FT — Jeroen Dijsselbloem Friday, departed from his position as president of the Eurogroup after a resounding defeat of his party in the Dutch elections last March in which Dijsselbloem lost his seat.
Despite his five years of forcing through bailouts and major austerity on Greece Dijsselbloem believes that further efforts are needed in Greece and other countries,
In a FT interview Dijsselbloem said that the single currency’s robustness would depend on making labour markets more flexible and improving the functioning of capital markets, with national governments needing to do much of the work. “If there were to be an economic shock this year, many of our countries and the monetary union as a whole are not prepared,” the former Dutch finance minister said.
Mr Dijsselbloem’s emphasis on the role of markets in absorbing shocks contrasts with the push from French president Emmanuel Macron and the European Commission for new budgets or backstops at European level to help countries weather crises.
The eurogroup developed into a key decision making body during the long eurozone financial crisis. Discussion of how to reinforce the eurozone is likely to dominate the tenure of Mr Dijsselbloem’s successor, Mário Centeno of Portugal.
During Mr Dijsselbloem’s time in office, governments navigated the worst of the sovereign debt crisis, including bailouts of Cyprus and Greece.
A third bailout programme for the country was settled in July 2015 only after a tumultuous six months when Greece’s Syriza government, and particularly its then finance minister Yanis Varoufakis, fought euro area governments over the conditions attached to rescue loans.
Mr Dijsselbloem said that, while much had been said of plans circulated by Germany during those talks for a temporary “Grexit”, in practice it was countries of central and south-eastern Europe — many with lower wealth per head than Greece — that mostly lost patience with Athens.
“Behind the broad back of Germany were a number of countries lining up who simply said ‘We’re done. We don’t have any confidence. We don’t want to talk any more with the Greek government. We want to talk about Plan B’,” he said.
Mr Dijsselbloem said he never countenanced a Greek exit, which would have been “really damaging” and a “huge mistake”.
Mr Dijsselbloem’s baptism of fire came with the bailout of Cyprus in 2013. A first version agreed was severely criticised for imposing a levy on bank depositors, including those with savings of less than €100,000 who would normally be protected by EU law.
Mr Dijsselbloem concedes he did not convince public opinion that the plan did not violate the EU bank deposit guarantee and says he regrets the episode. .
The bailout deal was altered days later to spare smaller depositors and place more of a focus on wiping out bank bondholders, including senior creditors.
Mr Dijsselbloem said the move — making clear that creditors of European banks should expect to be on the hook for losses — was a “game changer” with ramifications beyond Cyprus.
He said the step paved the way for a eurozone banking union, which would combine EU-level support mechanisms for the financial system with rules on creditor liability.
Asked about what advice he would offer Mr Centeno, he said patience and a “pro-active stance” were key. “It doesn’t happen around you. You really have to get in and get involved in the substance, in the political dealmaking,” Mr Dijsselbloem said. “Don’t allow defeatism, don’t even allow it in your thinking.”
It remains to be seen if Mr Dijsselbloem’s next role will be in the finance world or in the senior ranks of the EU.
