Leão’s candidacy for top ESM job discussed in Prague

  • Lusa
  • 9 September 2022

The succession to the ESM should take place from October 8.

The candidacy of former Portuguese Finance Minister João Leão and Luxembourg’s Pierre Gramegna as Executive Director of the European Stability Mechanism (ESM) is being discussed this Friday in Prague by euro area finance ministers.

Meeting for an informal gathering in the Czech city of Prague, euro area finance ministers will try to reach a consensus on the two names on the table for the Mechanism’s leadership – João Leão and Pierre Gramegna – within the framework of a meeting of the ESM Board of Governors, one of whom will replace Germany’s Klaus Regling, who has been the Mechanism’s executive director since its creation in 2012 and ends his term of office on October 7.

After the vote had been postponed twice due to a lack of consensus (as 80% of votes are required), European sources connected to the process believe there may be a decision at today’s meeting, while acknowledging the recent progress in the discussions between the countries may not be sufficient.

In the event of a further postponement of the vote, the issue will again be discussed, on the sidelines of the Eurogroup meeting in early October, by the ESM Board of Governors, the body’s highest decision-making body, which is composed of government representatives from each of the Mechanism’s 19 shareholders, the euro countries, with the finance portfolio. Portugal is represented by its finance minister, Fernando Medina.

The succession to the ESM should take place from October 8.

It is up to the euro finance ministers to make this decision, in a vote taken by a qualified majority, i.e. 80% of votes cast, with voting rights equal to the number of shares allocated to each ESM member country in the authorised capital stock.

Portugal, for example, has a voting right of about 2.5%, which compares with Germany (26.9%) and France (20.2%), which have greater power in the vote and the power of veto.

Based in Luxembourg, the ESM is an intergovernmental organisation set up by eurozone member states to prevent and overcome financial crises and maintain long-term financial stability and prosperity by providing loans and other financial assistance to countries in severe financial difficulties.