Saturday

13th Aug 2022

Luxembourg leader set to extend euro zone reign

  • Mr Juncker has served as Eurogroup chairman for five years (Photo: European Commission)

Luxembourg's Prime Minister, Jean-Claude Juncker, looks set to receive a fresh mandate under Lisbon Treaty rules as head of the 16-nation group that shares the euro currency.

"We all agreed that in January the Eurogroup president (chairman) will be elected for two and a half years," Mr Juncker told a news conference after a meeting of euro area finance ministers on Tuesday (1 December).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The Lisbon Treaty – a new EU rulebook that started on 1 December - brings about a number of institutional changes, including the extension of the Eurogroup chairman's working mandate from 2 to 2.5 years.

Mr Juncker's current term is due to expire at the end of 2010, but he now has strong backing from member states to stand for re-election in January.

"He is today the only candidate," French economy minister Christine Lagarde told journalists after the meeting.

The Luxembourg politician has already served as Eurogroup chairman for five years, with Italy expressing an interest in the post earlier this year having failed to secure the European parliament presidency position.

"I see that position would fit our finance minister Giulio Tremonti," Italian Prime Minister Silvio Berlusconi told journalists at the end of a EU summit in June.

Euro too strong

As well as the institutional housekeeping decision, ministers discussed the strength of the euro currency, with all agreeing it was over-valued. The IMF's Europe director, Marek Belka, also attended the meeting and cautioned over the euro's strength.

Mr Juncker briefed ministers on his recent visit to China with EU economy commissioner Joaquin Almunia and European Central Bank chief Jean-Claude Trichet.

"We see it as abnormal that a fast-growing economy devalues its currency in relation to a currency zone where growth performance is far less positive," he said, pointing to China's eight percent GDP annual growth rate.

Euro area growth is forecast to be positive but below one percent next year, with politicians and business leaders concerned the euro's strength versus other currencies is harming the region's export competitiveness.

However Mr Juncker was not overly optimistic about the outcome of his recent visit.

"We came back from China, not exactly reassured but at least we got out message across," he said.

Greece

The ministers also discussed the poor state of Greek public finances, with Mr Almunia citing the need to keep up pressure on the new Socialist government to bring down deficit levels, forecast to exceed 12 percent of GDP this year.

"The problems in Greece are problems of the euro area," he said. The country's debt total is expected to reach 124 percent of its GDP next year, the highest in the euro area.

This has raised the cost of borrowing money on the markets for the Greek government, with investors increasingly concerned about a possible default.

However Mr Juncker moved to quell rumours of a possible bankruptcy, and expressed confidence in the new administration's ability to tackle the challenges. "There is no hint of bankruptcy as far as Greece is concerned," he said.

The Greek government recently announced its budget for 2010 that aims to bring the deficit down to 9.1 percent for that year.

Mr Juncker welcomed the initiative but said other reforms should to be implemented, and did not rule out the need for a supplementary budget later next year.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Droughts prompt calls to cut water use amid harvest fears

With the prolonged lack of rain and high temperatures, fears have emerged over water shortages and droughts decreasing crop yields — prompting calls to use less water and reuse urban wastewater for agricultural irrigation.

EU 'must tax pesticides' to cut use, expert warns

The European Commission put forward a new proposal to reduce pesticides in mid-June. But experts warn that it is based on weak rules, and that European agriculture is stuck in a "permanent pesticide-dependence."

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

Opinion

Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

News in Brief

  1. Germany to help nationals cope with energy price spike
  2. Germany wants pipeline from Portugal
  3. Ukraine urges US to sanction all Russian banks
  4. Spain evacuates 294 Afghans
  5. EU sanctions have 'limited' effect of Russian oil production
  6. Donors pledge €1.5bn to Ukraine's war effort
  7. Sweden overtakes France as EU's top power exporter
  8. Italy's far-right star in European charm offensive

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Defying Russian bombs, Ukraine football starts 2022 season
  2. Sweden to extradite man wanted by Turkey
  3. EU must beware Beijing's new charm offensive
  4. Forest fire near Bordeaux forces over 10,000 to flee
  5. Estonia and Latvia sever China club ties
  6. Russian coal embargo kicks in, as EU energy bills surge
  7. Only Western unity can stop Iran hostage-diplomacy
  8. Kosovo PM warns of renewed conflict with Serbia

Join EUobserver

Support quality EU news

Join us