Luxembourg, Italy, Portugal and the Netherlands have all put forward candidates to succeed Klaus Regling as the head of the European Stability Mechanism, the 500-billion-euro eurozone bailout fund known as ESM. On Monday, the Eurozone finance ministers are due to decide on a successor for Regling, who steps down after a ten-year tenure and leaves behind a legacy at the Luxembourg-based ESM.
Luxembourg’s candidate Pierre Gramegna appears to hold the trump card, given that the Dutch and Italian candidates will find it difficult to attract the unanimous support that is required. Portugal’s candidate is less experienced and also has, since leaving his position as finance minister in March, encountered a bit of controversy at home.
The Dutch candidate, 51-year old liberal politician Menno Snel, appeared prominently in the news this week, although having one’s name mentioned prominently at the beginning of such EU talks often guarantees a bad outcome. Snel also has been named in a number of domestic controversies in recent years.
Can the ESM ‘go Dutch’?
“We think he is an extremely good candidate with a firm grasp of policy detail,” said Sigrid Kaag, the Dutch foreign minister, on Wednesday in The Hague after meeting with Eurogroup president Paschal Donohoe. “He is an economist who can build bridges and combines expertise and experience.”
“Going Dutch” with the ESM will be difficult to digest for debt-laden southern European countries, in particular Italy, which has put forward European Commission official Marco Buti as its candidate. Buti has served as director-general for economic and financial affairs at the European Commission since 2008 and now is head of cabinet to the EU Commissioner for the economy, Paolo Gentiloni. He is known as a politically savvy operator who knows his way around in the inner systems of the EU.
EU observers see a possible scenario evolve on Monday under which the Dutch and Italian candidates will cancel each other out, leaving the final decision on the two remaining candidates from Portugal and Luxembourg. The challenging economic environment makes the experience of the remaining candidates more important than usual.
Luxembourg has put forward Pierre Gramegna as its candidate. Gramegna served for more than eight years as finance minister until last January, when he was succeeded by Yuriko Backes. The Luxembourg government said earlier this month that Gramegna had been asked to become a candidate “at the request of several countries and interest groups”.
Experience matters at times of crisis
Gramegna, 64 years old, made an unsuccessful bid for the Eurogroup presidency in 2020 and was forced to yield to Ireland. Luxembourg this time around feels confident in the success of his candidacy because the challenging economic and geopolitical circumstances require someone who is familiar with the inner workings of the European institutions.
Gramegna has been keeping an active presence on social media since his candidacy was announced. “Many thanks to the government of Luxembourg for the official support and to all friends who encouraged me to run and contribute directly to the European construction,” Gramegna tweeted on 2 May.
‘A precious pillar of the success story of the euro’
Ready to run for the leadership of @ESM_Press , a precious pillar of the success story of the #euro! Many thanks to the government of Luxembourg for the official support and to all friends who encouraged me to run and contribute directly to the European construction. PG
— Pierre Gramegna (@pierregramegna) May 2, 2022
Portugal’s candidate is João Leão, 48 years old, is the least experienced one among the four. He was finance minister from 2020 until March of this year. After stepping down, he became vice-dean of ISCTE, the business school arm of the University of Lisbon which only recently benefited from 5.2 million euro in government-funding for a research project that he will be running, Portuguese media have reported.
Wrongfully targeting poor families
Snel, who carried ministerial responsibility for taxation, was forced to step down in 2019 in a scandal that pushed tens of thousands of Dutch low-income families and forced more than a thousand children into foster care because of mismanagement at the Dutch tax services. The tax authorities wrongfully targeted poor families, often in immigrant communities, with suspicions of fraud, Snel was criticised for his handling of this crisis.
Snel again ran into controversy last year because of an advisory role he played in the investment committee of the Dutch civil service pension fund ABP. Climate activists and participants in the fund accused him of a conflict of interest, after which he decided to step down.