Dijsselbloem Preaches Balanced Budgets as Euro Chief

Dutch Finance Minister Jeroen Dijsselbloem
Jeroen Dijsselbloem, newly elected Eurozone President and Dutch Finance Minister, looks at Luxembourg Prime Minister and former Eurogroup president Jean-Claude Juncker, during an Eurogroup meeting at the EU Headquarters in Brussels on Jan. 21, 2013. Photographer: Georges Gobet/AFP/Getty Images

Dutch Finance Minister Jeroen Dijsselbloem was elected to a key European crisis-management post over objections from Spain, pointing to future north-south tussles over bailouts, austerity and fixing the banking system.

Dijsselbloem, who last night started a 2 1/2-year term as chairman of euro finance meetings, preached the philosophy of balanced budgets as the best recipe for a healthy economy. Spain, considering a European aid program as it struggles with deficits, was alone among the 17 euro countries in voting against him.

“We should hold on to it and continue” fiscal consolidation, Dijsselbloem told reporters in Brussels late yesterday after being tapped to succeed Luxembourg Prime Minister Jean-Claude Juncker as Eurogroup chief. “Working toward a sustainable budget, a balanced budget in different countries, doesn’t conflict with holding on to solidarity.”

The little-known Dijsselbloem’s assumption of the informal, unpaid coordinating position follows last year’s appointments of a German to run the euro area’s permanent rescue fund and a Luxembourger to a vacancy at the European Central Bank, tilting the European balance of power toward northern countries committed to fiscal discipline.

‘Collective Action’

Just over two months after joining the Dutch government, Dijsselbloem, 46, was catapulted into the euro post thanks to a shortage of other candidates and a desire to reward the Netherlands, which hadn’t received a top-level European appointment since 2004.

The Netherlands has allied with Germany and Finland in setting tough terms for countries seeking aid packages and balking at picking up the costs of repairing banking systems elsewhere. Dijsselbloem will now preside over debates that will shape a future bank-aid mechanism.

Dijsselbloem pledged “collective action” to beat back the debt crisis and restore the euro-area economy and said he harvested a promise of “professional and positive” cooperation from Spanish Economy Minister Luis de Guindos, the lone opponent to his candidacy.

“If we are going to approach the euro area as a zone with a harsh line in the middle between AAA and non-AAA, between the north and the south, no way are we going to move forward,” he said. “That will definitely not be my approach.”

Policy Details

Still, at a joint appearance with Juncker after the meeting, Dijsselbloem passed up opportunities to comment on possible concessions for Ireland as it seeks to return to market financing, on France’s budget and on the euro’s start-of-year rise against the dollar.

Dijsselbloem’s silence on the policy nitty-gritty of the next few months also served as a reminder that the chairman has little power beyond the ability to set the agenda, steer the meetings -- usually monthly, except during the more intense phases of the crisis -- and announce the outcome.

The Eurogroup brings together euro-area finance ministers, the European Commission and the ECB. Its chairmanship rotated after the euro’s arrival in 1999 until Juncker, then also Luxembourg’s finance minister, was named the first full-time chief in 2005. Initially tapped for a two-year term, he was reappointed three times.

Maastricht Treaty

Juncker, 58, was present at the creation of the euro, serving as Luxembourg’s finance minister during the Maastricht Treaty negotiations in 1991. He became prime minister in 1995, a job he will keep after giving up the regular commute to Brussels for euro finance meetings.

Juncker, Europe’s longest-serving government leader, said Dijsselbloem’s comparative inexperience won’t be a handicap.

“Sometimes when I look at the sheet in front of me with so much on it, maybe then it’s an advantage if he has a sheet with less written on it so far,” Juncker said.

While Dijsselbloem emerged as the front-runner to succeed Juncker after a December summit of government leaders, last-minute objections from France threatened to derail the appointment on concerns that it would give Germany’s ideological allies too much sway in battling the debt crisis.

French Finance Minister Pierre Moscovici, who questioned the rush to make the appointment in a Frankfurter Allgemeine Zeitung interview last week, said Dijsselbloem needs to balance northern and southern interests and not push too hard for deficit reduction.

Agricultural Economics

“I asked him to be not the president of the AAAs, or the north versus south, but the president of the whole Eurogroup,” Moscovici said.

As a member of the Dutch Labor Party, Dijsselbloem is in the same political family as France’s Socialists, the party of Moscovici and French President Francois Hollande.

Dijsselbloem became Dutch finance minister on Nov. 5 as part of Liberal Prime Minister Mark Rutte’s coalition government following an election in September. He holds a degree in agricultural economics from Wageningen University.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE