the Council of Ministers in the form of the outgoing prime minister of Belgium, Charles Michel.

It will be vital that the council and commission work hand in glove. This role was created by the Lisbon Treaty and Mr Michel will be the third occupant of the job, following fellow Belgian, Herman van Rompuy, and latterly, the Pole, Donald Tusk.

Mr Michel is a genial francophone liberal who, in 2014, became Belgium’s youngest prime minister since 1845. His father served as foreign minister so Mr Michel is also part of the Brussels “pedigree chum” class.

As is so often the case, the EU has picked out its permanent rulers from among the old continental elite. We can only hope that the new stars can live up to the billing. If they simply fade into significance, they could drag the rest of us with them.

It is generally accepted that there is a shift of authority from Ms Merkel towards French president Emmanuel Macron, who has been pressing — with limited success to date — for greater emphasis on federal solutions. Mr Macron has been pushed back, but he has not gone away.

The Irish Government needs to work hard to build alternative visions for the future development of the EU so as to ensure that we do not find ourselves caught in the slow lane in a union moving forward at two or more speeds.

Additional reporting Reuters

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