The rights of small nations

The Belgians are angry. And you won't like them when they're angry. Well actually, we're not sure about that part, but the land of chocolate and waffles is pretty pissed off, or at least the government thereof. At issue is the allocation of two plum international finance jobs that are effectively the gift of the European Union finance minister collective. The jobs are a slot on the board of the European Central Bank, and the Managing Director of the International Monetary Fund. The former had been open for a while and the latter opened up a few weeks ago.

And with the de facto quota system that the EU runs for these jobs, the two vacancies interacted with each other. Since the ECB board slot was being vacated by a Spaniard, there was a presumption that another Spaniard should get it, namely Manuel Gonzalez Paramo. But then the only solid rumour for the IMF job was that departing Partido Popular finance minister Rodrigo Rato would get it, putting the ECB job back in play given that the rest of the EU surely wouldn't want the Spanish to get both jobs.

Enter the Belgians with their ECB candidate Peter Praet, and the Republic of Ireland, flush with the pride of holding the current EU presidency also put up a name. But it was not to be. There was a tied vote amongst the finance ministers between the Belgian and the Spaniard, and since the larger countries wanted the Spaniard, he won. The Irish guy didn't figure in the final decision. It's not clear what went on at the meeting:

[WSJ] Only minutes after saying that they didn't expect to reach agreement, European Finance Ministers chose Spaniard Manuel Gonzalez Paramo to join the European Central Bank's board.

Irish Finance Minister Charlie McCreevy made the announcement at a press conference.

McCreevy did not elaborate.

Which is a bit odd for a chatterbox like McCreevy. It could well be that this spat between suits reflects yet more fallout from the 11-M Madrid bombs -- perhaps the ministers didn't like the idea of handing the IMF job to the "Blame the Basques" crowd as they exit, and hence saw no problem with sticking to the previous plan for the ECB job. Anyway, that decision now moves to the next meeting of the finance ministers, and will be the subject of horse-trading next week in Ireland. And never has a phrase seemed more apt, because the meeting will be held, of all places, at Punchestown racecourse.

UPDATE: The Irish Times on 2nd April nicely explains why the Belgians had good reason to be upset, along with the more stoic McCreevy:

Some of Ecofin's decisions in recent months may have been unwise, however, notably in connection with the appointment to the ECB executive board. Appointments to the board must be made unanimously but the ministers came to what Mr McCreevy described as "a gentleman's agreement" to choose their nominee by qualified majority before formally approving the appointment unanimously.

If this procedure was questionable, its outcome was to set a precedent that can only disadvantage smaller member-states, such as Ireland.

By replacing one Spaniard on the executive board with another, the finance ministers have opened the way for Italy to nominate a successor to Mr Tommaso Padoa-Schioppa next year and for Prof Otmar Issing to be replaced by another German in 2006.

The EU's biggest member-states have intensified their efforts to gain control over European economic policy in recent months and the ECB appointment has strengthened their hand.

In other words, the small countries had a type of veto with the unanimity requirement, which is now seriously diluted by allowing the qualified majority voting.