Donohoe’s options narrowing as Eurogroup head

If Paschal Donohoe wishes to stay as head of the Eurogroup, the influential group of finance ministers from the countries that use the single currency, then he will have to campaign for it in Brussels, not in Dublin.

It is clear now that Donohoe will not remain as minister for finance after the December changeover in the Taoiseach’s office, and the subsequent reshuffle. Both Taoiseach Micheál Martin and Minister for Public Expenditure Michael McGrath – widely expected to become minister for finance in December – have made that clear in recent days, with McGrath firmly shutting the door over the weekend. The finance job will go to Fianna Fáil, as per the agreement between the three coalition parties. There is now acceptance of this in Fine Gael.

Nor will Donohoe be Ireland’s nominee to the Eurogroup if he is made – also generally expected – minister for public expenditure in the December reshuffle. EU sources always thought this outcome unlikely unless there was a wholesale redesign of the responsibilities of the two ministers, and that was never really on the cards. McGrath made the reasonable point at the weekend that the Minister for Finance has responsibility to the Dáil for matters discussed at the EU council of finance ministers, known as Ecofin.

Juncker’s precedent

Tánaiste Leo Varadkar has now floated an idea that has been quietly discussed by officials for some time – that the Eurogroup could retain Donohoe as its chair, even with McGrath attending as Ireland’s representative. There is precedent for this, as Varadkar explained – the former Luxembourg prime minister and finance minister Jean Claude Juncker retained his role as president of the Eurogroup after stepping down as his country’s finance minister, even while his successor as finance minister attended the meeting.

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EU sources, however, are sceptical about this. They say that that experience is unlikely to be repeated. “Juncker was a different character,” says one EU diplomat. “No, I don’t think it would work.”

Another makes a similar point, describing Juncker as “casus sui generis” – one of a kind, for whom rules were bent. He was the archetypal EU fixer, who went on to become president of the European Commission. Donohoe is highly respected in the commission and is widely seen as having done a good job in the Eurogroup. But he is not (yet, anyway) in Juncker’s league. And, as another diplomat pointed out, that was 20 years ago. It is harder to get these sort of arrangements agreed nowadays.

National asset

Few dispute that the Eurogroup position is a national asset for Ireland. But the two Government parties can’t make the internal politics of keeping the role work. Jobs and appointments are an integral part of every coalition agreement – they’re the glue that makes things stick together. Ultimately the share-out of the jobs is more important to them than the Eurogroup role. That may be internally consistent, but it is not a good public look.

There is also general agreement in Fianna Fáil and in at least some parts of Fine Gael that Varadkar’s approach to the issue in recent weeks did Donohoe no favours. By speaking publicly about the future of Donohoe’s European position before he made any private approach to Martin and McGrath, Fianna Fáilers say that he made the issue one on which the party could not concede.

“He made it an issue of status,” said one Fianna Fáil figure, “and that meant Micheál couldn’t back down.” The episode shows how the difficulties of being electoral rivals and coalition allies have not gone away.