At the time of signing the Maastricht Treaty in 1992, Europe’s single currency was praised by many and disliked by just a few. However, this grand political project has come under strain since the European sovereign debt crisis started ravaging the continent in 2009. The second half of 2012 witnessed some significant decision-making that has always been difficult for an economic unity lacking strong central political authority. Although optimists see some good signs for 2013, stormy weather is still ahead. The Eurogroup, the informal gathering of all the finance ministers of the Eurozone, appointed a new captain to sail the ship into safer waters last Monday. Let’s hope this new Mr. Euro, Dutch finance minister Jeroen Dijsselbloem, will not be heading the Flying Dutchman, the ghost ship doomed to sail in tempestuous waters forever.
The last months of 2012 have been a thrilling ride. The chances of a Greek exit from the Eurozone have been dropping ever since the president of the European Central Bank (ECB), the Italian Mario Draghi, pledged to do ‘whatever it takes to preserve the euro’. Consequently, Spanish and Italian government bonds – the interest rate a government has to pay annually to borrow – have been dropping from respectively 7.620 and 6.600 in July 2012 to almost below 5 and 4.220 on the 15th of January this year. Another memorable moment took place in Oslo on the 10th of November, when the presidents of the European Commission, European Council and European Parliament, José Manuel Barroso, Herman Van Rompuy and Martin Schulz, collected the Nobel Peace Prize that was awarded to the European Union because of its role in transforming a “continent of war” into a “continent of peace”. But even more important, on December the 12th, the European leaders agreed to a Single Supervisory Mechanism (SSM) which gives the ECB supervisory power over all the Eurozone banks, the first step towards a true banking union
The appointment of the Dutch finance minister Jeroen Dijsselbloem as the new Mr. Euro, succeeding the Luxembourgian Jean-Claude Juncker, is both a surprising and rational choice. It is surprising in the sense that the Netherlands has recently been quite sceptical about further integration. Prime Minister Rutte (VVD), re-elected in September 2012, has opposed ‘sovereignty-transfers’ to Brussels in the past years. However, the new coalition of the Liberals with Labour has made the tone a bit more pro–European. But his appointment is a rational, strategic choice for the other Eurozone countries as well.
Without discrediting Dijsselbloem, an intelligent and capable man who has been involved in the Labour Party (PVDA) for years, he might be appointed more for what he represents rather than who he is. The Netherlands is one of the remaining Eurozone countries that has not been downgraded from its AAA credit rating (together with Germany, Finland and Luxembourg). But more important, Dijsselbloem is neither French nor German. The Germans are still irritated because of the French opposition to the appointment of the German finance minister Wolfgang Schäuble as the new Mr. Euro. As for the French, Dijsselbloem is ‘everything Moscovici [the French minister of Finance] is looking for’ because he is a ‘reasonable man’ from the centre-Left and perhaps a very capable bridge and buffer between France and Germany.
In the Netherlands, Dijsselbloem’s appointment has been met with mixed reactions. On the 17th of January, the House of Representatives approved of Dijsselbloem’s candidacy with a large majority. Only Geert Wilders’ Freedom Party (PVV) and Emile Roemer’s Socialist Party (SP), the bookends of the political spectrum, are opposed. Wilders says Dijsselbloem should step down as finance minister when appointed as Mr. Euro while Roemer is afraid that Dijsselbloem will place Eurozone interests above Dutch national interests. Although the Dutch Finance Minister will have to display some serious multi-tasking abilities, this will probably not hurt the Dutch interests but rather increase its influence in Europe.
The appointment of Dijsselbloem went faster than expected. Last week, the French minister Pierre Moscovici, urged not to rush the procedure and wanted Dijsselbloem to firstly present his vision on the Eurozone on Monday the 21st before a possible appointment. However, when later that day Dijsselbloem was chosen, it was not the French but the Spanish minister, Luis de Guindos, who did not want to endorse the Dutchman. Some EU officials are afraid that a political wedge is being driven between the ’so-called “virtuous” northern countries and the crisis-hit Mediterranean states’. Dijsselbloem himself instantly rejected those kind of distinctions, saying that he ‘will try to build bridges between North and South, the triple-A’s and the non-Triples A’s’.
So what are the challenges the new Mr. Euro has to face? 2013 will be the year of the German elections, which will tie the hands of Angela Merkel. Mario Monti, leading a technocratic government in Italy, has stepped down, leading to a lot of uncertainty in Italy. On top of that, unemployment has been rising and the Eurozone economy is still contracting. However, ratings agency Standard and Poor’s said 2013 could be a ‘watershed year’ for the Eurozone economy and that it ‘could mark the start of the region sustainably overcoming the market volatility and fragmentation that has affected it over the past few years’. This could include further steps towards a true banking union and enabling the European Stability Mechanism (ESM), the permanent bail-out fund, to directly recapitalise banks. However, Germany, Finland, Austria and yes, the Netherlands, opposed this last September.
Time will tell whether the new Mr. Euro, Jeroen Dijsselbloem, will be able to navigate the EU’s complicated politics and steer a course to meaningful reform. Without further political integration, however, the process may become one of retroactively treating the symptoms of the crisis, instead of proactively searching for a more permanent cure.
JEANINE DE ROY VAN ZUIJDEWIJN