Mário Centeno resignation triggers contest for eurogroup presidency

Mário Centeno’s resignation from Portugal’s government has triggered a contest to succeed him as leader of the group of eurozone finance ministers, as EU capitals wrangle over the details of a massive coronavirus recovery plan.

Mr Centeno said on Tuesday that he was standing down as eurogroup president and finance minister in his country’s minority Socialist government. The decision kicks off a race to lead the informal body of 19 eurozone finance ministers when it becomes vacant next month.

Candidates to replace him as head of the group include: Nadia Calviño, Spain’s deputy prime minister for the economy; Pierre Gramegna, Luxembourg’s finance minister; and Paschal Donohoe, his Irish counterpart.

Mr Gramegna was viewed as a strong candidate in 2017, in part thanks to his experience as one of the bloc’s longest-serving ministers, but euro members gave the job to Mr Centeno.

Neither Ms Calviño — a member of the Socialist-led government — nor Mr Gramegna are affiliated with the centre-right European People’s party, which may enhance their chances given pressure for posts to be more broadly distributed among the EU’s political families.

The socialists will be keen to retain the eurogroup leadership after Mr Centeno departs. Southern European states will also fight to keep the position given that the preparatory working group that feeds into the eurogroup is now headed by Tuomas Saarenheimo of Finland. 

Nadia Calviño, Spain’s deputy prime minister for the economy © Bloomberg

Ms Calviño, who was recruited as Spain’s economy minister two years ago, has held senior European Commission posts including a stint as director-general of the budget directorate. She was a contender for the job of leading the IMF last year, a position that ultimately went to Kristalina Georgieva.

Madrid believes Ms Calviño’s Brussels pedigree gives her clout in EU negotiations. Within Spain’s leftwing coalition, she is perceived as the voice of fiscal and economic orthodoxy.

She has sought to block attempts by the junior coalition partner, the radical left Podemos party, to ditch completely labour reforms passed by a previous centre-right government, measures that many economists say helped Spain recover from the last financial crisis.

Olaf Scholz, German finance minister, is not seen as a possible candidate given Berlin already holds the European Commission presidency. Mr Scholz said on Tuesday that his government had a clear view on the eurogroup presidency, while declining to give a name. He is known to have a strong working relationship with Ms Calviño.

Bruno Le Maire, the French finance minister who had been viewed as a potential eurogroup leader, would not put himself forward for the job, the ministry said on Tuesday.

The proposal by Ursula von der Leyen, commission president, for a €750bn pan-EU virus recovery fund is set to be debated at next week’s European leaders’ summit. Several countries, including the so-called frugal four — Austria, the Netherlands, Sweden and Denmark — have expressed reservations about the commission borrowing large sums of money and distributing it to member states as non-refundable grants. The seven-year EU budget, which is also being renegotiated, will also be on the agenda.

Pierre Gramegna, Luxembourg’s finance minister © AFP/Getty Images

Mr Centeno was instrumental in helping the eurogroup steer its way through a €540bn emergency support package to battle the fallout from the virus crisis, including putting in place pandemic-fighting credit lines from the single currency area’s bailout fund.

However, the group has in recent years struggled to advance key euro reform priorities, including the completion of the bloc’s banking union, where progress has stalled.

An economist with no previous political experience, Mr Centeno joined António Costa’s Socialist administration in 2015.

He was the architect of a plan to overturn austerity measures introduced during Portugal’s 2011-2014 bailout while simultaneously meeting tough fiscal targets. Last year, the 56-year-old delivered Portugal’s first budget surplus in 46 years of democracy. He is viewed as a candidate to become Portugal’s central bank governor.

His success in showing that the two aims were not incompatible led Wolfgang Schäuble, former German finance minister, to describe him in 2017 as the “Cristiano Ronaldo of EU finance ministers”, a reference to the Portuguese football star.

João Leão, currently Portugal’s secretary of state for the budget, has been appointed to succeed Mr Centeno.

This article has been amended to point out that Nadia Calviño was up against Kristalina Georgieva to lead the IMF