New Eurogroup chief Dijsselbloem pledges balance between discipline and solidarity
Dutch Finance Minister Jeroen Dijsselbloem was appointed the new chairman of euro zone finance ministers on Monday and told his colleagues he wanted to move on from simply fighting crises to focus on longer-term policies to cement fledgling confidence.
Dijsselbloem was confirmed in the post at a meeting of the Eurogroup of 17 euro zone ministers, but did not receive unanimous support, with Spain refusing to give its backing.
Addressing concerns that his appointment could deepen divisions between northern European countries which enjoy higher credit ratings and the south, where countries have to pay more to borrow, Dijsselbloem said fiscal discipline and financial help between euro zone countries were not mutually exclusive.
"We will have to promote a balanced approach, recognising that both discipline and solidarity are needed,» he said.
The Dutch minister, who took his national post three months ago, said the euro zone should continue with reforms and fiscal consolidation that have pleased investors.
"We now need to keep the momentum going, to ensure we retain the confidence we managed to regain in a lasting manner,» he told his euro zone colleagues in a letter outlining his priorities. «Our focus needs to shift from crisis management to delivering and implementing sound medium-term policies."
Dijsselbloem said policies in the euro zone, which is in recession, had to be focused on restoring sustainable growth, for which sound fiscal policy was indispensable, but such policies should be individually tailored.
"The speed of fiscal adjustment should continue to be based on country-specific fiscal and macro-financial risks,» he said in the letter.
Dijsselbloem said countries should focus on their structural budget balance, which excludes increased spending and lower revenues typical for an economic downturn.
The Netherlands is one of only four euro zone countries to have retained the highest credit rating throughout the crisis and has been one of the hardliners, along with Germany and Finland on the need for tough austerity in countries benefiting from euro zone support - Greece, Ireland, Portugal and Spain.
Dijsselbloem replaced Luxembourg's Prime Minister Jean-Claude Juncker as chairman of the Eurogroup, the monthly meeting of finance ministers which is a powerful policymaking body key to dealing with the debt crisis.
The appointment to chair the monthly meetings of the finance ministers from the 17 countries sharing the euro is for two-and-a-half years.
Dijsselbloem’s assumption of the informal, unpaid post follows last year’s appointments of a German to run the euro area’s permanent rescue fund and a Luxembourger to a vacancy on the European Central Bank, tilting the European balance of power toward northern countries committed to fiscal discipline.
The Eurogroup brings together euro-area finance ministers, the European Commission and the ECB. Its chairmanship rotated after the euro’s arrival in 1999 until Juncker, then also Luxembourg’s finance minister, was named the first full-time chief in 2005. Initially named for a two-year term, he was reappointed three times.
Dijsselbloem, a member of the Dutch Labor Party, became finance minister on Nov. 5 as part of Liberal Prime Minister Mark Rutte’s coalition government following an election in September. He served as a member of the Dutch parliament from 2000 until his appointment to the Cabinet, with a short hiatus in 2002. He holds a degree in agricultural economics from Wageningen University.
Dutch opinion of the appointment split along party lines. Maastricht University professor Willem Vermeend, a former undersecretary of finance and Labor Party associate of Dijsselbloem, predicted a weightier role for the Netherlands in crisis management.
“The Germans always like to get support from the Netherlands and we know that it’s not appropriate to resist what the Germans want,” he said. “The Dutch try in return to get something back in another way.”
Arnold Merkies, a finance expert with the opposition Socialist Party, feared that Dijsselbloem will be “easier to influence” as a Brussels neophyte. “He cannot take a position in favor of the Netherlands. In this role he will be enforced to be neutral.”
Juncker earlier this month said that even if Luxembourg “will lose influence” with him giving up his Eurogroup role, he will still be around as prime minister “and he will in the future be much freer to take a stand.”
“Because so far every word I said was weighed by the financial markets, by analysts,” he said. “Now, I will be able to speak freely again and express my opinion about European affairs.”