His absence from the front line of European politics did not last long. In October 2013 parliamentary elections ended the 18-year-old rule of Jean-Claude Juncker as prime minister of Luxembourg. But just last week the veteran politician was back in the limelight once more when the European People's Party (EPP) – the umbrella group that represents most of the mainstream right-wing political parties in the European Union – voted him in as their leading candidate ahead of elections for the European Parliament on May 25th.
This is no mere symbolic position. Under new EU rules the political grouping that does best in the Euro elections across the 28 member states this year will see its top candidate become the new president of the European Commission (EC), the EU's administrative arm. For 59-year-old Juncker that would mean a speedy return to the very heart of European politics. But many observers judge that the choice made by the European People's Party is potentially a disastrous one not just for them but for a EU that is desperately in need of a new lease of life as it struggles to come to terms with the financial crisis that has ravaged it since 2008. For Juncker is a controversial, even divisive figure associated with a dated vision of the EU that has been judged to fail it in recent years. He is also closely linked with the secrecy in financial matters that has afflicted Luxembourg for so long.
Juncker's victory came during an EPP congress in Dublin on Friday March 7th, at which he polled 382 votes against the 245 votes cast for his opponent Michel Barnier, the current EU commissioner for internal markets and services and former French agriculture minister. Barnier probably realised he was unlikely to win the contest as far back as early February when the German chancellor Angela Merkel declared during a press conference: “It's no secret to anyone that I have a lot of sympathy for Jean-Claude Juncker.” Yet the German leader's support will count for little during the Euro elections themselves, which look set to be very close. The EPP currently dominates the European Parliament but the balance of power between Left and Right is likely to be much closer after the May polls.
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The other potential candidates for the Commission presidency – if their political groupings do well enough at the elections – are German socialist Martin Schulz, the Belgian liberal Guy Verhofstadt, the Greek politician Alexis Tsipras – who is head of the left-wing coalition Syriza - and the Franco-German pairing of José Bové and Ska Keller for the Greens. The extreme right opted to boycott the process. The election campaign is likely to be a rough and tumble affair and many observers think that Juncker's past will provide his opponents with plenty of ammunition with which to target him.
One immediately obvious line of attack is that, after losing elections in Luxenbourg last year, Juncker has a recent political failure to his name. Having been at the helm of the Grand Duchy for 18 years, Juncker felt obliged to resign in July 2013 in the wake of a scandal involving Luxembourg's security agency. His Christian Social People’s Party narrowly won the subsequent elections but Juncker was unable to form a coalition, with the younger generation of Luxembourg politicians apparently wanting to see an end to his time in office. Instead a 40-year-old lawyer, Xavier Bettel, from the liberal Democratic Party, took over as premier in December, leaving his predecessor looking an ageing figure on the Luxembourg political scene.
“Juncker is a very bad choice for the EPP, he has just lost an election and he's at the end of his career,” says French socialist MP Philip Cordery, former number two in the European Socialist Party who is currently putting the finishing touches to his campaign to support Martin Schulz for the Commission presidency. Another weakness that can be exploited is that when Juncker quit the presidency of the Eurogroup – the inter-ministerial group that oversees the single currency – having held the position from 2005 to 2013, he was said to have been burnt out, exhausted by arduous years of managing the sovereign debt crisis in the EU, with the constant emergency meetings and teleconferences at all hours of the day and night. Now in his sixtieth year, he will have to convince the European public of his capacity to “do the job” for five years in Brussels.
Indeed, some of his opponents, such as the social democrat Dutch finance minister Jeroen Djisselbloem, his successor as head of the Eurogroup, have not held back from publicly expressing their doubts about Juncker's physical ability to take on such a demanding post. “Juncker is an inveterate smoker and a drinker,” Djisselbloem told a humorous Dutch TV programme in January, claims the Luxembourg politician later dismissed. The latter's image as a figure of the past is also symbolised by his unease over new technology. “He has never used a computer, doesn't write emails,” a former colleague told the Belgian newspaper Le Soir.
But there are also more substantive handicaps in relation to Juncker's career. He represents an aspect of Europe that has always been reluctant to show its face; that of financial opacity and secrecy. Last November the Transparency and Exchange of Information for Tax Purposes ruled that Luxembourg – of which Juncker had been head of the government for the previous 18 years - was not conforming with rules on tax transparency and the exchange of fiscal information. In other words, it was still in essence a tax haven.
Meanwhile the economist Gabriel Zucman has calculated that 600 billion of the euros hidden in Switzerland – a third of all the secret assets in that country – are in fact invested there via Luxembourg investment funds. But Luxembourg is not just a safety deposit box for well-off Belgian, German or French citizens. For many years the Grand Duchy has been at the service of the world of finance, welcoming with open arms private individuals who want to hide their wealth from the tax authorities, but above all providing a haven for multinational companies who are expert at tax optimisation, with Apple and eBay as prime examples.
