Greece versus Belgium as Eurozone finance ministers pick their new chief

Good morning.

Today, our finance correspondent previews the imminent vote to elect the next Eurogroup president, and I report on the extensive negotiations over the proposed Ukraine reparations loan raised against frozen Russian assets.

Master of coin

Today finance ministers of the Eurozone will elect one among their midst to lead the Eurogroup, and every vote counts, writes Paola Tamma.

Context: The body reuniting the 20 finance ministers of the single currency bloc jumped to prominence during the Eurozone sovereign debt crisis, when it steered EU policy to salvage economies stricken by the threat of a default. 

It’s led by a president elected by a simple majority, and became vacant last month after Ireland’s Paschal Donohoe stepped down to take up a senior position at the World Bank.

The two contenders are Greek finance minister Kyriakos Pierrakakis and Belgian deputy prime minister responsible for budget Vincent Van Peteghem. 

Both hail from the conservative European People’s Party, which counts nine members of the Eurogroup, thus splitting the conservative vote. Social Democrats control five seats, Liberals four, and hard-right parties have two.

The winner has to convince at least 10 of his peers that he’ll be best suited to lead the anaemic currency bloc back to sustained growth, rein in high debt and overspending, shape the euro in its digital form and complete the single market for financial services.

The vote remains too close to call with many capitals refusing to pick a side in advance, most prominently the Big Four of France, Germany, Italy and Spain.

Greece’s Pierrakakis is selling the story of his country’s economic turnaround following a decade of bailouts and belt-tightening reforms that, he claims, have enabled the country to outperform the bloc in recent years, run a budget surplus and put debt on a downward path.

“Greece’s recent experience offers a European lesson,” he told the Financial Times.

Weighing against Van Peteghem’s candidacy is a pending decision from Belgium on the use of Russia’s frozen assets to fund Ukraine, which has pitted Kyiv’s staunchest Eurozone supporters — the Baltic states and Finland — against him.

But the Belgian is undeterred: “In a world of uncertainty, steady leadership is the euro area’s strongest asset. My commitment is to safeguard that stability with discretion, trust and determination,” he told the Financial Times, adding: “I feel strong support within the group for this approach.”

Chart du jour: Fortress belt

A proposed peace plan to end the war in Ukraine is stumbling on Russia’s demand to be given land it has been unable to conquer: Ukraine’s eastern “fortress belt” of Pokrovsk, Kostyantynivka, Druzhkivka, Kramatorsk and Slovyansk.

Stalemate

Extensive talks between EU ambassadors in Brussels yesterday failed to make any decisive headway on a “reparations loan” for Ukraine funded by immobilised Russian sovereign assets, as the clock continues ticking to next Friday’s deadline.

Context: Ukraine will go bankrupt without tens of billions of additional financial aid early next year. Brussels has proposed an initial €90bn loan funded by Russian assets immobilised in the EU. Most of the assets are held in Belgium, which opposes the idea due to fears of retaliation from Moscow.

The European Commission says its 87-page legal proposal, and related 19- page proposal to keep the assets frozen indefinitely, allay almost all of Belgium’s concerns.

That’s not how Belgium sees it. The country’s representative held firm during an extensive discussion yesterday, tabling a 37-page list of detailed amendments to the proposal, which people briefed on the discussion said it appeared to be designed to neuter.

The EU says it must agree some form of funding for Kyiv by next Friday. Given the required paperwork, financial engineering and legal approvals that are still necessary after a political agreement, that’s the latest to back the loan for it to pay out before Ukraine’s formal fiscal cliff-edge in April.

Ending a summit of leaders next week with no deal would send a very negative signal to Ukrainian debt holders and traders of its currency. Regardless of any efforts to secure an imminent peace deal, the country still needs to pay its nurses, teachers and police.

On the peace deal push, the leaders of France and Germany joined a call with their British and American counterparts yesterday afternoon for an update.

Identical Franco-German statements said that “intensive work on the peace plan is to continue in the coming days. [The four leaders] agreed that this is a decisive moment for Ukraine and for collective security in the Euro-Atlantic area”.

Separately, Ukrainian President Volodymyr Zelenskyy held talks with US Treasury Secretary Scott Bessent, Donald Trump’s son-in-law Jared Kushner and BlackRock boss Larry Fink about Ukraine’s postwar reconstruction.

What to watch today

1. Eurogroup meets to elect new president.

2. Nato secretary-general Mark Rutte meets Chancellor Friedrich Merz in Germany.

3. Finland’s President Alexander Stubb visits the Netherlands.

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