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JANUARY 12, 2004
He'll Need The Luck Of The Irish As Charles McCreevy heads for Brussels, the economic infighting is deafening Charles McCreevy, Finance Minister of Ireland, cuts a colorful figure in a country known for exuberant politicians. A horse-racing fanatic and free-market zealot, McCreevy, 53, combines gruff charm with a ruthlessness that would have served him well in the smoke-filled committee rooms of New York's Tammany Hall. The question is, will McCreevy's talents be enough to get Europe's feuding mandarins working together again? On Jan. 1, Ireland takes over the six-month rotating presidency of the 15-nation European Union. That means he will chair Europe's most important economic policymaking committees at a moment of turmoil. In November, a cornerstone of the EU's economic superstructure cracked as France and Germany refused to be bound by the limits of the deficit-restraining Growth & Stability Pact. In early December, ambitious negotiations over a new constitution collapsed. Meanwhile, Poland and nine other Eastern Europe nations are preparing to join the EU in the largest single act of expansion the union has ever witnessed. "The EU is divided, stressed, and anxious," says Heather Grabbe, deputy director of the Centre for European Reform, a London think tank. What to do? "It's time to draw breath," says McCreevy. "Our job is to take soundings [and] move forward those issues that are capable of being moved." Sounds like a modest agenda. But just keeping the EU from fracturing further will be a major feat. After all, Italy, which currently holds the EU presidency, has stumbled from one diplomatic blunder to the next. Europe can ill afford another such term. Trouble is, McCreevy faces an agenda already loaded with possible time bombs. The Stability Pact, for example, remains in place, even though France and Germany effectively trashed it. Some officials in Brussels believe 2004 could see first the Dutch and then the British receiving official "early warnings" that their budget policies put them in danger of breaching the deficit limits. McCreevy -- as new chairman of the secretive and powerful Eurogroup of euro zone Finance Ministers and the more formal Economic & Financial Committee (Ecofin) of all 15 EU members -- must prevent this potentially explosive process of mutual economic oversight from careening out of control. Not an easy task: Ireland sided with Germany and France in the Stability Pact fracas, alienating other small countries that have honored the pact. "A BIT CONFRONTATIONAL" Also on McCreevy's agenda is the looming fight over the EU's own budget for 2006 to 2013. Six big countries have just called for a lower ceiling on EU spending. This could hit the payouts to poorer EU members such as Spain as well as the 10 countries that will be joining in May, 2004. McCreevy also will represent euro zone countries at February's meeting of Group of Seven nations in Florida. Finally, he must lead preparations for the EU Economic Summit in March, at a time when the strategy for bold reform set out in Lisbon in March, 2000, has blown wildly off course. McCreevy brings economic tenets to the presidency that many European governments have found hard to express. He thinks other EU nations must follow Ireland's example and be more flexible to compete with low-cost rivals like China or the new EU members from Eastern Europe. "Governments have got to make it easier for business to get a healthy return on capital," he says. Can McCreevy be the great conciliator and a free-market apostle at the same time? "He can be a bit confrontational," says Daniel Keohane, a research fellow at the Centre for European Reform. "But he is a shrewd politician. You only get to the top of Fianna Fail [the biggest party in Ireland's center-right governing coalition] if you understand and can handle its Byzantine politics." McCreevy certainly has a good track record. He has been Ireland's top economic policymaker for the past seven years and a free-market advocate since he entered the Irish Parliament in 1977. He can fairly claim a share of the credit for transforming the Irish economy from the European basket case of the 1980s to the "Celtic tiger" of the mid-'90s. No one's expecting him to do the same for Europe. But even if he restores forward momentum to the EU's reform agenda, it will be a notable capstone for a rural Irish politician who has come very far indeed.  By Stewart Fleming in Dublin Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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