Yet this black hole of international finance has a seat at the EU's European Council, and the right of veto over all decisions relating to European banking and financial regulation. This is a power that Juncker has not hesitated to use. On the surface Juncker was simply sticking to his role in Europe as the supreme advocate of budgetary orthodoxy. But behind the scenes he was busily ensuring in European negotiations that his country remained a haven of financial opacity, even if this meant fighting the initiatives of his EU partners for greater tax transparency. It was a stance that earned him this scathing comment from French senator Jean Arthuis of the centrist UDI party: “In the morning he reminds us of our obligations to balance the public finances and in the afternoon he picks our pockets thanks to Luxembourg's fiscal and banking secrecy regime.”
Is Juncker's bid for Commission presidency just a decoy?
Even if the general view among his fellow countrymen is that Jean-Claude Juncker, the son of a worker who was involved in the Christian trade union movement, is not a passionate fan of the world of finance, he has nonetheless taken great care to oversee that sector's development in Luxembourg. This has paid off, with finance now providing 12% of all jobs, a quarter of the GDP and nearly a third of the tax receipts in a country with a population of 525,000. On occasions Juncker felt obliged to go on the offensive to defend this economic model. For example, in October 2008, when confronted with a report by publicly-owned French television company France 2 which showed how easy it was to launder money in his country, Juncker accused the programme makers of “typical French condescension”.
Then in July 2009, during a general statement of government policy, Juncker used tough language to attack a report by several Luxembourg non-governmental organizations which showed that wealth management in Luxembourg was harming developing countries. The study was “crude and simplistic”, said the then-prime minister.
In the end, just before he left office, Jean-Claude Juncker did commit Luxembourg to converting to a system of automatic exchange of financial information, the best tool against financial fraud by private individuals, by 2016. But this spectacular U-turn was above all an admission that he was unable to withstand the process unleashed by the American legislative steamroller; with the Foreign Account Tax Compliance Act or FATCA the United States will in effect impose transparency in all financial markets from July 2014. It signals a new era in the world of financial regulation.
Juncker's record is a little more flattering when it comes to his handling of the European sovereign debt crisis that exploded in 2008. Despite the risk of incurring the wrath of Paris and Berlin at the time, he was one of the rare leaders to express his unease publicly over the 'Merkozy' double act – the improbable duo of Angela Merkel and French president Nicolas Sarkozy – which appeared to impose its will on EU decisions. In an interview with the German newspaper Süddeutsche Zeitung, Juncker criticized Merkel for “pursuing internal politics on the back of the euro”. As for Paris, on several occasions he mocked the French government's submissive approach to Germany and its virtual non-involvement in debates in Brussels. “France's place is in the cockpit, not in the support vehicle,” he told Le Soir.
In general, Juncker had a excellent reputation inside the Brussels bubble for having endeavoured to reconcile the irreconcilable during the financial crisis: the budgetary rigour of north European countries on the one hand, and the demand for social justice and solidarity from southern countries on the other. In this sense this conservative figure is one of the rare representatives of the Right who is focussed on social issues, and who is not directly linked with the disastrous impact of the 'Troika' – the European Commission, International Monetary Fund and European Central Bank – on those Eurozone countries that needed baling out.
Nonetheless, Juncker still comes across as a figure from the past. He belongs to that era when people unhesitatingly believed in the benefits of a federal and closely-integrated Europe, of which the Eurozone was going to be just the first step. He is indeed one of the symbols of this Europe of the last century, of which the Benelux nations – Belgium, Holland and Luxembourg – were the centre of gravity and which has little in common with today's Europe, a 28-member EU which has been completely changed by the membership of countries from eastern and central Europe. Juncker himself is aware of this. “The euro and myself are the sole survivors of the Maastricht Treaty,” he joked in March 2012.
Even Juncker's candidature for the presidency of the Commission feels like a rerun of the past. Twice before he has been close to running a major EU institution. In 2004 he was the arch-favourite to be head of the Commission, but in the end he preferred to remain prime minister in Luxembourg. His withdrawal from the contest left the way clear for José Manuel Barroso to become the president for ten years. Five years later Juncker did his utmost to become president of the European Council, whose members are heads of government from the EU states. But on this occasion he was pipped to the post by former Belgian prime minister Herman Van Rompuy, whose candidacy had the blessing of Sarkozy and Merkel.
Today it is by no means certain that Jean-Claude Juncker is really motivated by a desire to become president of the Commission. Many Brussels insiders think that his candidacy is simply a decoy; and that his real aim is to succeed Van Rompuy at the European Council, a position that is far more strategic and influential in European affairs. That post becomes vacant in November 2014. If so, assuming that May's election results are close and that the right-wing EPP and the socialist group share the top posts, this would leave the way open for Martin Schulz to become president of the Commission.
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English version by Michael Streeter