Eurogroup
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The Eurogroup is a meeting of the finance ministers of the eurozone, i.e. those member states of the European Union (EU) which have adopted the euro as their official currency.
The group has 19 members, as of January 2015. It exercises political control over the currency and related aspects of the EU's monetary union such as the Stability and Growth Pact. Its current president is Dutch finance minister Jeroen Dijsselbloem.
The ministers meet in camera a day before a meeting of the Economic and Financial Affairs Council (Ecofin) of the Council of the European Union. They communicate their decisions via press and document releases. This group is related to the Council of the European Union (only eurogroup states vote on issues relating to the euro in Ecofin) and was formalised under the Lisbon Treaty.
History
The Eurogroup, formerly known as the Euro-X and Euro-XI in relation to the number of states adopting the euro, was established at the request of France as a policy co-ordination and consultation forum on eurozone matters.[1] The December 1997 European Council endorsed its creation and the first meeting was held on 4 June 1998 at the Chateau de Senningen in Luxembourg .[2]
To begin with, the chair of the Eurogroup mirrored that of the rotating Council presidency, except where the Council presidency was held by a non-eurozone country, in which case the chair was held by the next eurozone country that would hold the Council presidency.[2] In 2004 the ministers decided to elect a president (see "President" below for details) and in 2008, the group held a summit of heads of state and government, rather than finance ministers, for the first time.[3] This became known as the Euro summit and has had irregular meetings during the financial crisis. In March 2013 the Eurogroup along with the IMF developed the terms for the imposition of a bank levy on all bank accounts in Cyprus. This negotiation, which began as a condition for a 10 billion euro loan to bail out 2 Cyprus banks, led to one of the most controversial developments in banking over the past one hundred years, government confiscation of depositors assets without notice or the opportunity to democratically consider and pass legislation supporting the confiscation. The Eurogroup appears to have assumed official status as an operating unit of the EU.
Since the beginning of the monetary union, its role has grown in regards to the euro's economic governance. The fact the group meets just before the Ecofin council means it can pre-agree all Ecofin's decisions on Eurozone affairs.[4] In 2009 the Lisbon Treaty formalised the group and its president.
President
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The current president of the group, dubbed Mr Euro[1] or the president of the eurozone,[5] is Jeroen Dijsselbloem (current Minister of Finance of the Netherlands).
In September 2004, the Eurogroup decided it should have a semi-permanent president that is to be appointed for a period of two years. Finance Minister and then Prime Minister of Luxembourg Jean-Claude Juncker was appointed first president of the Eurogroup, mandated from 1 January 2005, until 31 December 2006, and was re-appointed for a second term in September 2006.[6] Under the Lisbon Treaty, this system was formalised (see "legal basis" below) and Juncker was confirmed for another term.[7]
The Presidency has helped the strengthening of the group, as before Juncker's appointment the Eurogroup was only 'accidentally' present at meetings in the European Parliament. Since the creation of the Presidency, the president attends Parliament's committee on Economic and Monetary Affairs every six months.[4]
After his reappointment as Eurogroup president in January 2010, Juncker emphasised the need to increase the scope of the Eurogroup's activities. In particular in terms of co-ordinating economic policies and representation. Juncker proposed creating a small secretariat for the group of four to five civil servants to prepare the meetings. However although France and Spain support such plans, Germany is worried that strengthening the group could undermine the independence of the European Central Bank.[8]
In June 2012, the Estonian minister Jürgen Ligi was being considered as a possible successor for Mr. Juncker.[9] As of January 2013, Juncker hinted that his probable successor would be Jeroen Dijsselbloem,[10] who was appointed second president of the Eurogroup on 21 January 2013.[11]
Members
Eurogroup members as of 2015.[12] The ECB President, Economic and Monetary Affairs Commissioner and Chairman of the Eurogroup Working Group also attend the meetings. It is worthwhile to note that the members of the EU who choose not to participate in the Euro (UK, Sweden, the Czech Republic, Denmark, etc.) have been excluded from observer status. The membership is very fluid. For example, IMF personnel such as Christine Lagarde are sometimes allowed to be present at meetings—see Lagarde statement 20130316. What remains unknown about this group is whether they allow observers to speak or speech by the observers is forbidden.
- Observers
- President of the European Central Bank: Mario Draghi (1 November 2011)
- European Commissioner for Economic and Financial Affairs, Taxation and Customs: Pierre Moscovici (1 November 2014)
- President of the Eurogroup Working Group: Thomas Wieser (24 January 2012)
Legal basis
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Prior to the Lisbon Treaty, the Eurogroup had no legal basis. This had some advantages as, because it was not a Council formation, it is smaller and more informal resulting in more constructive and confidential discussions than the full Ecofin Council. It also means that it does not have the usual rotating six-month presidency meaning its work is streamlined and strengthened vs the other institutions.[4]
A formal legal basis was granted for the first time under the Lisbon Treaty when it came into force on 1 December 2009. Protocol 14 of the treaty lays out just two articles to govern the group;
Article 1: The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.
