DThe characterization dates from December 2017, when the euro finance ministers were looking for a successor to the Dutchman Jeroen Dijsselbloem at the head of the euro group. Four ministers entered the race, including Luxembourg’s Pierre Gramegna. According to an EU diplomat at the time, he was undoubtedly an “experienced holder of champagne glasses”. It wasn’t a compliment. What was meant was that the former career diplomat and general director of the Luxembourg Chamber of Commerce might have mastered small talk perfectly, be friendly, jovial and eloquent, but he didn’t drill too deep into political boards. And he was not necessarily seen as someone who could represent the euro area particularly credibly.
Five years later, that same Gramegna got a top position in the euro area. On Friday, the euro finance ministers elected the 64-year-old from Luxembourg to head the euro crisis fund ESM, succeeding the first boss Klaus Regling, who had been in office for twelve years. This ended a dispute about Regling’s successor, in which the euro states had blocked each other for half a year. The fact that Gramegna has now won the race is an ironic final point of this dispute. Two months ago, he was burned when Luxemburg withdrew his candidacy.
The candidate by Christian Lindner
Technical expertise is even more important as a suitability criterion for the post of head of the ESM than for the post of head of the Eurogroup. Above all, Regling was considered the ideal person because he was able to communicate with the financial market players and they accepted him as a dialogue partner. Gramegna has not yet provided proof that he will succeed.
There are a number of reasons why the Luxembourger got the job after all. Paschal Donohoe, head of the Eurogroup, apparently managed to convince the southern euro states that Leão, as the representative of a former “program country”, would not have been a suitable supreme administrator of the ESM billions – and that Gramegna, the candidate of German Finance Minister Christian Lindner (FDP) can actually act as a mediator between North and South.
In addition, the Eurogroup no longer wanted a financial expert, but one of their own, i.e. a former minister. The insight that anyone who has ever acted as finance minister in the financial center of Luxembourg also knows the financial markets and knows how to talk to their protagonists spoke in favor of Gramegna. The fact that he founded the Luxembourg sovereign wealth fund “in favor of future generations” in 2014 may also have spoken in his favour.
It was almost Gramegna’s turn
It also played a role that Gramegna had been there for a long time and, to a certain extent, it was his turn. His bid for the presidency of the Eurogroup failed not only in 2017, when the ministers from four not particularly strong candidates did not elect him as their head, but the Portuguese Mário Centeno. When he became head of the Portuguese national bank in 2020, the Luxembourger entered the race again – and fell through again, this time against the current incumbent, Donohoe from Ireland, and Nadia Calviño from Spain.
In December 2021, Gramegna resigned as Finance Minister after eight years “for personal reasons”. It seemed as if the politician wanted to retire and spend more time with his family. But appearances were deceptive. Now, like his predecessor, the ex-diplomat will regularly scour all the world’s major financial centers and try to convince local investors that ESM bonds are a good investment. And he will hope that the crisis fund will not have to help individual euro states again, as happened almost constantly during the euro crisis.
For Donohoe, getting rid of the tough ESM staffing had a pleasant side effect. The Irishman is the sole candidate for another two-and-a-half-year term at the head of the Eurogroup. There is no doubt that he will be re-elected in a week.
