Euro-Area `Linchpin' Departs as Bloc Seeks to Start New Chapter
(Bloomberg) -- In February 2015, shortly after Greece’s new anti-bailout government swept to power with promises of ending austerity, a little-known European official flew to Athens on a secret trip to deliver a message, the ramifications of which continue to reverberate today.
Sitting down with a small group of government ministers, the Austrian economist spelled out the consequences of Greece defaulting on its loans. First, the country would be cut off from the international funds needed to pay salaries and pensions. As capital flight ensued, banks would collapse and the economy would follow. His audience, however, wasn’t convinced, until his prophesies were all but realized six months later.
The trip, orchestrated by higher powers in Brussels and Berlin, highlights the key role played behind the scenes by Thomas Wieser, head of the influential euro-working group, in helping quell the crisis that racked the euro area. As Wieser now prepares to leave his post at the helm of one of the bloc’s most powerful bodies later this month, the lessons learned during those turbulent times are informing the debate among governments on how to strengthen the 19-nation currency region.
The mandarin’s departure signals the end of an era for the old guard who faced unprecedented financial calamity, while the bloc’s attention has shifted from managing chaos to avoiding it altogether. On Monday, euro-area finance ministers will appoint Dutch Treasury Director General Hans Vijlbrief to succeed Wieser, in a meeting that will otherwise focus on further steps to complete the bloc’s banking union and develop its crisis-fighting fund.
The sharp-witted 63-year-old Wieser is little known outside EU institutions and finance ministries. But from his office on the third floor of the gray Justus Lipsius European Council building in Brussels -- where leaders have held countless emergency summits -- he has overseen the euro’s ascension, transformation and brush with disintegration.
Since 2012, Wieser has led the officials that prepare the monthly meetings of euro-area finance ministers, known as Eurogroup. The so-called EWG was notoriously powerful during the crisis, green-lighting emergency loans and leading discussions on issues such as banking rule overhauls and the bloc’s crisis-fighting apparatus.
One month after his 2015 trip failed to convince the Greeks to drop their brinkmanship, tensions between Athens and its creditors were growing, and Wieser was back on a plane to Greece for a second clandestine mission. German Chancellor Angela Merkel had invited Greek Premier Alexis Tsipras to Berlin in an effort to break the deadlock, and Wieser’s mission was to ensure the Athens’s delegation was up to the task. Over pasta and chicken at then-finance minister’s Yanis Varoufakis’s house, he attempted to prepare the Greeks for their first visit to the Chancellery.
The surreptitious trip was characteristic of Wieser who, while never in the limelight, was always in the center of countless critical efforts that ensured the euro survived its greatest crisis yet.
“Thomas Wieser is a man who advances without seeking fame,” Valdis Dombrovskis, the EU commissioner in charge of the euro, said in an interview. “He is one of these skilled statesmen who will be little known to the large public, yet without whom history would not be the same.”
Squaring the Circle
Wieser’s departure at the end of January, which aligns with the end of Eurogroup Chief Jeroen Dijsselbloem’s tenure, will likely rob the group of depth and experience just as the euro area enters a critical junction. With the worst of its crisis behind it, and helped by the election of deeper-integration advocate Emmanuel Macron in France, the bloc is now looking at strengthening itself in the face of future financial turmoil.
“As the first permanent EWG chairperson, Thomas Wieser leaves huge shoes to fill,” said Klaus Regling, the managing director of the European Stability Mechanism, the euro-area bailout fund that was itself born out of one such crisis-meeting. “He was one of the key persons to ensure that the euro area has overcome the crisis successfully and that the integrity of the currency union remained intact.”
Few cases illustrate Wieser’s role in the euro’s survival better than his involvement in Greece. Whenever the country and its creditors failed to see eye-to-eye, he was among the few tasked with squaring the circle, even as everyone else had given up.
After a Eurogroup meeting in July 2015 concluded prematurely because the atmosphere had become too toxic, Wieser, together with Dijsselbloem, stayed until the early hours and, to the surprise of all sides, hammered out an acceptable compromise, a version of which was eventually agreed upon by euro-area leaders in a deal that brought Greece back from the brink.
To many EU officials, Wieser is the ultimate Brussels eurocrat: He’s deeply knowledgeable, technically proficient and has an an understanding of the political pitfalls his group’s decisions will face in EU capitals. To some critics, though, he represents the faceless “Brussels” behind demands for tough austerity inflicted upon Europe’s citizens by unelected officials sitting miles away in Belgium.
Still, revered or loathed, few doubt the role he played in the euro’s most critical hours.
Speaking after a summit on the future of the euro-area in December, European Commission President Jean-Claude Juncker called the soon-departing Wieser “the linchpin of the Eurogroup.”
“Without him much would not have been possible, and thanks to him much was made possible,” Juncker said.
©2018 Bloomberg L.P.