Mario Centeno and Jeroen Dijsselbloem during a ECOFIN meeting in February 2017. PES Communications/Flick. Some rights reserved.

“Above all, the thrall in which an ideology holds a people is best measured by their collective inability to imagine alternatives.”

- Tony Judt, The Memory Chalet

Two years ago Mario Centeno was yet another finance minister of the Eurozone trying to convince his European counterparts that austerity was not working. Portugal was emerging from a severe economic crisis and an equally challenging bailout. Pensions were slashed, education suffered a 23 per cent cut and unemployment reached 17.5 per cent in 2013. The former centre-right government zealously followed the treatment recommended by the IMF and the European Union. But the results were far from satisfactory. Deep cuts were not after all the answer to improve our economy and the life of our citizens. However, things changed dramatically when Antonio Costa´s government assumed office in 2015. After finding an unorthodox formula to govern, the socialists showed Europe that there is an alternative: the solution lies, politically, in reaching broader consensus. Economically, in boosting demand, not suppressing it.

Mr. Centeno is now going to Brussels to defend the Portuguese model. He will preside over the Eurogroup, influencing the direction of the eurozone economic and monetary policies in a key moment for the future of the European project. He overcame the finance ministers of Latvia, Luxembourg and Slovakia, and become the first holder of the post coming from a Southern European country.

The solution lies, politically, in reaching broader consensus. Economically, in boosting demand, not suppressing it.

Mr. Centeno’s metamorphosis from outsider to European leader started when Portugal left the EU´s excessive deficit procedure in May. The decision gave Portugal margin to ease austerity and to push away the threat of future sanctions. The decisive moment for Mr. Centeno, however, came the day after. Mr. Schäuble, then Germany´s finance minister, called him the “Ronaldo of Ecofin” and praised him in public. Many understood Mr. Schäuble words as an endorsement. However, few believed Portugal´s finance minister could be on his away to replace Jeroen Dijsselbloem.

Still, it was during this time that the perception about Portugal´s finance minister changed. People started to focus less on his failures, and to pay closer attention to his merits. As Portugal´s economic situation improved, so did Mr. Centeno popularity. But despite Mr. Schäuble words and Portugal´s economic recovery, Mr. Centeno wouldn’t have been elected if several other factors hadn’t come into play.

Public domain.

Every leadership position in Europe is chaired by the European People´s Party. The exception is the Eurogroup. And there was a gentlemen agreement between conservatives and socialists ensuring that the Eurogroup should be presided by the latter. There was also consensus around the idea that the President of the Eurogroup should come from a smaller country. Another decisive factor was the electoral calendar in Italy – elections will take place during the Spring – and the political instability in Spain. Nonetheless, Portugal´s role as Europe´s success case was a key factor. Whether we like it or not, economic results determine the perception of politicians and governments. And financial stability in a country used to the contrary is a sign of competence. And a synonym of political success, even if the results in other areas are not favourable at all.  

Presiding over the Eurogroup will be a good opportunity for Mr. Centeno to display his negotiation and consensus building skills that have become a trademark of his government. 

Mr. Centeno´s government came to power under suspicion. Ending austerity was a promise made before in Greece, and everyone remembered how that had ended. But it´s a fact that, with or without the help of tourism and exports, Mr. Centeno economic plan recovered the country´s economy while respecting eurozone rules. Unemployment has fallen below the eurozone average, a 2.6 percent growth is expected this year and the deficit is forecasted at 1.4 percent: the lowest since 1974. Portugal´s case shows that it´s possible to align fiscal stability with growth.

Whether we like it or not, economic results determine the perception of politicians and governments. And financial stability in a country used to the contrary is a sign of competence.

Exporting this success to the Eurogroup won’t be easy. And the challenges ahead are not insignificant. Greece approaches the end of its eighty-six billion bailout programs next summer, and it´ll be up to Mr. Centeno to oversee its conclusion. He´ll also have to guide the development of a common strategy capable of strengthening the economic and monetary union. This will be extremely difficult, as it´ll potentially entail reforming the EU´s bailout arm, creating a new budget for the single currency bloc and paving the way for a EU minister for economy and finance, a role combining the powers of the President of the Eurogroup and the Commission´s Vice-President for the economy.

Presiding over the Eurogroup will be a good opportunity for Mr. Centeno to display his negotiation and consensus building skills that have become a trademark of his government. Portugal´s economic success shows that there are alternatives to austerity. However, exporting this model abroad will be difficult because “there are no prêt-à-porter reforms” – they must be tailored to the specific needs of each country – and in Europe neoliberalism is still the dominant game in town. It will require a lot more than electing a Southern European as President of the Eurogroup to change that. Still, imagining alternatives it´s the only way to challenge ideas that have made our citizens lives worse.

It´s possible after all to present a credible action program and remain true to your values. Mr. Centeno has a small chance to change Europe from within. Hopefully we will remember what he imagined for Portugal. And start imagining something better for Europe.