Four countries enter race to nominate new EU bailout fund chief

On his way out: Head of the European Stability Mechanism (ESM), Klaus Regling will leave his post in October this year. The race for his succession has started. [Yannis Kolesidis (EPA-EFE)]

As the term of the current managing director of the European Stability Mechanism (ESM) Klaus Regling draws to a close in October 2022, four men have been proposed by their government to succeed him.

Euro area finance ministers will discuss the candidates at their meeting on 23 May, and will vote on Regling’s successor on 16 June. The successful candidate will have to win 80% of the votes to be elected for a five-year term at the head of the ESM.

The ESM is an intergovernmental organisation bringing together all members of the euro area, tasked with supporting member states that get in financial trouble – for example if they cannot service their public debts anymore or if their financial sector runs in trouble and threatens to destabilise the country’s economy.

It was set up in October 2012 as the successor to the European Financial Stability Facility (EFSF), which was created as a temporary backstop to provide emergency assistance to Greece, Ireland and Portugal during the euro zone debt crisis.

To receive financial support, however, countries have to file an official request and commit to reforms.

The candidates

The governments of Italy, the Netherlands, Portugal, and Luxemburg each nominated a candidate to the post shortly before the deadline on Monday (2 May), according to a press statement by Paschal Donohoe, the Irish minister of finance and president of the Eurogroup.

Italy nominated Marco Buti, who was director-general for economic and financial affairs at the European Commission from 2008 to 2019 before he joined EU economy commissioner Paolo Gentiloni as chief of staff.

In his current role, Buti is one of the main architects of the reform of the macroeconomic governance framework and the fiscal rules that should be proposed later this year.

The Dutch government, meanwhile, nominated Menno Snel, who was state secretary for finance from 2017 to 2019.

Portugal nominated João Leão, who was minister of finance in the Costa government from 2020 to March 2022.

Luxemburg put forward Pierre Gramegna, also a former minister of finance, who served from 2013 to January 2022.

Euro area finance ministers will thus have the possibility to vote for one of their former colleagues to take over from the current managing director, Klaus Regling.

End of a long career

Until now, the 71-year old Regling has been the first and only managing director of the ESM since its creation in 2012, during the euro zone debt crisis.

Regling was Marco Buti’s predecessor as director-general for economic and financial affairs at the European Commission, serving from 2001 to 2008. In the early 1990s, he worked for the German ministry of finance, helping to lay the groundwork of the economic and monetary union that is still in place today.

In late 2021, Regling publicly criticised the EU’s fiscal rules that he helped to bring about, as “economically nonsensical”.

“Politicians should be aware that a country can borrow too much, but also too little,” he said, while ESM economists argued for an increase of the public debt limits, given the low interest rate environment.

Regling’s term ends on 7 October, after which the new managing director will take over the reins in a time of high economic uncertainty and high levels of public debt.

Architect of EU fiscal rules calls for reform

Ahead of a new push by the European Commission to reform the EU’s fiscal rules, the chief of the bloc’s bailout fund, Klaus Regling pointed out the danger of sticking to rules that have become “economically nonsensical”.

[Edited by Frédéric Simon]

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