Spain’s Finance Chief Starts as Front-Runner in Eurogroup Race

(Bloomberg) -- Prime Minister Pedro Sanchez nominated Economy Minister Nadia Calvino as Spain’s candidate to lead meetings of the euro-area finance chiefs, confirming her position as the front-runner and officially launching the race for an informal but powerful post at a critical juncture for the region.

Calvino, 51, emerged as a leading candidate after Mario Centeno resigned as Portugal’s finance minister earlier this month. She has a curriculum that’s well-suited to the post, authorities in Spain say, as a moderate Socialist who spent nearly a decade as a senior official at the European Commission in Brussels before returning to Madrid when Sanchez took power in 2018. She would be the first woman to hold the post.

During the coronavirus crisis, Calvino has worked to bridge the differences between Spain’s business leaders and the minority coalition government which includes the far-left group Podemos, earning plaudits from executives and some economists. She’ll face a challenge from Ireland’s Paschal Donohoe, who may attract support from the more fiscally conservative countries of northern Europe. Ireland sought to build links with nations such as the Netherlands and other new allies after Brexit.

Luxembourg Finance Minister Pierre Gramegna on Thursday also joined the race, saying on Twitter he stands ready for “today’s momentous challenges” that “require consensus and compromise between all Eurozone members -- small or large, North to South & East to West” of the EU.

Calvino has a fiscally conservative streak too, that has sometimes made her reluctant to support the government’s massive injection of coronavirus-crisis funds to bolster the floundering economy. But she has also been a strong backer of a euro-area budget and common insurance for bank deposits that may stir up opposition in the North.

Whoever is selected to head the Eurogroup will be leading efforts to rebuild the European economy and seize on the expected influx of crisis funds to brighten the outlook by making progress on the region’s weak points, such as digitalization and the competitive edge of major companies.

While officials in Madrid say they are cautiously optimistic about Calvino’s chances, they acknowledge that she faces some hurdles.

Spain already holds several top posts in the EU for starters.

Calvino’s predecessor Luis de Guindos is vice president of the European Central Bank. Former foreign minister Josep Borrell is the High Representative of the EU. And Spaniard Jose Manuel Campa is chair of the European Banking Authority.

Also, Spain’s economy has been one of the hardest-hit by the coronavirus crisis and the country is poised to be one of the single biggest recipients of financial aid from a package of funds that’s still being negotiated in Brussels. With so much at stake for Spain in the coming years, some countries might want a more neutral leader for the Eurogroup.

“Today I presented my candidacy to lead the Eurogroup, with the willingness to continue working for a strong and prosperous euro zone, for the benefit of all European citizens,” Calvino said on Twitter. The deadline for nominations is Thursday.

Potential Rival

Donohoe decided to make a bid for the role after consulting with counterparts around Europe to guage his support.

His plans had been complicated by Ireland’s ongoing government talks with his party, Fine Gael, seeking to form the country’s first ever grand coalition. Donohoe’s decision to run is a clear signal he expects to remain as finance minister.

The Green Party on Friday will announce the results of a ballot by members on joining a coalition with the country’s two traditional parties of government, Fine Gael and Fianna Fail. If they vote against, Ireland could be facing another election.

While less prominent than during the euro-zone sovereign debt crisis, the Eurogroup presidency has been a sought-after post, giving its holder seats at the table at all the important and exclusive international fora. Originally designed as an informal meeting for finance ministers to exchange views, the group morphed into one of the most closely watched decision-making bodies in Europe.

While the president of the Eurogroup has no decision-making powers, the role calls for a skilled mediator who can broker agreements when the bloc faces major challenges.

‘Ireland has long been a bridge builder,” said Donohoe in an email confirming his nomination. “If elected, I will work to chart a common way forward on building the European recovery, strengthening the eurozone economy, and promoting sustainable and inclusive growth.”

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