Paschal Donohoe is the New President of the Eurogroup
The nineteen eurozone countries have voted their new chair: Ireland’s finance minister Donohoe. He is the successor to Portugal’s Centeno and must steer the Eurogroup through – inter alia – the worst recession in its history.
Paschal Donohoe has become the new head of the Eurogroup. The Irishman surprisingly prevailed in the second ballot against two competitors. In Brussels, Nadia Calviño, Minister of Economy of the socialist-led government in Madrid, was initially considered the favorite. She would have been the first woman to chair the Eurogroup. In addition to Germany and France, she was also supported by Italy before the vote. However, each country had only one vote, and a simple majority was required to win. After the first ballot by video conference, the Luxembourg Gramegna had already withdrawn. Donohoe then prevailed in the jump-off. The exact result was not published.
Before he was elected Eurogroup leader, Donohoe had been Irland’s finance minister since June 2017. After the election, Donohoe said he was deeply honored and wanted to create a euro group that included everyone and was transparent. He would also strive to “build bridges between all members of the eurozone” and ensure that Europe finds an agreed approach to recovering its respective economies and societies.
Donohoe is scheduled to take up his post next Monday and remain in office for two and a half years.
The nineteen Finance Ministers of the eurozone meet each month as part of the Eurogroup with the main task of coordinating economic policy. In the financial and debt crisis, the Eurogroup became the central body for creating rescue programs for member states threatened with national bankruptcy.
The previous head of Eurogroup, Centeno, had already announced at the end of June that he would not seek another run after the end of his term in office and is now to become President of the Portuguese Central Bank. During his farewell, Centeno had expressed hope that the stimulus packages already decided could avert the worst, saying: “I expect this political response to change fate and help us cushion the blow and protect the internal market.”
Donohoe and the Eurogroup face significant challenges: the European Union faces the worst recession in its history in the corona pandemic. In the euro area, the economy is expected to shrink by 8.7 percent and only partially recover next year. The latter will further increase the already high debt burden of some member states. In addition, the division within the EU is growing, while Bulgaria and Croatia are to be added to the eurozone in the next few years.
In Ireland, Donohoe is a member of the liberal-conservative Fine Gael party and has been the country’s finance minister since June 2017. Under his leadership, the Irish government has returned to a budgetary surge for the first time in a decade after the financial crisis. Previously, he was responsible for transport and European affairs in the Dublin government. After studying politics and economics, Donohoe first worked for the US consumer goods group Procter & Gamble. After further stays in the private sector in 2003, Donohoe then turned to politics and was elected to the Dublin City Council a year later.
Donohoe will lead the Eurogroup under challenging times. Nevertheless, his leadership could pave the way towards a European recovery. Under him, Ireland has taken a disciplined reform course in recent years. Moreover, Donohoe is thus also cognizant of the challenges European aid mechanisms present. His stance on fiscal issues and understanding the positions of small and medium-sized economies could turn out to be rather beneficial for the Eurogroup, particularly if he stays true to his conservative spirit and without losing sight of the bigger European picture.