Spaniard Set To Become Eurogroup Chief

Luis de Guindos is Spain's economy minister. The 54-year-old is considered to be the architect behind the cleaning up of the country's banks. He is now expected to take over the top job of the Eurogroup.



"I already have a job thank you very much. Actually I have two and I am actually liking the combinations and that's all I can say ... What the future may bring we will wait and see," the current head of the Eurogroup Jeroen Dijsselbloem said recently, referring to the positions he holds in The Hague and in Brussels. He was answering to questions on whether he would take up a position at the European Commission (EC).



Although Dijsselbloem hasn't so far quit his post to switch to the European Union executive, his tenure as the head of the informal body that brings together the finance ministers of eurozone countries is about to end in the spring of 2015.



Spanish Economy Minister Luis de Guindos is now set to succeed Dijsselbloem. During a visit to Spain on Monday, August 25, German Chancellor Angela Merkel officially endorsed de Guindos for the position. It would be the first time that a non-finance minister will hold this office.



De Guindos is set to become a full-time president of the Eurogroup. The position has so far been a side job, which is often carried out in the evenings. This is not in accordance with the significance of this body, many experts say.



The group's head dealt with requests for assistance from countries affected by the economic crisis. Dijsselbloems's predecessor Jean-Claude Juncker spent days talking on the phone in a bid to prevent Greece from a disastrous financial crash.



In addition, the head of the Eurogroup also leads the Board of Governors of the Luxembourg-based eurozone's bailout fund European Stability Mechanism (ESM). This powerful financial institution currently has around 80 billion euros in paid-in capital and is a firewall for the eurozone nations against future financial crises.



A reformist?



The 54-year-old de Guindos, who has been Spain's economy minister since 2011, is credited with reforming the country's banking sector which was battered by the severity of the housing crisis. Many ailing financial institutions were nationalized and restructured.



However, the cleaning up of banks and the associated costs to taxpayers, which ran into billions, has been quite controversial in Spain. de Guindos, however, has always countered the criticism by arguing that a collapse of banks would have had much worse consequences.



Spain, meanwhile, left the EU bailout program of about 41 billion euros to bail out the nation's banks. Furthermore, Madrid also repaid 1.3 billion euros at the beginning of June, even though repayments on the rescue funding were not due until 2022.



The economy has also been growing at a better rate than expected, with the government projecting a 1.2 percent expansion for this year. In 2015, it estimates an even higher rate of 1.8 percent. Despite the positive developments, the country is still plagued by high unemployment and increasing government debt.



A man with a past



De Guindos' appointment as economy minister in 2011 by conservative Prime Minister Mariano Rajoy was not something that was widely expected. But ironically, de Guindos - who worked for the collapsed US bank Lehman Brothers between 2006 and 2008 - was expected to lead Spain out of its worst economic crisis and solve the country's unemployment and debt problems.



At the end of 2008, de Guindos joined the auditing firm PricewaterhouseCoopers (PwC) and two years later, he took over as the head of a finance research center set up by PwC at the IE Business School in Madrid. Analysts say that in this period, he became one of the leading economic policy thinkers among Spanish conservatives. Furthermore, at the beginning of his career, he worked as secretary of state for economic affairs. During that time, he started to establish a network in Brussels which could come in handy now.



Good reputation



The economy minister also enjoys good international standing. German Finance Minister Wolfgang Schäuble praises de Guindos as an "outstanding economy and finance minister." In its efforts to overcome the crisis, Schäuble believes, Spain is on the path to success.



The "sound fiscal policy" and the reforms introduced by de Guindos have led to greater confidence over Spain's economy among members of the Eurogroup. Even Spain's Prime Minister Rajoy will welcome if de Guindos takes on more responsibilities. Rajoy praised his economy minister's "excellent work" in Spain and Europe, according to the Internet portal ABC.es.



Seine künftige Aufgabe wird einiges von de Guindos abverlangen. Der Präsident der Eurogruppe muss einerseits in dem Gremium der Euro-Finanzminister eine Spaltung zwischen Krisenstaaten und den florierenden Ländern vermeiden, muss aber auch die finanzpolitischen Versäumnisse deutlich kritisieren. Zudem wird jede öffentlichen Äußerungen von Investoren aufmerksam verfolgt werden und kann die Finanzmärkte deutlich bewegen.



De Guindos' future task will be much more demanding. On one hand, the president of the Euro Group has to prevent a divide between the crisis and thriving countries. On the other, he also has to criticize the fiscal failings. Moreover, his public statements are closely monitored by investors and can significantly influence financial market movements.