The confirmation that Jean-Claude Juncker has been re-appointed head of Eurogroup is good news for Europe. This sign of confidence from his colleagues, fellow finance ministers, should give Juncker the verve and optimism needed after various incidents in the past which may have weakened his enthusiasm. Two years ago, he was affected by the way it proved impossible to make progress in the negotiations at the European Council under his chairmanship over the EU's budget (Financial Perspectives) for 2007-2013 (although the actual compromise deal reached shortly afterwards owed virtually all its initiative to Juncker's draft). More recently, the icy reception by the President of the European Central Bank to Juncker's invitation to hold closer, regular dialogue between Eurogroup and the ECB came as a blow to him. These partial deadlocks did not impact on the intensity of his work to manage change in the eurozone and boost coordination of eurozone countries' economic policies, and the decision to extend his term of office as the standing president of Eurogroup for two years (standing president because unaffected by the six-month rotation of the EU Presidency) was confirmation that the eurozone countries have full confidence in him. His next two years, 2007-2008, will allow him to act with determination in moving towards the double objective he set himself at the outset, namely a) boosting economic governance in the eurozone and b) instigating genuine dialogue with the ECB over the EU's monetary policy without impacting on the ECB's autonomy when it comes to managing the euro.
Political views. Both objectives merit comment. But firstly, I would like to point out that Juncker's work is obviously essentially political. His management of economic and monetary matters in the eurozone is decided by his underlying political ideas. In my comments in early July (see issue No. 9223) on his being awarded the Charlemagne Prize, I mentioned some aspects of his political convictions, like the call to be 'proud of Europe again', opposing defeatism and lack of knowledge about the EU's successes, defending EU farming as a vital part of our civilisation, and sceptism about Turkey joining the EU. I will now add another element to his political portrait. Concerning the eternal conflict between free market ideas and economic management, he said that Europe could not be reduced to a simple market. He rejected any exclusively ideological approach, believing that it is legitimate for governments to question the industrial idea s underlying takeover bids and mergers, or the repercussions they might have on a region or a country, or the impact on employees. He added that people who want Europe to always look like a market and nothing but a market should not turn around later and complain about the gulf separating off public opinion.
Practical measures. Juncker's work in the European economic fields consigned to him has to be judged based on his political ideas. His first significant result was agreement on the revised Stability Pact. The correct application of the Pact remains a vital priority for stability of the euro. To this should be added the two objectives mentioned above, which were not achieved during the first two-years as Eurogroup President. How many speeches have been made about the balance between the two arms of EMU, the solid monetary arm in good working order and the limping economic arm! Fed up with theoretical statements, Jean-Claude Juncker is reportedly planning to introduce rules and procedures and highlight the autonomy of Eurogroup deliberations with regard to the Economics and Financial Council (where non-euro countries hold the majority). He also wants to improve the way journalists are kept informed about Eurogroup's work - the Eurogroup President should be respons ible for communication and the other ministers should respect a duty to hold their tongues. Juncker is aware of course that these useful measures cannot replace governments' willingness to play ball.
Making use of the Treaty? As for dialogue with the ECB, both sides at times gave the impression of touching on raw nerves. Soothing comments of mutual esteem were then swapped by the two Jean-Claudes (Juncker and Trichet), both expressing desire to hold dialogue. But no rules have been established and it's all very hazy. To such an extent that people in some circles are wondering whether it might not be useful to make use of Article 111 of the Treaty, which gives the Council explicit powers over the euro exchange rate and general exchange policy guidelines. In his vision of Europe expounded last Friday in Brussels, Nicolas Sarkozy said that with a stable and enormously high quality President, Eurogroup has every change and all the means necessary to deal with this fundamental issue. Was he testing the waters or is this an actual invitation?
(F.R.)