by Frank Schnittger
Fri Jul 10th, 2020 at 09:00:11 AM EST
Ireland has scored a few significant diplomatic victories in recent times in getting the EU, and ultimately Boris Johnson, to accept its position on the N. Ireland border and winning a seat on the UN Security Council against strong opposition from Canada.
Paschal Donohoe's election as President of the Eurogroup of Eurozone finance ministers yesterday may not seem like much of a coup to casual observers, but it was gained against strong opposition from Spain's Finance Minster Nadia Calvino, who had been favoured by France, Germany and some Mediterranean countries as an economist with experience working within the EU institutions who would make the argument for a generous response to the Coronavirus pandemic.
Although who voted for who in the secret ballot hasn't been publicly revealed, it seems he was viewed as a compromise candidate who could bridge the gap between the "frugal four" (Austria, Denmark, the Netherlands and Sweden) and those member states in favour of stronger fiscal support at EU level. Ireland's position as a country which went through a Troika led austerity programme, and yet has recovered to become a net contributor to the EU budget may also have been a factor in his election.
Of course winning diplomatic battles is all very well, but what matters is what you do with those achievements. With the prospects of a significant post-Brexit trade deal diminishing by the day, the fact that the N. Ireland "backstop" ended up becoming a "front-stop" included in the Withdrawal Agreement, already signed and ratified, as opposed to part of a possibly never to be agreed trade deal, becomes more important by the day.
Ireland's victory in the UN Security Council election came just at the time the new Fianna Fail, Fianna Gael and Green Government failed to include the Occupied territories Bill in the programme for government which hopefully is not a harbinger of more bad things to come. Smaller countries look to post-colonial Ireland to represent their interests, and there is hardly any small country in need of greater support than the Palestinian people right now.
The role of President of the Eurogroup is an informal one, but was pretty influential in a negative way when Jeroen Dijsselbloem held the post during the last financial crisis. It is to be hoped Paschal Donohoe will play a more constructive and positive role during the current crisis. Although a leading light in the conservative Fine Gael Party, allied in Europe to the EPP, Paschal Donohue has managed to achieve a widespread consensus on Irish fiscal policy since his appointment as Minister for Finance in 2017.
In particular, he has been widely praised for his strongly interventionist approach to addressing the Covid-19 crisis which will see a projected government surplus of several billion Euro transformed into an estimated deficit of c. 23 Billion for this year. His increase of the unemployment benefit from c. 200 to 350 per week, and the introduction of a wage subsidy scheme of up to 400 per week for businesses impacted by the pandemic has done much to mitigate the immediate economic shock of the lockdown.
He tends not to be a polarising figure, has not been doctrinaire in his approach, and is always looking to find pragmatic solutions to opposing interests and political positions. I doubt there are many finance ministers in the world who have read, never mind favourably reviewed Thomas Piketty's 1,150 page magnum opus, Capital and Ideology, and he is said to be the most widely read member of the current cabinet.
The challenges he will face as President of the Eurogroup is a daunting one, trying to reconcile the opposing views of the frugal four and Mediterranean countries such as Italy on the need for a large fiscal stimulus to help the Eurozone, collectively, to recover from the crisis. He will be helped by the fact that Germany, which holds the Presidency of the European Union, has already committed to supporting a major move away from exclusive reliance on loans to greater fiscal transfer financed through debt held at EU level.
If the frugal four thought that he would act as a counterweight to the influence of France and Germany, in championing this approach, they are likely to be disappointed. He will be inclusive in his approach, trying to achieve the widest possible consensus, but he will not oppose the general thrust of the Merkel Macron policy initiative. Although Ireland has been aligned with some of the frugal four on some issues, notably corporate tax reform, it has also supported the Mediterranean countries in their search for greater central EU funding.
More difficult may be achieving a consensus on the forthcoming 2021-2027 EU budget. These negotiations are always slow, painful, difficult and fraught, and this time around may be complicated by the fact that some of the biggest potential beneficiaries - Hungary and Poland - are also the most in conflict with the ethos and values of the EU as a whole.
Already there have been calls for any net transfers to be made conditional on greater compliance with the spirit, as well as the letter of the Treaties. The free ride which some Eastern European countries have enjoyed in terms of fiscal transfers while showing nothing but contempt for EU values and institutions may be coming to an end.
But there are also issues of national sovereignty and pride at stake, and Hungary and Poland could react very badly to any attempts to make fiscal transfers directly dependent on greater compliance to democratic norms. Minister Donohoe might be just the man to square the circle of achieving greater compliance while leaving national pride intact.
Unusually for a politician, Paschal Donohue seems to have a small ego. Although one of the three most prominent politicians in Fine Gael, along with former Taoiseach, now Tánaiste (deputy Prime Minister) Leo Varadkar and foreign Minister and deputy leader, Simon Coveney, he did not challenge for the leadership when Leo Varadkar replaced Enda Kenny as party leader and Taoiseach. He doesn't pose as an intellectual despite obvious intelligence, and tends not to grandstand.
All in all he could be just the man to lead the Eurogroup through turbulent times: Conservative enough not to frighten the EPP horses, and yet open to compromise with opposing views. He is probably better at listening and building relationships than articulating radical visions, but that is probably not what the Eurogroup expect their President to do.