Finance Minister Paschal Donohoe to retain presidency of Eurogroup

Rival candidates pull out ahead of vote

Finance Minister Paschal Donohoe is set to be reelected as president of the euro area’s group of finance ministers. Picture: PA

Finance Minister Paschal Donohoe is set to be reelected as president of the euro area’s group of finance ministers, retaining a leading role in the region’s efforts to enhance the profile of its common currency.

Rival candidates Carlos Cuerpo of Spain and Lithuania’s Rimantas Sadzius pulled out of the race, leaving Mr Donohoe as the only candidate ahead of a vote later on Monday. Mr Donohoe will now continue to chair monthly meetings of the 20-member club during a third term that is likely to feature a renewed push to unify capital markets and set up a digital euro.

“In the current context of big challenges for the euro zone, promoting unity and avoiding fragmentation within the Eurogroup is necessary,” the Spanish government said in a statement in which it acknowledged Mr Cuerpo didn’t have the votes.

Originally designed as an informal forum to exchange views and coordinate positions ahead of the European Union’s finance-chief meetings, the Eurogroup became a key forum for decision-making during the region’s debt crisis, playing a central role in designing bailout programmes for countries including Greece and Ireland.

The body lost some relevance in recent years, overshadowed in legislative matters by the bigger club of EU ministers. Meanwhile, efforts by Mr Donohoe to revive progress on euro area-specific matters such as banking union have stalled amid divisions among member states, mostly Germany and Italy.

Threats to defy the group’s cohesion may be among his challenges. When long-standing resistance again stymied a recent attempt to advance a push for capital markets union, France and Spain proposed breaking ranks to create a “coalition of the willing”. Those countries, together with Germany, Italy, and the Netherlands, also critiqued the Eurogroup in a joint document in June, arguing that it proved itself in crises but has been a lot less decisive and nimble at other times.

“The current geopolitical context makes it more important than ever to build on the strengths of our common currency and ensure that euro-area economies can respond effectively to the challenges and opportunities ahead,” Mr Donohoe said in June.

Among those are the perceived window of opportunity presented by the dollar’s weakness to strengthen the international role of the euro, as argued by European Central Bank President Christine Lagarde, and the region’s struggle to afford the massive cost of rearmament after years of underinvestment.

Mr Donohoe has held a number of ministerial positions, including public expenditure and transport. The Fine Gael TD became president of the Eurogroup in 2020 after defeating Spain’s Nadia Calvino with the support of a broader base of smaller economies and backed by big members including France and Germany.

Mr Donohoe will become the second longest-serving Eurogroup chief after Jean-Claude Juncker of Luxembourg from 2005 to 2013, who was followed by Jeroen Dijsselbloem of the Netherlands in the five years after that, and then Portugal’s Mario Centeno until 2020.