Ireland could lose Eurogroup presidency after Cabinet reshuffle

There is a risk that Ireland could lose the Eurogroup presidency due to a forthcoming December reshuffle expected to remove Paschal Donohoe as Minister for Finance, European Union sources say.

There had been little appetite for a leadership contest to replace Mr Donohoe, and some expectation that he would stand for re-election unopposed when his 2½ year term at the helm of the influential group of finance ministers ends in mid-January.

But the potential that EU rivals could put themselves forward as challengers for the role is growing as awareness spreads in Europe of the uncertainty over his position at home.

“If other member states hear about this being an issue, they may start thinking to run candidates,” one official said.

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Fianna Fáil has insisted that the finance portfolio passes to their party when Leo Varadkar replaces Micheál Martin as taoiseach in December under the Coalition deal agreed before Mr Donohoe won the Eurogroup role.

Some have suggested that Mr Donohoe could keep the Eurogroup presidency while becoming minister for public expenditure and Reform, allowing likely successor Michael McGrath to become minister for finance, though Mr McGrath has said he intends to be Ireland’s Eurogroup representative, too.

Could Donohoe keep the Eurogroup job as minister for public expenditure?

The Eurogroup is an informal grouping and something of a work in progress. The protocol setting out how it runs is only 200 words long, allowing for significant room for interpretation.

There is precedent for a Eurogroup president to continue in the role while changing ministries.

Jean-Claude Juncker was prime minister of Luxembourg throughout his tenure as Eurogroup’s first president from 2005 and 2013, and he was his country’s minister for finance as well until 2009.

But following an election that year, Mr Juncker become minister for the treasury. His replacement as minister for finance, Luc Frieden, attended the Eurogroup as Luxembourg’s representative, but Mr Juncker stayed as chair.

The Eurogroup protocol sets out that member states are represented by their “ministers with responsibility for finance”, a wording that allows for different national titles (Spain’s representative is ‘first deputy prime minister and minister for economic affairs and digital transformation’).

Therefore, attendance depends more on who the Government “endorses” to represent them, rather than on ministerial title.

The Government will decide on its representative, but the 19 finance ministers on the Eurogroup decide who chairs the meetings, a decision likely to be made in Eurogroup meetings of November and December, where Mr Donohoe would be expected to announce whether he intends to stand or not.

[ Fianna Fáil cool on Varadkar suggestion that Donohoe could remain Eurogroup president after Coalition reshuffle ]

Would Donohoe get a second term?

Currently, most finance ministers are preoccupied with looming economic turmoil, the energy crisis and deeply contentious arguments about how to reform the EU’s fiscal rules. Because of that, several sources suggest that member states would prefer a fudge to keep Mr Donohoe in place, to avoid the difficulties of replacing him.

Mr Donohoe is described by continental officials as a “safe pair of hands” and “well thought of”, and is positively viewed even by the camps who were his leadership contest rivals.

Fears that Ireland would introduce a “northern” bias to the presidency did not play out. Potential awkwardness over Ireland’s position on tax, which came into the spotlight amid international negotiations on a 15 per cent global minimum, was deftly defused.

Mr Donohoe’s easy working relationship with European Central Bank chief Christine Lagarde and the former Italian prime minister and economy commissioner Paolo Gentiloni has helped, too.

As the three stood side by side, Mr Gentiloni essentially endorsed Mr Donohoe as president publicly in the press conference following last week’s Eurogroup meeting in Prague.

“Thank you, Paschal for your words and your activity, because we need I think very strongly the role of the Eurogroup and your leadership in these difficult coming months,” he said.

Could Michael McGrath take over?

The Eurogroup presidency is a subtle position that involves brokering compromise across the EU’s traditional north-south split. Authoritative experience and knowledge of national circumstances, as well as personal relationships with other finance ministers, are highly important, and presidents are preferred from countries that do not bring a strong national agenda.

A position without executive power, it involves listening and synthesising the consensus position of the euro-using member states, and representing that view in summits alongside Europe’s key financial decision-makers.

The idea of someone who is relatively unknown in international politics, such as Fianna Fáil’s Michael McGrath, assuming the Eurogroup presidency simply because he replaces Mr Donohoe and is Irish, was described as “unthinkable”. Equally, finance ministers would not want to set a precedent that national governments can decide who chairs their meetings.

A closely-connected EU official burst out laughing at the idea.

“It doesn’t mean that the new finance minister would be unfit, it’s just that nobody knows him. It is unthinkable that he could come sailing in to his first Eurogroup meeting and be given the chairmanship. It is totally unthinkable,” the official said.

“A lot has to do with personality and approach and people knowing you and having worked with you.”

How important is Ireland holding the Eurogroup presidency?

Irish officials say the Eurogroup presidency has helped to rebuild Ireland’s image after the economic crash a decade ago. But one Fianna Fáil source said it was simply a point of principle that the finance ministry had to go to McGrath, and questioned the importance of the Eurogroup.

“The Eurogroup thing is secondary. Maybe there is a way with public expenditure ... but how important is the Eurogroup anyway? Is he really representing Ireland’s interests?”

Supporters of Mr Donohoe in Brussels say that people across the institutions are “puzzled” at what they hear from Ireland.

“The Eurogroup presidency is a very high-profile role. And it’s quite a unique chance for country like Ireland to hold it,” one EU official said.

“It’s a bit like what happened with the Irish commissioner Phil Hogan,” the official continued.

“There’s really astonishment that that the Government would undermine this position by some kind of domestic politics.”