Donohoe’s Eurogroup return is a coup for him and a relief for Government

Paschal Donohoe’s reappointment unopposed to the presidency of the Eurogroup is a coup for the Minister for Finance and a relief for the Government.

It maintains Ireland’s position at the head of one of the most influential EU bodies, underlines Donohoe’s standing in the top ranks of EU politicians, and neatly sidesteps the accusation – inevitable had he not been successful – that the Coalition was putting its own share-out of jobs ahead of the national interest.

Donohoe won an election to the post in the summer of 2020, building a coalition of small countries (every country has one vote) and large ones to defeat the Spanish finance minister Nadia Calvino in an vote among the members.

But his term finishes at the end of this year and with the Department of Finance due to move to Fianna Fáil when Leo Varadkar takes over as taoiseach, it seemed that Donohoe would have to give up the post.

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The idea was floated around Government last summer that Donohoe could remain in the Department of Finance in order to keep the Eurogroup job, but it quickly became clear – especially after the idea became public – that it would not fly with Fianna Fáil.

Michael McGrath made clear his expectation that the terms of the agreement between the two parties would be honoured, and the Department of Finance would move to his party. Subsequently, so did the Taoiseach: it was not a runner. The minister for finance would be from Fianna Fáil, and they would represent Ireland at Eurogroup meetings.

[ Paschal Donohoe set to secure second Eurogroup president term unopposed ]

Donohoe and his officials had been working on a parallel track, however. There was a precedent for an independent chair who was not a finance minister, running the meetings while his country’s representative took part as an ordinary group member. This is what happened when Jean Claude-Juncker, the former Luxembourg prime minister and minister for finance, stepped down from the latter role, but remained on as president of the group.

EU diplomats thought it was a very long shot given – however independent the chairman was, other countries would bridle at one country having two members on the group. And while there was a precedent, Juncker was ... well, Juncker – the first president of the Eurogroup, a European wheeler and dealer par excellence, who went on to become president of the European Commission, the most powerful of all the roles in the Brussels jungle. Donohoe was both liked and respected, they said, and everyone agreed that he had done an excellent job in the role. But he was no Juncker.

As the autumn drew on it became clear that there was little appetite in the group to replace Donohoe, or for an election. The group’s rules might presume that the president is a finance minister – but they don’t exactly stipulate it. And anyway, in the EU, there’s always space for political wiggle room.

Donohoe’s quiet campaigning was well received. Two weeks ago, he announced that he would be a candidate – a declaration that was greeted in several quarters as evidence that he had, if not quite got the job sewn up, then certainly had a strong base of support which would deter other candidates. So the announcement on Thursday came as no surprise in Brussels.

The news probably copperfastens Donohoe’s appointment as minister for public expenditure in next month’s reshuffle. It also keeps intact the axis he has formed with McGrath – almost certain to be appointed minister for finance – at the heart of Government, a link that is essential to the functioning of the Coalition. They comprise the most important stabilising force in the entire arrangement. It will be needed more than ever in the coming two years, if the FF-FG-Green partnership is to navigate the tricky path to a general election.

It also maintains influence for Ireland at the very top of the EU. While sometimes the importance of this is hard to put your finger on, having Donohoe in the room when choices are being made or narrowed is important. The agreement of the new minimum corporation tax rate last year at a level that suited Ireland (preserving its model of receptiveness to inward investment) was heavily influenced by Donohoe’s diplomacy and willingness to play hardball when required, and by the relationship he has cultivated with US treasury secretary Janet Yellen.

While in Washington recently for World Bank and International Monetary Fund meetings, Donohoe convened a Eurogroup meeting and had Yellen come and speak to them.

In a world where access is the currency, his fellow ministers duly noted it.