Brussels, 03/10/2014 (Agence Europe) - Arriving in Brussels with the reputation of being a determined reformer, the former Latvian prime minister, Valdis Dombrovskis, who has been nominated for the euro and social dialogue portfolio, will have the tricky job of putting the social dimension at the heart of concerns in economic and monetary union (EMU).
Jean-Claude Juncker is well aware that the 43 year-old Christian Democrat stood aside in the race to head the European People's Party (EPP) list in the spring. When Juncker became the head of the new European Commission after the EPP's victory in the European elections, he returning the favour by nominating the Latvian for the post of vice-president of the Commission.
This appointment is recognition for Latvia, a Baltic State that joined the eurozone in January this year. And recognition for the man who became his country's prime minister in March 2009 during a deep economic crisis. The country was able to recover thanks to draconian measures including civil service pay and spending cuts. In his answers to the questions posed by the European Parliament's economic and monetary affairs committee (ECON) ahead of his hearing on Monday 6 October, Dombrovskis said his governments' priority was to restore economic growth and job creation as quickly as possible and in as convincing a manner as possible. Following structural reforms and the restoring of sound public finances, Latvia has come out of the deep social and economic crisis, he said, to become one of the fastest-growing economies in Europe.
After a Greek-style recession in 2009 during which GDP slumped by17.7%, Latvia returned to growth in 2011. Growth reached 5.2% in 2012 and 4.1% in 2013. Unemployment hit 19.5% of the working population in Latvia in 2010, but has continued to fall since then and is expected to fall below 10% in 2015.
Keen to distance himself from his image of being a man of austerity, Dombrovskis points out that he set up a social protection network to deal with the social consequences of the crisis, which would not have been possible without close and regular dialogue with the social partners.
Dombrovskis used to be the Latvian finance minister and he explains that he will make use of this experience to consolidate EMU and give it greater social legitimacy, as requested by Juncker in his roadmap for Dombrovskis. It will be for Dombrovskis to study how to replace the troika (responsible for monitoring the implementation of bailouts of eurozone countries) with an accountable institutional mechanism.
In the light of the blurring of borders between the areas of responsibility in the new European Commission among commissioners and vice-presidents when it comes to economic affairs, many observers feel that Dombrovskis has the hidden agenda (desired by Germany) of keeping an eye on the action of the commissioner-candidate for economic and financial affairs, Pierre Moscovici of France. During his hearing on Thursday, Moscovici, a Socialist, stressed the collegiate nature of decisions at the European Commission and said he would be the commissioner who represented the European institution at Eurogroup press conferences (see EUROPE 11168). Juncker says, however, that, along with preparing work relating to eurozone summits, Dombrovskis will submit any draft decision on budget surveillance “jointly” with Moscovici. The Latvian will also be responsible for developing over the first few weeks in the job “practical arrangements” for commissioners to attend the Ecofin Council and Eurogroup meetings, along with economic dialogue with the European Parliament and meetings of the European Central Bank's Governing Council. (MB)