Article 2: The Ministers of the Member States whose currency is the euro shall elect a president for two and a half years, by a majority of those Member States.—Protocol 14 of the Consolidated Treaties of the European Union (as amended by the Treaty of Lisbon)[13]
Furthermore, the treaty amended the Council of the EU's rules so that when the full Ecofin council votes on matters only affecting the eurozone, only those states using the euro (the Eurogroup countries) are permitted to vote on it.[14]
Representation
On 15 April 2008 in Brussels, Juncker suggested that the eurozone should be represented at the International Monetary Fund as a bloc, rather than each member state separately: "It is absurd for those 15 countries not to agree to have a single representation at the IMF. It makes us look absolutely ridiculous. We are regarded as buffoons on the international scene."[15] However Finance Commissioner Joaquin Almunia stated that before there is common representation, a common political agenda should be agreed.[15] In January 2010 Juncker indicated that the Commission is to propose that the group become a member of the G20.[8]
Economic government
In 2008, in light of the 2008 financial crisis, French President Nicolas Sarkozy (speaking at the European Parliament as the outgoing President of the European Council) called the Eurogroup to be replaced by a "clearly identified economic government" for the eurozone, stating it was not possible for the eurozone to go on without it. The eurozone economic government would discuss issues with the European Central Bank, which would remain independent.[16]
This government would come in the form of a regular meeting of the eurozone heads of state and government (similar to the European Council) rather than simply the finance ministers which happens with the current Eurogroup. Sarkozy stated that "only heads of state and government have the necessary democratic legitimacy" for the role. This idea was based on the meeting of eurozone leaders in 2008 who met to agree a co-ordinated eurozone response to the banking crisis.[3]
This is in contrast to an early proposal from former Belgian Prime Minister Guy Verhofstadt who saw the European Commission taking a leading role in a new economic government, something that would be opposed by the less integrationist states.[1] Sarkozy's proposal was opposed by Eurogroup chair Jean-Claude Juncker who did not think Europe was ripe for such a large step at the time[1] and opposition from Germany killed off the proposal.[3][17] Merkel approved of the idea of an economic government, but for the whole of the EU, not just the eurozone as doing so could split the EU and relegate non-eurozone states to second class members.[17]
In his 2011 State of the Union address, Commission President José Manuel Barroso opposed the Franco-German intergovernmental plan, stating that community institutions should perform that role.
Controversy
During the 2013 Economic crisis in Cyprus, Eurogroup proceeded towards the first bail-in approach towards the Cypriot banking sector, resulting in the confiscation of deposits of Cyprus' two main banks. Despite the lack of any visibility on the banks' credentials and balance sheets, Eurogroup decided to utilise deposits of the two banks for a bail-in. The process is not completed yet. However, it has been criticized by some in the EU as an attack on private property.[18]
See also
References
- ↑ 1.0 1.1 1.2 1.3 An economic government for the eurozone? PDF, Federal Union
- ↑ 2.0 2.1 History, Eurogroup website
- ↑ 3.0 3.1 3.2 Germany rejects idea of eurozone 'economic government': report, EU Business (21 October 2008)
- ↑ 4.0 4.1 4.2 Schwarzer, Daniela (24 November 2006) Institutionalisation through the back door, Eurozone Watch
- ↑ Marlowe, Lara (24 October 2008 Sarkozy should head euro zone states, say French, Irish Times
Other usage of the term if needed: - ↑ "Juncker re-elected Eurogroup president, voicing optimism over economic growth". People's Daily. 9 September 2006. Retrieved 2 January 2008.
- ↑ Willis, Andrew (3 December 2009) Luxembourg leader set to extend euro zone reign, EU Observer
- ↑ 8.0 8.1 Willis, Andrew (19 January 2010) Juncker wants more eurozone activism, EU Observer
- ↑ "The next Juncker should be an Estonian". Der Spiegel (in German). 20 June 2012.
- ↑ "Juncker hints Dijsselbloem will replace him as Eurogroup chief". Europolitics. 10 January 2013.
- ↑ "Dijsselbloem voorzitter eurogroep" (in Dutch). NOS. 21 January 2013. Retrieved 21 January 2013.
- ↑ Eurogroup members, Council Website
- ↑ PROTOCOLS, Official Journal of the European Union
- ↑ Treaty of Lisbon (Provisions specific to member states whose currency is the euro), EurLex
- ↑ 15.0 15.1 Vucheva, Elitsa (15 April 2008)eurozone countries should speak with one voice, Juncker says, EU Observer.
- ↑ "Sarkozy pushes eurozone 'economic government', France 24 (21 October 2008)
- ↑ 17.0 17.1 Willis, Andrew (15 June 2010) Merkel: Spain can access aid if needed, EU Observer
- ↑ "BBC News - Cyprus bailout: Deal reached in Eurogroup talks". BBC News.
External links
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