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Jean-Claude Juncker is the incumbent Eurogroup president

The Euro Group or Eurogroup is a meeting of the finance ministers of the eurozone (i.e. those Member states of the European Union (EU) who have adopted the euro as their official currency). It is the political control over the euro currency and related aspects of the EU's monetary union such as the Stability and Growth Pact. Its current President is Jean-Claude Juncker.

The ministers meet a day before a meeting of the Economic and Financial Affairs Council (Ecofin) of the Council of the European Union. 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.

Contents

History

The group has no official name, but is colloquially called the "Euro Group" (formerly Euro-X and then 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 comprising of heads of state and government, rather than finance ministers, for the first[3] and (as of 2009) only time.

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 Ecofn's decisions that on Eurozone affairs.[4] In 2009 the Lisbon Treaty formalised the group and its president.

President

The current president of the group, dubbed Mr Euro[1] or the president of the eurozone,[5] is Jean-Claude Juncker (finance minister and Prime Minister of Luxembourg).

In September 2004, the Eurogroup decided it should have a semi-permanent president that is to be appointed for a period of two years. Prime Minister and Finance 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 Junkers 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 a euro group president in January 2010, Juncker emphasised the need to increase the scope of the Euro Group's activities. In particular in terms of co-ordinating economic policies and representation. Juncker proposed creating a small secretariat for the group in the council 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]

Members

Eurogroup members as of February 2010.[9] The ECB President, Economic and Monetary Affairs Commissioner and Chairman of the Eurogroup Working Group also attend the meetings.

Representing Member Representing Member
 Austria Josef Pröll  Netherlands Wouter Bos
 Belgium Didier Reynders  Portugal Fernando Teixeira Dos Santos
 Cyprus Charilaos Stavrakis  Slovakia Ján Počiatek
 Finland Jyrki Katainen  Slovenia Franc Križanič
 France Christine Lagarde  Spain Elena Salgado
 Germany Wolfgang Schäuble Non-voting
 Greece Giorgos Papakonstantinou European Union Eurogroup President Jean-Claude Juncker
 Ireland Brian Lenihan European Union Central Bank President Jean-Claude Trichet
 Italy Giulio Tremonti European Union Economic and Monetary Affairs Commissioner Olli Rehn
 Luxembourg Luc Frieden European Union Chairman of the Eurogroup Working Group Thomas Wieser
 Malta Tonio Fenech

Legal basis

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)[10]

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.[11]

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."[12] However Finance Commissioner Joaquin Almunia stated that before there is common representation, a common political agenda should be agreed.[12] 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 continue without it. The eurozone economic government would discuss issues with the European Central Bank, which would remain independent.[13]

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] Germany subsequently rejected Sarkozy's idea, as he had proposed economic policies to respond to the economic crisis that would be mainly paid for by German funds.[3] It is also opposed by current Eurogroup chair Jean-Claude Juncker who does not think Europe is ripe for such a large step.[1]

There are other proposals to start with simply a eurozone government bond's market under the control of the Eurogroup to help with the structural deficiencies. This would help reduce German worries of it funding all the bail outs and the money raised could be used for bailing out banks or the projects of the European Investment Bank and European Bank for Reconstruction and Development. Although under the control of the Eurogroup, they would be managed by the ECB and would help create a unified and supported financial system. Such a system would run parallel to national bonds and may even draw the membership for the UK.[14]

Current Belgian Prime Minister Yves Leterme proposed in March 2010 a common finance ministry for the eurozone known as the European Debt Agency which would manage eurozone government debt.[15] A similar plan came from France and Germany for creating a European version of the International Monetary Fund (IMF) so IMF style resources and expertise could be used, while solving the problem within Europe. The plan is also backed by the Socialists and the Italian President who stated that "The European Central Bank [and] the European institutions are aware that there's something missing from our common tool box to tackle unforeseen and serious crises in one of the eurozone nations." The Commission is preparing a formal proposal on an EMF[16] however some see the plan as too far fetched as there is no appetite for treaty reform after Lisbon.[15] Regardless, an EMF or EDA wouldn't be operational in time to help Greece. French President Sarkozy declared that "France is by the side of Greece in the most resolute fashion ... The euro is our currency. It implies solidarity. There can be no doubt on the expression of this solidarity" and that if the eurozone let a member fail, there would have been no point in creating the currency.[16]

References

  1. ^ a b c d An economic government for the eurozone? PDF, Federal Union
  2. ^ a b History, Eurogroup website
  3. ^ a b c Germany rejects idea of eurozone 'economic government': report, EU Business (21 October 2008)
  4. ^ a b c Schwarzer, Daniela (24 November 2006) Institutionalisation through the back door, Eurozone Watch
  5. ^ Marlowe, Lara (24 October 2008 Sarkozy should head euro zone states, say French, Irish Times
    Other usage of the term if needed: [1] [2] [3]
  6. ^ "Juncker re-elected Eurogroup president, voicing optimism over economic growth". People's Daily. 2006-09-09. http://english.peopledaily.com.cn/200609/09/eng20060909_301052.html. Retrieved 2008-01-02. 
  7. ^ Willis, Andrew (3 December 2009) Luxembourg leader set to extend euro zone reign, EU Observer
  8. ^ a b Willis, Andrew (19 January 2010) Juncker wants more eurozone activism, EU Observer
  9. ^ About the eurogroup, Council Website 19 February 2010
  10. ^ PROTOCOLS, Official Journal of the European Union
  11. ^ Treaty of Lisbon (Provisions specific to member states whose currency is the euro), EurLex
  12. ^ a b Vucheva, Elitsa (2008-04-15)eurozone countries should speak with one voice, Juncker says, EU Observer.
  13. ^ "Sarkozy pushes eurozone 'economic government', France 24 (21 October 2008)
  14. ^ Soros, George (18 February 2009) The eurozone needs a government bond market, Financial Times
  15. ^ a b Belgian PM Leterme proposes European Debt Agency, The Guardian
  16. ^ a b Plans emerge for 'European Monetary Fund' EU Observer

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