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May 30, 2017

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Juncker bows out as firefighter for cooled eurozone troubles

BRUSSELS--Luxembourg premier Jean-Claude Juncker chairs his last meeting of Eurogroup finance ministers on Monday after years battling the debt crisis, before handing over to a Dutch newcomer amid relative eurozone calm.

The succession issue, with a lone candidate bidding to overcome French reticence, will dominate the talks starting from 1600 GMT, relegating discussion about an increasingly contested Cyprus bailout to second-tier status.

Arriving at the European Union headquarters venue shortly before 1200 GMT, Juncker said he was leaving feeling "some melancholy, but mainly relief."

Originally expected to lead the agenda at these talks, a formal request for aid from Nicosia appears to have gone backwards with the long shadow of Russian money-laundering especially hanging over negotiations.

So much so that German Finance Minister Wolfgang Schaeuble, in an interview with German and French newspapers published on Monday, queried if any bailout should even take place — unless absolutely necessary for the wider eurozone's collective interests.

"We're still a long way from being able to decide on an aid package," Schaeuble told Sueddeutsche Zeitung.

"First of all, we have to examine whether the problems in Cyprus represent a danger for the eurozone as a whole. That is one of the pre-conditions for the money coming from the euro rescue fund."

This flagged one issue for the ministers, as Dutch Finance Minister Jeroen Dijsselbloem — who took up his national job only in November — bids to secure the high-profile role as Juncker's replacement.

The mood has changed in 2013, mainly due to European Central Bank action to guarantee downwards-pressure on bond yields for governments which find interest rates on the debt market becoming prohibitive, as was the case for Spain and Italy last year.

"Markets are no longer betting that the ECB will commit suicide by letting major member countries implode," said Holger Schmieding, chief economist with Germany's Berenberg Bank.

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